(Repeats to additional clients)
By Sam Forgione and Jennifer Ablan
NEW YORK May 16 Bond investor and co-founder of
DoubleLine Capital LP, Jeffrey Gundlach fancies himself as more
than just a fixed-income guru, making successful predictions on
everything from shares in Apple Inc. to Japan's Nikkei
stock market index to natural gas and gold.
"Everybody wants to meet with me now. I don't know why. They
didn't want to before," Gundlach, 53, said. "I guess they're
curious. Who is this guy? That kind of thing."
Gundlach was fired from his old shop, the TCW Group Inc, in
a dispute that led to a lawsuit, a trial and a settlement.
DoubleLine's assets under management of $60 billion have
tripled since the Dec. 29, 2011 settlement with TCW, the terms
of which were not made public. Many of his closest associates
left TCW to help set up DoubleLine and his firm has been
successful in continuing to attract former employees.
His firm's success is rooted in a series of prescient calls
Gundlach has made on the markets, which has translated into
strong returns for his clients, and attention by fans and
Many scoffed when he said at an April 2012 finance luncheon
in New York that investors should "short" Apple, then trading
around $560, because it was going to $425. Soon after, that's
what it did, with Apple breaking below $400 earlier this year
after peaking at $700 a share in September of 2012.
When Reuters exclusively reported in March that Gundlach
bought "more long-term Treasuries in the last month" when
10-year yields hit above 2 percent than he had in the previous
years, investors took notice.
The yield on the 10-year Treasury note now stands at 1.88
percent but not before dipping to 1.65 percent two weeks ago, as
figures on U.S. economic growth have softened.
Yields on Treasuries tend to slide on weak economic news.
Gundlach first made his mark in the bond world for being a
savvy trader of mortgage-backed securities.
One reason his flagship mutual fund outperformed is its
exposure to mortgage debt not backed by Fannie Mae or Freddie
Mac. Gundlach believed so-called private label mortgage debt
issued by Wall Street firms prior to the financial crisis would
rally in response to the Federal Reserve's easy money policies
and its game-changing decision in September 2012 to buy lower
yielding government guaranteed mortgage debt.
Gundlach's flagship DoubleLine Total Return Bond Fund
, earned a three-year annualized return of 11.15
percent through April, making it the top performer among U.S.
intermediate-term bond mutual funds, according to Morningstar.
The fund, which has roughly $41 billion in assets, is up 2.1
percent this year, besting 92 percent of peers.
MONEY MANAGER OF THE YEAR
In a sign of just how much his star has risen, Gundlach, who
was anointed "bond king" in early 2011 by Barron's magazine,
will be awarded money manager of the year Thursday by
Institutional Investor magazine.
Gundlach said the honor isn't going to his head. But it is
easy for some to look at his latest prediction that Japan's
Nikkei stock market index will hit 17,000 before year-end as
nothing more than hubris. After all, the Nikkei, currently
trading at 15,096, a level not seen since 2008, is already up 45
percent for the year.
Then again, Gundlach first began predicting the Nikkei would
keep reaching new heights back on Nov. 13, when it was trading
"It's going to go higher. It's going to be 17,000 before
year-end, it looks like," Gundlach told Reuters in an interview
Gundlach said the index shows "no signs of flagging" and
that investors who are jumping into stocks in response to global
stimulus measures should invest in Japan, whose central bank is
engaging in "full force" quantitative easing.
The Bank of Japan said on April 4 it would inject about $1.4
trillion into the country's economy in less than two years to
fight deflation, mainly through purchases of long-term Japanese
government bonds in a process known as quantitative easing.
And after gloating at Apple's slide, he is now something of
a bull, at least in the near-term.
Gundlach said he would rather own stock in Apple Inc. than
the company's debt given the low yield on the company's recently
issued bonds. He said he considers Apple bonds "super safe" but
Apple shares now seem to be the better trade. Apple closed at
$428.85 on the Nasdaq.
"I kind of like Apple these days, just as a trade," Gundlach
said, noting he still thinks the company needs better innovation
over the long-haul.
He also said Treasury Inflation Protected Securities, or
TIPS, are a "pretty bad" investment right now as inflation is
unlikely to rise. "Inflation isn't really anywhere in sight,"
Gundlach told Reuters Insider television.
He also sees increases in taxes which will support municipal
bonds that are generally exempt from federal income taxes.
Gundlach also favored U.S. dollar-denominated emerging
market corporate bonds rated between triple-B and double-B,
which he predicted can generate annualized returns of between 10
to 12 percent over the next 12 to 18 months.
All of these calls have elevated Gundlach into something of
a rock star, even in jaded Los Angeles where entertainment
celebrities, not money managers, rule the roost.
He was in an elevator at a local Whole Foods grocery store
with the actor Mel Gibson and a third person, he told Reuters.
But it wasn't Gibson who caught the other person's eye, it was
"The guy looks around the elevator and looks at me and says:
'You're Jeffrey Gundlach,'" said Gundlach, chuckling a bit.
(Reporting By Samuel Forgione and Jennifer Ablan)