Jeffrey Gundlach is the CEO of DoubleLine Management and is formerly of TCW (where he spent nearly 25 years and was in charge of its $9.3B Total Return Fund). He is widely recognized for being an expert in debt-related investments, particularly bonds, although he’s nearly as famous for his idiosyncrasies, intelligence, and love of music.
Jeffrey Gundlach grew up in a lower-middle-class Buffalo home that had to be creative at times to make ends meet. He was always good in math, so it was no surprise that he majored in mathematics at Dartmouth. But Jeffrey was not content with just one degree; he also got a degree in philosophy while an undergrad.
He later was accepted to, and spent two years at, Yale working toward a Ph.D. in applied mathematics before dropping out and heading west to become a rock ‘n’ roll star in Los Angeles. Even the band he was in, Radical Flat, was so named to reflect his love of math. By all accounts, Gundlach was a fantastic drummer but the band itself never made it big.
Always driven to succeed and make a lot of money, Gundlach finally decided that becoming an investment banker would be the best way for him to make it big, so he left the music scene in 1988.
Drumming Up a Fortune In the Financial World
Jeffrey Gundlach never lost his analytical mind or that blue-collar Buffalo ethic, so one day in the late 1980s, still trying to make it big as a rock star but broke (and tired of being so), he sent his resume to over 20 Los Angeles investment banking firms because he had heard that an investment banker was the highest-paying job in the business world. All that was really required to be successful at this were the two things Gundlach already had in spades – the analytical thinking and work ethic.
He received only one answer, from TCW, and he was soon working there as an investment manager. Even though at his interview Gundlach didn’t know the difference between a stock and a bond, he read and studied everything he could and, within two years of starting at TCW, Gundlach was already earning six figures.
After a nearly 25-year run of success at TCW, Gundlach was unceremoniously fired one Friday after lunch in 2009. Though he unwaveringly denies it, he was accused of stealing staff records and confidential client information with the intent of starting his own firm. As lurid details surfaced – stashes of porn, sex devices, and marijuana smoking accessories we allegedly found in his office – the war between the two sides intrigued not only Wall Street insiders but also the layman on the street.
Gundlach’s Third Act – Still the “King of Bonds”
Regardless of the TCW accusations, that Jeffrey Gundlach was much loved by his senior staff was evidenced by their leaving TCW with him to create his new firm, DoubleLine, which happened almost immediately. However, due to ongoing litigation issues with TCW, he had to charter the new firm as a mutual fund to get it truly off the ground.
Such was Gundlach’s influence and draw that one of DoubleLine’s earliest clients was a Merrill Lynch brokerage office that entrusted the new firm with $65 million on faith due to Gundlach’s track record at TCW. A further testament to his tangible track record of investing successes is that $30 billion in assets – totaling $150M in annual fees – left TCW with him as many of his former clients abandoned ship with him. When it climbed above $90 billion in managed assets, it became one of the fast-growing mutual fund start-ups Wall Street had ever seen.
Known everywhere in the investment world as the “King of Bonds”, Gundlach himself admits he’s better than nearly anyone else even as he also says that he doesn’t often know where his ideas or insights come from; he suspects, though, that his success is due to his obsessive and regimented analysis of the markets, which leaves nuggets in his head that he eventually pieces together into winning plays.
Regardless of how he sees the market and makes the moves he makes, many of his bold calls have been spectacular winners. His expertise in analyzing mortgage-backed securities gives him the edge needed to succeed even as the sector victimizes scores of lesser investors and traders. He correctly predicted and profited from the 2007 housing crash as well as from the plunge in interest rates in 2013-14.
Is there a fourth act in the cards for Gundlach? Even now, as energetic as he is in his late 50s, there’s still time for it. And, given Gundlach’s brashness and smarts, it’d be foolish to bet against him – and just as foolish to bet in which industry he will next make it big.