Emmanuel “Manny” Roman is waiting for me at his table in Marino, an old Italian family restaurant in Hollywood. I am a few minutes late. If anyone has an excuse to be late, it is my guest, the chief executive of Pimco, the giant fund manager. It has some $2tn of assets under management and the markets are in turmoil. I am hotfoot, I explain, from the Getty Museum, on the far side of town.
With the same crisp precision that he might outline to investors his view on whether to stay invested in China or how much to worry about exposure to Russia — his answers, I learn later, are yes and not much — Roman rules on the merits of the Getty and the Los Angeles County Museum of Art. He then urges me to go to The Broad museum, though cautions it is “the collection of a very rich man so it’s incredibly predictable”.
I have come to LA to see another very rich man, but one whose tastes are anything but predictable. Roman is a cosmopolitan French financier who pre-2008 might have been dubbed a “Master of the Universe”. He is also a legendarily literary patron of the arts. I am keen to hear his thoughts on the global outlook at this turbulent time. But I also want to know how his worlds intersect — the world of trading and the world of ideas — if they do at all.
That morning’s front pages in the US are screaming warnings of recession. The decades-long bull run of the bond market which has served Pimco so well has been declared at an end. It is a critical moment for Pimco and for the 58-year-old Roman, who upped sticks from London six years ago, opting to live in LA rather than south of the city in conservative Newport Beach, where Pimco is based.
He is a picture of composure. In fact not once in our Lunch does he look at his phone. I am surprised, I say, he has not had to cancel. He deploys that half-smile that has disarmed so many — some to their cost — over the years. So do the movement of ideas and the movement of markets really come together, I ask? Roman doesn’t pause.
“They totally come together,” he says. “I think markets are a very complicated Impressionist painting. Different pieces contribute to the story.” He gives a whistle-stop tour of his philosophy. “By thinking through the various sectors, stories and people you meet you get a much more holistic picture of what is happening in the economy. Some of it is by data, some of it is by anecdotal stories, some it is by lateral thinking. They are all part of the picture.”
Marino is an oasis on a blazingly hot summer’s day. Mario Marino, one of the two brothers running the show, arrives with a delicate sponge-like cauliflower mushroom cooked in pistachio oil. It is exquisite. Roman signals his approval.
The last time I saw him was in his previous role as the chief executive of Man Group, one of the world’s biggest hedge fund managers, the then sponsor of the Booker Prize, when he presided over its award ceremonies. Publishers were startled to find this “hedgie” had not only read the shortlist but had strong opinions. I ask him to rule on the “Manny myth”: does he really read a new book a week?
It all started when he was growing up in Paris’s bohemian Montparnasse quarter, he says, mostly raised by his artist father. “He painted, the house was full of books, there was no TV, no car, so what does a boy do when options are fairly limited? I read and I read and I read.” And even now, I ask, running his empire and with a young (second) family?
“The trick is to be able to go lowbrow when you are tired and there’s too many things in your life,” he says. “I always have unread thrillers to hand if I don’t have the energy to read anything interesting.” I say I have devoted myself to Russian classics since the invasion of Ukraine and am travelling with Tolstoy’s short stories. His eyes narrow.
“The Death of Ivan Ilyich . . . That didn’t put you in the best possible mood.” We alight on a shared treasure, A Swim in a Pond in the Rain, a reflection on the art of the 19th-century Russian short story by the American writer George Saunders. “That’s part of what Russia is,” he says, sweeping back to the pressing issues of the day. “There’s a cultural heritage and a pride and a sense of the empire. When you talk of an Impressionist picture, that’s part of it.”
Sal Marino pops over from the kitchen with the second antipasto, raw kingfish. Its centrepiece looks like a minuscule sliced unripe acorn. It is a “green almond”, available for just a month at the start of an almond’s life. “It’s a superfood,” enthuses Sal. It is, also, exquisite, though I do wonder if I am eating the nut equivalent of veal.
I probe Roman’s Impressionist argument about the importance of nuance in investing. Ultimately, if you are trading, is it not also about splashy confident decisions — and timing?
