There's no place like home: Gundlach snags TCW fund managers

Bond guru makes move into equities with hirings

Jan 2, 2013 @ 11:00 am

Jeffrey Gundlach, the bond manager who founded DoubleLine Capital LP, hired two stock fund managers from TCW Group Inc. as his firm expands into equities.

Brendt Stallings and Husam Nazer, who managed about $5 billion in stock strategies at TCW, the firm that fired Gundlach in 2009, will join as portfolio managers and partners in a newly created unit called DoubleLine Equity LP, according to a statement today from Los Angeles-based DoubleLine.

DoubleLine, which has about $53 billion in assets under management, is expanding into equities as bond yields hover near record lows and governments struggle to control spending. Gundlach said in September that equities are a superior investment to bonds as an inflation hedge and that he was seeking to diversify and broaden the firm. He also said at the time that equities wouldn't repeat the poor performance they had from 2000 to 2010.

“I will continue to explore other complementary partnerships and acquisitions to diversify our business and serve our clients,” Gundlach said in today's statement.

Gundlach joins Bill Gross, manager of the world's largest bond fund, in diversifying into stocks amid speculation the three-decade rally in bonds may be ending. Gross's Pacific Investment Management Co. three years ago started an expansion into equities in anticipation that their returns will beat those of bonds over coming years.

Funds Trail

Stallings, 44, and Nazer, 41, will hire at least five investment professionals this year, according to the statement. Stallings ran the $71 million TCW Growth Equities Fund (TGGEX), whose institutional shares returned 12 percent over the past year, trailing 78 percent of rivals. The fund gained 0.6 percent over the past five years, behind 61 percent of similarly managed funds, according to data compiled by Bloomberg.

Nazer managed the $822 million TCW Small Cap Growth Fund (TGSCX), whose institutional shares delivered 3.1 percent over the past 12 months, trailing 97 percent of peers, and 2.3 percent over the past five years, trailing 52 percent of similarly managed funds.

Private-equity firm Carlyle Group LP (CG) in August agreed to buy TCW in a deal that will give management and employees a 40 percent stake. TCW, which manages about $135 billion, was owned for more than a decade by French bank Societe Generale SA.

TCW said Nov. 1 that Mike Olson and Chang Lee, research analysts at TCW, would replace Stallings and Nazer after they resigned from the firm effective Dec. 31 as co-portfolio managers of the TCW Small and Mid-Cap Growth Equities team.

--Bloomberg News--

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