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%.