Marino Restaurant
6001 Melrose Ave, Los Angeles 90038
Raw cauliflower mushroom, Santa Barbara pistachio (on the house)
Crudo di mare with green almonds x2 $44
Homemade gnocchi al pesto $26
Alaskan halibut with saffron sauce x2 $72
Elderflower blossom gelée with Royal Rainier cherry (on the house)
Acqua Panna $9
Sauvignon Blanc $18
Chenin Blanc $18
Double espresso x2 $12
Total (inc tax) $226.65
“People trade too much,” he replies. “In the next 12 months there’s going to be plenty of things to do because things break and they become cheap. The discipline is to say, right now not a lot is happening where we can do better than the market. Then all of a sudden it’s a totally different ballgame and you can deploy plenty of capital — and do it very well.
“So the pandemic, terrible as it was, gave a unique opportunity to invest money pretty well. It was a window where things became incredibly cheap. Same with 2008. Same with 2001.”
Where he does agree with me is on the role of timing. His career has coincided with years of loose monetary policy, ultra-low interest rates and quantitative easing, which have allowed firms such as Pimco to prosper despite the financial crisis and the pandemic.
“The post-Volcker years have been very good for financial markets and for our generation,” he says, referring to Paul Volcker, the Fed Reserve chair from 1979-1987 who was credited with ending high levels of inflation. “I call that generational luck.”
The big plays in his career have certainly been well-timed. After an 18-year stint at Goldman Sachs, he joined the swashbuckling hedge fund GLG in 2005, just as markets were reaching a peak, and then helped to prime it for a listing two years later, just before the crash of 2008. Two years later he orchestrated its sale to Man, which was very lucrative for him and his GLG colleagues but not for Man. It was soon clear it had overpaid. In a plot twist worthy of a Chekhov short story, Man had to take writedowns on the business, its chief executive headed to the sidelines . . . and Roman took the top job; the reverse takeover was complete.
It was his record as an unruffleable turnround agent at Man, where assets had risen 38 per cent in his three years in charge, that led to his 2016 appointment to run Pimco’s business and change the culture, with chief investment officer Dan Ivascyn running the money.
It was a troubled inheritance. Pimco’s longtime star, the “bond king” Bill Gross, who had been among the first to spot the trading potential of the bond market, had left in 2014 in a spectacular row. Pimco was known as a hard-charging place. Gross had loved to strut his stuff on the morning talk shows. Roman has kept a far lower public profile, but I am told he and Ivascyn brought a decisiveness after a period of drift. Pimco’s assets dropped precipitously in the 2010s after Gross left and in late 2020 returned to that level.
But does he listen enough? How do you avoid becoming too confident in your judgment, I ask?
“Overconfidence is one of the great sins of mankind — and fund managers,” he says. “It’s easy to build a narrative where you say I have seen this before.” Richard Thaler, the behavioural economist, a friend and a Pimco consultant, “constantly” reminds him “of the bias that all humans have”.
“It’s very hard to escape that sometimes . . . and that’s why thinking through portfolio construction and risk and debating it with people of different backgrounds and age groups is very important . . . And not just people in your own mould.”
His comments have an added relevance as Pimco’s leadership received a letter last year signed by 21 former and current female employees accusing the firm of abusive and discriminatory behaviour to women. Several have filed lawsuits against Pimco.
“It’s an ongoing investigation,” says Roman. “I believe we’ve done nothing wrong. We’ve done our own investigation, and we’ve commissioned a third-party report. What’s very hard to judge is what happened 10 years ago.
“What I try to do is focus on things under my control, which is to be incredibly focused on having a very diverse workforce. I argue that a diverse workforce stops groupthink. The bigger problem is a bunch of white middle-aged men who all think the same . . . and will hit the wall at the same time.”
Mario is back with our homemade gnocchi, cooked to perfection. He also bears two half glasses of an American-style French Sauvignon by Philippe Melka, the former winemaker from Petrus. Roman demurs at the idea of wine and then acquiesces; he did in his London years own one of the more famous cellars in the city.
Now, however, his life in LA with his second wife is very different. And it’s not just that his social life is more limited, his wine…
Read More: Emmanuel Roman: ‘Markets are a very complicated Impressionist painting’