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PIMCO's Total Return Fund Sells Over $80 Billion Of Mortgage Securities To US Taxpayers Year-To-Date

Tyler Durden's picture


Bill Gross' PIMCO is selling mortgage securities like there is no tomorrow. In October, the Newport Beach firm's Total Return Fund held the lowest amount of mortgages in recent (or distant) history: at 16% of the total $193 billion in fund total net assets, securities backed by the housing bubble (v1 and/or v2) accounted for a record low $30.8 billion of all holdings. In January the same fund held $113 billion of these securities: the firm has now disposed over $80 billion of mortgage-backed toxic securities. And who is the buyer: you dear taxpayer, courtesy of Ben Bernanke and Wellington Asset Management, which has taught the Fed all it needs to know about conducting secret Bill Gross bailouts away from the public's eye. As to what price these transactions occurred at, well, that is one thing you will never know so long as Barney Frank and other idiots in the Congress and Senate refuse to provide the level of Fed transparency demanded by Ron Paul and Alan Grayson.

Some other observations: the Total Return Fund bought over $30 billion in government related securities in October alone, an increase of 36% monthly, and the gov't class is now at an all time high of $121.3 billion, or 63% of all holdings. Since January, when the fund had a net short position in TSYs, the TRF has purchased over $120 billion in government-related securities. Investment grade securities also reached a high of $34.7 billion in October, after dropping to as low as $14.5 billion in January. One under-represented class: High Yield, of which the fund held a mere $1.9 billion. And if you are searching for who may be one of those evil culprits shorting the dollar, look no further than Fashion Island: Pimco was short $13.5 billion in cash and equivalents in October.

An analysis of the market-weighted maturity by product demonstrates that the fourth branch of government is a huge fan of 1-3 year maturities, holding over 60% of all securities in this bucket. A distant second is the 3-5 year bucket which in 2008 was PIMCO's preferred maturity group. And the 5-10 year bucket which hit 80% of holdings in November 2008 is barely scraping 10%.


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Mon, 11/23/2009 - 23:17 | Link to Comment Anal_yst
Anal_yst's picture

the negative "net cash" position, does that necessarily indicate a short cash trade or could it be something else (margin borrowing?)

Mon, 11/23/2009 - 23:42 | Link to Comment Marla Singer
Marla Singer's picture

What's the diff?

Tue, 11/24/2009 - 01:49 | Link to Comment Anal_yst
Anal_yst's picture

Intent (or lack thereof)?

Tue, 11/24/2009 - 00:03 | Link to Comment Anonymous
Tue, 11/24/2009 - 14:30 | Link to Comment jd2iv987
jd2iv987's picture

what does it matter? exchange one shitty investment for another...

Mon, 11/23/2009 - 23:34 | Link to Comment Assetman
Assetman's picture

Good work.

At least as of recently, Bill Gross and his PIMPCO guys haven't been terribly shy in showig the public where they aren't.

And as much as we may not like that "4th branch of government", their changes in duration and non-agency bias tells you a whole lot about the big "gift" the Federal Reserve have given them-- and everyone else dying to dump crap paper at par. 

That highly likely includes foreign central banks.

Tue, 11/24/2009 - 07:26 | Link to Comment Anonymous
Mon, 11/23/2009 - 23:46 | Link to Comment BlueStreak
BlueStreak's picture

He'll plow all that money back into real estate when it gets cheap, and judging by how he's doing it, I'd say the bottom for real estate values is 36ish months out.

Full Disclosure - Pimco "investor" via 401k

Tue, 11/24/2009 - 00:38 | Link to Comment JohnKing
JohnKing's picture

hmmm ... fed buys toilet paper for money, is it still money?

Mon, 11/23/2009 - 23:52 | Link to Comment Comrade de Chaos
Comrade de Chaos's picture

"Full Disclosure - Pimco "investor" via 401k"


as if 401K's provide much choice, hell if you have PIMCO available, you are one of the lucky few.:)

Mon, 11/23/2009 - 23:53 | Link to Comment tom a taxpayer
tom a taxpayer's picture


Out of control. 


We need a law that requires +50% of taxpayers to sign on before Bernanke/Wellington commit taxpayers to filthy deals like the $80 billion to PIMCO.

Oh, and you smug bassturds at PIMCO, the prosecutors will be coming for you eventually.

Tue, 11/24/2009 - 00:41 | Link to Comment Anonymous
Tue, 11/24/2009 - 00:58 | Link to Comment Cursive
Cursive's picture

By the time public opinion has turned enough to matter, if I were Bill "Bond Whisperer" Gross et al, I'd be more worried about pitchforks than prosecutors.

Tue, 11/24/2009 - 04:40 | Link to Comment Anonymous
Tue, 11/24/2009 - 00:19 | Link to Comment Anonymous
Tue, 11/24/2009 - 01:46 | Link to Comment Anonymous
Thu, 11/26/2009 - 00:39 | Link to Comment Anonymous
Tue, 11/24/2009 - 02:04 | Link to Comment Shiznit Diggity
Shiznit Diggity's picture

You can't blame Pimpco for dumping MBS. They just gettin while the gettin's good. Anybody holding MBS should be doing likewise. You don't need to be clairvoyant to see which way mortgage rates will head once the Fed stops buying MBS, which is why the Fed will extend its MBS purchasing program.

Tue, 11/24/2009 - 04:22 | Link to Comment phaesed
phaesed's picture


Did you think Bill Gross and El-Erian were dumb? They've played both sides of the fence like it was a game of Blackjack and the dealer is being forced to hit.

Bill Gross is better than Buffett ever was and will probably continue to be considered one of the greatest until the next Depression comes.

He knows when to walk away.

Tue, 11/24/2009 - 06:15 | Link to Comment Anonymous
Tue, 11/24/2009 - 06:27 | Link to Comment FreeStateYank
FreeStateYank's picture

Ahh, THAT's why Bill announced his 'committment' to Treasuries? Snake.

Tue, 11/24/2009 - 06:39 | Link to Comment Anonymous
Tue, 11/24/2009 - 08:10 | Link to Comment Handle with care
Handle with care's picture

Hey, if some lunatic came wandering into your neighborhood offering to buy your broken appliances for the full new retail price, wouldn't you rush to sell as many as you could find to him before the poor sad old lunatic has lost all his money?


Or you might think that exploiting the situation is immoral, but then you wouldn't be a Financial master of the universe either so your opinion wouldn't count.

Tue, 11/24/2009 - 08:33 | Link to Comment Jim B
Jim B's picture

Uncle Benny B, I have some stocks that I Lost my B#^$& on over the last several years.  Like the banks, GS, PIMCO, and the rest of the alphabet, I refuse to mark them to market.  I think the FED should buy them, nevermind, I forgot I am not a connected hack of the US financial system.

Tue, 11/24/2009 - 08:53 | Link to Comment DavosSherman
DavosSherman's picture

I'd ask if these people have kids, but demons don't bear children. Great world we are leaving our kids.

Great read!

Tue, 11/24/2009 - 11:21 | Link to Comment Anonymous
Tue, 11/24/2009 - 13:10 | Link to Comment Anonymous
Tue, 11/24/2009 - 13:26 | Link to Comment Anonymous
Thu, 11/26/2009 - 21:32 | Link to Comment Anonymous
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