May 15, 2013 / 8:12 PM / 5 years ago

UPDATE 1-DoubleLine's Gundlach says Nikkei will hit 17,000 in '13

By Sam Forgione

NEW YORK, May 15 (Reuters) - Star bond investor and head of DoubleLine Capital LP Jeffrey Gundlach said on Wednesday that Japan’s Nikkei stock market index will hit 17,000 before year-end, and that $380 is the “perfect price” at which to short Chipotle.

Gundlach, chief executive and chief investment officer of DoubleLine, said that the price of Chipotle stock is “remarkably high” vs the company’s earnings. Gundlach correctly predicted last fall the subsequent crash in Apple shares to $425 even as they were trading at more than $700.

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.

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 is up 2.1 percent this year, besting 92 percent of peers.

On the Nikkei 225, which is trading around 15,096, Gundlach said: “There’s ample evidence that there’s a correlation between equity strength in recent quarters and quantitative easing, but if that’s the reason why you’re playing the stock market, go to Japan because that’s where they’re doing QE full force.”

Gundlach, whose firm has $60 billion in assets, said he would rather own stock in Apple Inc than the company’s debt given the low yield on Apple 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.

He said he would likely buy more Treasury securities if the yield on the 10-year Treasury bonds breaches 2 percent. The current yield is 1.94 percent.

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