Bill Gross Goes Massively Short Cash

Posted by Bill Gross: Pimco via ZeroHedge

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PIMCOholdings

Two things stand out in the just released September holdings update of Pimco’s flagship Total Return Fund: first, what appears to be a record cash short of 19% of the fund’s total unchanged AUM of $245 billion, doubling the previous short of -9%. The incremental cash was used almost entirely to purchase Mortgage Backed Securities, which jumped to 38% of total from 32%, even as the fund kept its government exposure virtually flat at 22%( 21% previously). (click on chart for larger image)

PIMCOholdings

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(click on image for larger image)

That’s either what is called betting one’s farm on Operation Twist, or, betting one’s farm that the next thing to be purchased by the Fed in QE3 or QE4 depending on how one keeps count, will be Mortgage Backed Securities. As a reminder, the last time Gross saw such a surge in MBS holdings in the TRF was side by side with the phased out roll out of QE2 when it was unclear if the Chairman would be buying USTs or MBS.

 

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