INsider: Where will Jeffrey Gundlach find his equity stars?

INsider: Where will Jeffrey Gundlach find his equity stars?
Stock pickers at ex-employer TCW are on a roll, but many have committed to stay
SEP 21, 2012
By  JKEPHART
DoubleLine Capital LP could be going back to the well in its quest to create an equity investment team. Founder and chief executive Jeffrey Gundlach said Wednesday that the firm for the first time is considering expanding its product lineup to include equities. The timing of Mr. Gundlach's comments raise some interesting questions. In an article last month in InvestmentNews' sister publication Pensions & Investments, management at TCW Group Inc. — Mr. Gundlach's former employer — declined to comment about whether equity mutual fund managers at the company had signed new long-term contracts following TCW's sale to the Carlyle Group LP. As part of the deal, TCW employees have the ability to boost their equity stake in the firm to 40%, up from 17%. To do so, however, they must sign new long-term contracts that include lower salaries, but higher stock grants. While TCW appears to have locked up most of its big guns, it remains unclear how many managers in the equity group have signed on to stay. “We're pleased that portfolio managers who oversee roughly 90% of TCW's actively managed assets have entered into new long-term agreements to participate in the Carlyle transaction,” said company spokesman Peter Viles. “We continue to have productive discussions with other key TCW employees about participating in the transaction.” Given that the last 10% of TCW's assets are largely managed by the equity group, there still may be an opening for Mr. Gundlach to try to beef up his team at DoubleLine. Mr. Gundlach is no stranger to recruiting from TCW. After his ugly divorce from the company in late 2009, more than 40 TCW employees, including the ex-managing director of the TCW Mortgage Group, Philip Barach, and five-star emerging-markets fixed-income manager Luz Padilla, signed on at DoubleLine. If Mr. Gundlach is able to attract any of TCW's equity managers, it could be quite a coup for Doubleline. Thanks to their strong long-term track records, TCW's large-cap mutual funds have been able to avoid the massive withdrawals that have plagued most actively managed equity funds. The TCW Select Equities Fund Ticker:(TGCNX), which ranks in the 20th percentile of large-cap growth funds over the last three years and in the 10th percentile over the last five years, has lead the way with $260 million of inflows through the end of August, according to Morningstar Inc. The TCW Relative Value Large Cap Fund Ticker:(TGDVX) and the TCW Growth Fund Ticker:(TGGYX) have had $245 million and $1.2 million of inflows, respectively. Those inflows may not seem very impressive on their own, but the very fact that investors are adding more money than subtracting is a feat in and of itself. Large-cap mutual funds have seen a net $40 billion in outflows through the end of August, according to Morningstar. Given the industrywide trend of equity outflows, it may come as a bit of a surprise to some that Mr. Gundlach, who's built DoubleLine's assets under management to more than $40 billion in less than three years, thanks to his fixed-income reputation, would consider branching out into equities. It turns out the negative perception of equities is what intrigues him. “I like the way equities are out of favor and I like doing things when they're unpopular,” Mr. Gundlach told Bloomberg Tuesday. “Equities are a superior investment to bonds for an inflation hedge, and I like the ability to diversify and broaden the firm.” Mr. Gundlach isn't the first bond guru to set his eyes on equities. The bond giant Pacific Investment Management Co. LLC launched its first equity fund — the $2.2 billion Pimco EqS Pathfinder Fund Ticker:(PATHX) — in 2010 and has followed it with three more.

Latest News

SEC Says Game Service Roblox Part of ‘Active Investigation’
SEC Says Game Service Roblox Part of ‘Active Investigation’

Short sellers previously said the company was under investigation, though Roblox denied allegations.

Musk’s DOGE descends on CFPB with intention to shut it down
Musk’s DOGE descends on CFPB with intention to shut it down

The Consumer Financial Protection Bureau is in the crosshairs of the Republican group that is widely attempting to dismantle government agencies.

Advisor fighting Finra banishment loses $17.7 million dispute with old firm
Advisor fighting Finra banishment loses $17.7 million dispute with old firm

National Securities Corp. sued the advisor in 2020, alleging breach of contract and unjust enrichment.

Job numbers, inflation leaving room for Fed to hold rates
Job numbers, inflation leaving room for Fed to hold rates

Recent data support a measured pace by the Federal Reserve for the year ahead.

Private assets remain hot despite surging stock market
Private assets remain hot despite surging stock market

Financial advisors are still adding alternatives despite the surge in publicly traded stock prices

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.