How did Allianz's Pimco win the sweepstakes to land ex-Fed Chairman Alan Greenspan? Well, a handwritten note certainly helped (yes, Bill Thompson's grandmother would be proud). The skinny on the mutual fund world's biggest consultant signing of the year is uncovered by Pimco's home town paper this morning. Meanwhile, Pimco hall-of-famer Bill Gross takes some hits in the Wall Street Journal.

How to Sign a Fed Chief

Bill Thompson, Pimco's CEO, started courting Greenspan at the firm's annual client conference in Dana Point last year. It wasn't the swanky appointments at the beach down the Pacific Coast Highway from Pimco's Newport Beach digs that caught Greenspan's attention, though, but something a lot more old-fashioned: A handwritten note. And it worked.

"He said, 'I couldn't resist calling you because it's seldom that I get a letter like this,' " Thompson confided to Los Angeles Times staff reporter Walter Hamilton.

Hamilton also reports that there was a sweepstakes among Wall Street types for Greenspan's services. The paper quotes Greenspan lawyer Robert Barnett as confiding that, "When Dr. Greenspan left the Fed, he received more offers than I've ever received for anybody other than former President Clinton. It seems that everyone would like him to be part of their efforts."

Greenspan initially told Thompson that he wanted to wait until he completed his book -- which is due out in September -- before he decided on which offers to accept. He plans to take fewer than a dozen consulting gigs, reports the paper.

There are some skeptics about whether Greenspan will help Gross run Pimco's bond portfolio, reports Hamilton.

"To be blunt, I think it's marketing. I don't know what insight he brings," New York economist Barry Ritholtz tells Hamilton. Thompson disagrees with that assessment, saying that marketing benefits are a byproduct and that, "His crystal ball may not be better than ours but it gets a lot clearer when you can tap into somebody like Alan Greenspan."

Whatever, the news has gotten us to cover the story twice.

Marketing or not, it turns out that Bill Gross and Pimco could use the boost. The L.A. Times notes that Gross' Total Return Fund is up just 1.3 percent so far in 2007, adding that the underperformance is "partly because of Gross' caution about the economy" and his unwillingness to "bet heavily on high-yielding corporate bonds" because of his belief that slowing economy will whack their value.

The WJS glosses over Greenspan's hiring story and makes Gross' recent underperformance the centerpiece of it coverage.

Pimco's Gross:
Living Down A 'Big Mistake'

Wrong Bet on Rates
Lands Big Bond Fund
Near Bottom of Pack


So screams Tom Lauricella's headline on the cover of the "C" section in Thursday morning's edition.

Lauricella sets the scene by reporting that Pimco celebrated Gross' twentieth anniversary at the helm of Total Return with a company wide barbecue last week [hopefully they served tri-tip]. The reporter adds that Gross admits his decision to take a pass on corporate bonds and load up on rate sensitive issues because of fears that a bursting housing bubble would cause the Fed to cut rates was a "big mistake."

That mistake has left Total Return in the bottom 25 percent of its peer group for the past 12 months. That is even worse than in 2006, when the fund landed in the bottom half of its peer universe for the first time ever.

Of course, Gross was right about what would happen to housing, just wrong on how the Fed would react.

"We did our homework," he told Lauricella. "We sent out scouts into middle America, down to Florida." They did make some correct calls, such as predicting a drop in long-term interest rates last summer.

Now with Greenspan on call, he may have a leg up on predicting Fed moves to. 

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