As many savvy investors know by now, DoubleLine Capital has a story to tell: a creation myth that involves CEO Jeff Gundlach’s stormy departure from the TCW Group, the lawsuit that followed and the dramatic turnaround of a company that blasted from zero to $53 billion of assets under management in just three years.
But as the stellar DBLTX and DLTNX Total Return Bond funds approach their three-year benchmark on April 6 and five new DoubleLine funds prepare for launch, what is less known is the story behind the 45 or so people who followed Gundlach when TCW fired him in December 2009.
Over truffle omelets in The Palace on Wednesday in midtown Manhattan, Gundlach loyalist Bonnie Baha talked about why she left TCW after a 20-year career there to follow the eccentric and highly successful bond king as he started up DoubleLine the Monday after his Friday firing, even though she received offers from other firms, including Standard & Poor’s.
“If I had to place my money on somebody, I’d place it on Jeffrey,” said Baha, who serves as a DoubleLine portfolio manager and co-director of global developed credit at the company’s Los Angeles headquarters. “There is a ‘revenge is sweet’ factor, but there was a religious and spiritual element.”
TCW Experience Was an ‘Unplanned Pregnancy’
There was also an element of Baha’s feeling as if she was experiencing “an unplanned pregnancy,” when TCW rocked her world with its sudden announcement that it was replacing Gundlach with a fixed-income team from Metropolitan West. “I came in on Monday, and there were people we didn’t know sitting at our desks.”
Later, in 2010, Gundlach evoked those spiritual feelings after TCW sued, potential clients left in droves, and he came to his DoubleLine colleagues with tears in his eyes to promise that he took it as his personal responsibility to be sure they received a paycheck, recalled Baha, who also remembers that he was so stressed that he was losing weight and sleep as his loyal followers were paying their bills with credit cards and savings.
To be sure, Baha acknowledges that Gundlach’s strong personality can be read as arrogant—something she herself did back in the 1990s when she was a vice president on the TCW trading floor and didn’t like the way he was dressing down a colleague publicly. As Bloomberg reports it, Baha called Gundlach “a freaking jerk,” but as Baha herself remembers it, she called him the much more blunt, “f*****g a*****e.”
It was the start of a beautiful friendship. Later that day, Gundlach went to her office and spent two hours describing his hardscrabble upbringing in Buffalo, N.Y.