Fighting Tears
Fighting back tears, Gundlach stood before his staff of about 40 people and told them he felt responsible for their careers after they had left TCW to start DoubleLine, she says.
“He said he would walk if he proved to be a liability,” she says. “His firing made him more appreciative of family connections, friendships, people who stuck with him.”
Gundlach was forced to build his firm with retail investors, who were pouring into bond funds after the S&P 500 Index closed at 676.53 in March 2009, a 12-year low.
“We needed to show success quickly because of the litigation,” says Ronald Redell, president of DoubleLine Funds Trust, which offers funds to investors.
DoubleLine got help from Howard Marks, another former TCW star, who left the firm 17 years ago with four other distressed- debt experts to start Oaktree Capital Management LP. Oaktree, with $81 billion in assets as of September, bought a 22 percent stake in DoubleLine for an undisclosed price and assigned 60 of its people to help set up the firm’s back office and other support functions.
Under Attack
“Since we had started a firm ourselves, the founders of DoubleLine enlisted our help in their startup,” Marks says. “When you are under attack, you’ve got to take extra steps to make it 100 percent certain you won’t make a misstep.”
Whether three-year-old DoubleLine continues to thrive will rest largely on the investment instructions that Gundlach gives to his senior portfolio managers. They all debate the broad investment categories in which DoubleLine will place its bets during monthly asset allocation meetings in the Warhol conference room, named after the flamboyant pop artist.
Gundlach acts as the final judge, signing off on the percentages of investments of particular assets for the firm’s funds. Once he settles on a strategy, Gundlach leaves it up to his managers to execute the trading, with oversight but little interference.