How PIMCO’s investment team debates their ideas

Original source: SimoleonSense.com .

H/T Josh Wolfe of Lux Capital

Click Here To Read: How PIMCO’s investment team debates their ideas

Introduction (via Walter Hamilton @ La Times)

Mutual fund giant Pacific Investment Management Co. hires some of the brightest minds in finance. Then it forces them to prove their smarts every week.

The Newport Beach company is best known for its celebrated fund manager, Bill Gross, whose prescient investment picks over the years turned Pimco into the world’s most powerful bond firm with $1 trillion under management, including the industry’s largest mutual fund, Pimco Total Return.

But behind the scenes, Pimco has sought to craft a meritocracy in which its 125 portfolio managers have wide latitude to pitch their ideas and — most important — to challenge the firm’s investments and one another.

At the heart of the system is a weekly meeting where portfolio managers square off in hours-long debates that are a cross between Socratic dialogue and bare-knuckled slugfest.

“The group is not shy,” said Mohamed El-Erian, Pimco’s chief executive. “When someone says something that someone disagrees with, they immediately say, ‘I disagree with that.’ There isn’t an ‘Oh, I’m going to be ultra-polite to you even though you’re saying something silly.’ “

Additional Excerpt

“You have to have a pretty thick skin to work here,” Seidner said later. “You should expect to come in here three or four times out of 10 and get beat up.”

Click Here To Read: How PIMCO’s investment team debates their ideas