It’s no coincidence that DoubleLine Capital, known for its track record with bond funds, launched its first stock fund just a few months after the new fund’s two equity managers left their TCW Group funds behind to join Jeffrey Gundlach’s storied startup.
The DoubleLine Equities Small Cap Growth Fund opened to investors on April 1, just after TCW veterans Husam Nazer and Brendt Stallings announced March 22 that they had brought four equities analysts and an equities trader into the newly formed DoubleLine Equity LP. Nazer (left) and Stallings, who headed TCW’s Small and Mid-Cap Growth Equities Group when it reached a peak of $5 billion in assets under management, brought four of the five new personnel from their TCW group.
Institutional shares of DoubleLine Equities Small Cap Growth (I shares-DBESX; N shares-DLESX), which has total assets of $2.3 million according to Morningstar, were trading Friday afternoon at an NAV of $9.77, down 0.09 points, off 0.91% from the Thursday close. Institutional shares of TCW Small Cap Growth Fund (I shares-TGSCX; N shares-TGSNX), currently managed by Chang Lee and Mike Olson with total assets of $349.8 million, were trading at an NAV of $28.25, down 0.19 points, off 0.67% from Thursday.
Nothing but the Knowledge in Their Heads
“We have reconstituted the core of our original research and trading team,” Nazer said in a statement on March 22. “In addition, we are carefully recruiting talent from other firms. I expect DoubleLine will bring aboard one or two more equity analysts in the months ahead.”
In an interview at the New York Yacht Club on April 11, Stallings recalled how he and Nazer departed TCW on Dec. 31 carrying nothing but the knowledge in their heads and went to work for DoubleLine on Jan. 2. On that first business day in January, the duo began trading their tested strategies, so there was no break in their track record. Currently, Nazer and Stallings are constructing portfolios and building models in the domestic stock space, and they have plans to launch two more funds soon.
“It’s the entrepreneurial opportunity of a career,” said Stallings (left), who spent 16 years at TCW while partnered with 17-year veteran Nazer. “We wanted to build an equity franchise that scales and lasts, and we found a simple and elegant solution after a 15-minute conversation with Jeffrey.”
DoubleLine at 3-Year Mark
Now that DoubleLine is three years old, the Los Angeles-based fund firm has the stability and financial resources to take on a new challenge. It doesn’t hurt, of course, that the U.S. stock market is enjoying what looks to be an extended period of bullishness and solid returns.
Nazer, 41, was TCW’s senior portfolio manager of small-cap growth and SMID-cap growth strategies, and along with Stallings, co-portfolio manager of the TCW global technology strategy and co-head of the TCW small- and mid-cap growth equities team. Stallings, 44, was senior portfolio manager of the TCW growth equities strategy.
“We were close with Jeffrey at TCW, and we always listened to him,” Nazer said. “We would have been stupid not to. He was the chief investment officer of the whole firm. We were comfortable at TCW, and we were making money, but we couldn’t run fast enough from the Carlyle Group’s leveraged buyout” of TCW in August 2012.
Read Ouch! DoubleLine Raids TCW Again for More Talent on AdvisorOne.