He says the amount of money investors can make in phase three will dwarf what they can earn now.
“I’m waiting for something to go kaboom,” Gundlach says in his office a week before the L.A. speech. “If phase three takes two years, it’s worth waiting for. The markets don’t have lots of opportunity now.”
Gundlach has a history of making brash pronouncements. At a conference in New York in April, he told a Bloomberg News reporter that he would abolish the 99-year-old Federal Reserve, a position espoused by failed Republican presidential aspirant Ron Paul.
“That’s a very extreme view,” says Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Given how the Fed has evolved since the early 1900s, to say we’re going to change all that and start over is absurd.”
Gundlach has a propensity to stand up for his ideas even at the risk of jeopardizing his career. He dropped out of a Yale University theoretical math Ph.D. program because he was told his idea for a thesis proving infinity didn’t exist was out of the mainstream of the department. He then moved to Los Angeles and performed as a drummer in two rock bands before landing a job as a quantitative analyst in 1985 at TCW.
Gundlach soon became a star manager of mortgage-backed- securities funds and, in 2009, was on the losing side of an internal struggle over the leadership of the Los Angeles firm. TCW fired Gundlach and sued him a month later, accusing him of breach of fiduciary duty and theft of trade secrets.
Gundlach shot back with a countercomplaint, accusing TCW of ousting him to keep up to $1.25 billion in future fees that his team would have been paid. The suits were settled, though Gundlach hasn’t left behind his combative ways. Since 2010, he’s been complaining to Morningstar Inc., claiming the research firm’s analysts are biased against him.
“Jeffrey didn’t gather $50 billion in assets in three years because he’s some little noodge in the corner with his eyeshades on,” says Tania Modic, a DoubleLine investor at Western Investments Capital LLC in Incline Village, Nevada. “Jeffrey wants to be an outstanding thought leader, and you’re not going to get it by just being a bland personality.”
Gundlach also isn’t shy about touting his own exploits and expertise.
On art: “I seriously doubt there’s anyone who knows more than me about Mondrian.”
On the New York Times Saturday crossword puzzle, the hardest one of the week: He completes them in pen and often skips Sunday because it’s too easy, like counting Cheerios in a box. “You can do it, but what’s the point?”
On his Total Return Bond Fund, which attracted the most deposits of all U.S. mutual funds in 2012 through Oct. 31, according to Morningstar: “I have the most popular fund in the world.”
J. Alfred Prufrock
Those who work for Gundlach are intensely loyal to him. As he was starting DoubleLine in December 2009, more than 40 people from TCW -- including Barach, his right-hand man -- joined him at the new firm. Bonnie Baha, who followed Gundlach from TCW and now oversees DoubleLine’s investments in corporate bonds, says her boss’s eclectic mind is part of his charm.
One time, Baha cited a line from T.S. Eliot’s “The Love Song of J. Alfred Prufrock” during a meeting, and Gundlach began reciting the first stanza of the poem from memory. He peppers his unscripted investor presentations with references to James Bond movies, William Shakespeare, Karl Marx and rock songs from Nirvana and The Who.
And in addition to rooting for his hometown Buffalo Bills football team, he likes to garden, pruning back his Betty Boop and Gemini tea roses.
“He’s a much more complex human being than an egotistical blowhard,” Baha, 53, says. “The guy is a paradox. He is crazy about football. Then he recites a T.S. Eliot poem.”
As an investor, Gundlach goes on buying sprees when asset values plunge. After warning investors at a 2007 Morningstar conference that the subprime lending market was a “total unmitigated disaster,” he started to load up about a year later on the distressed mortgage-backed securities that most of the world was shunning.