Jeffrey Gundlach: The new bond king strikes back

Donald Trump is far from the only prominent American taking to Twitter to decry “fake news”, says BusinessInsider. The most recent one to test the tactic was Los Angeles “bond king” Jeffrey Gundlach of investment manager DoubleLine Capital. Gundlach is a custodian of some $111bn in mostly fixed-income assets who has been waging a one-man campaign against The Wall Street Journal (WSJ).

Gundlach got wind that the WSJ was investigating the performance of DoubleLine’s flagship Total Return Bond fund several months back and took the “unusual” step of “attacking reporters” on Twitter for a story that had yet to be published after learning that reporters had been ferreting around past employees, says Bloomberg.

The WSJ’s story seemed rather tame when it was finally published in August. It blandly reported that some investors were pulling back from the fund because its formerly “white-hot pace” had cooled to become merely “solid”. Assets had declined 13% from their peak last year to $53.6bn in July, the story noted. That didn’t stop another volley of invective on Twitter from Gundlach. But his outspoken style is “part of his appeal to some”, says BusinessInsider.

Gundlach – born in 1959, the son of a technician at a bowling alley – was raised in Buffalo, New York, and has always been a driven individual. He got into Dartmouth College on financial aid and graduated summa cum laude in maths and philosophy in 1981, before heading for Yale for a PhD in theoretical mathematics.

He dropped out halfway through and went to LA to become a rock drummer. But he made sure he had a back-up plan in place, says Reuters. Gundlach later claimed it was an episode of Lifestyles of the Rich and Famous that inspired him to go into investment.

After taking a job with manager TCW, Gundlach took home his first $1m pay cheque in 1990. He stuck with the firm for nearly 20 years and by 2009 was making $40m a year.

There was a brief hiatus that year when TCW fired him for “alleged gross misconduct”, says Businessweek: “including an attempt to steal staff and confidential client and trade information to launch his own rival firm”. Gundlach’s charmed career really got going, however, when he formed DoubleLine in 2009 and began cleaning up in mortgage-backed securities, even as the market underwent tectonic shifts.

Following a series of prescient calls, Barron’s announced in 2011 that he had dethroned Pimco’s Bill Gross and was now America’s “king of bonds”. “Look, I have a gift, or some would say a curse, of being able to have stunning insight into the reality of the markets and the economy,” Gundlach told the magazine.

“Maybe it’s the fact that I’m obsessively regimented in my analysis, borderline autistic. But whether it’s bond selection or asset allocation we can do it better than just anybody around.” That’s quite some claim. No wonder Gundlach seems willing to fight to the death to defend it. As he warned the WSJ: “I am a scorpion. Attack me and I will fight back. Hard”.


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