TCW Asset Management's brash decision to eject Jeffrey Gundlach, the firm's equally brash mortgage-backed securities investment star, and buy Los Angeles-based bond shop Metropolitan West Asset Management to replace him has left investors with roughly $100 billion in assets scrambling to assess their options.
The very public cage match between TCW and Mr. Gundlach since the firm abruptly terminated him Dec. 4 has focused attention on how much Mr. Gundlach — who has promised to resurface with a new firm in a month or so — will be able to eat into TCW's fixed-income pie.
Los Angeles-based TCW is projected to have almost $100 billion in fixed income under management with the addition of MetWest's $30 billion business.
With investors and consultants likely to be focusing on organizational issues, at both a radically changed TCW as well as the new investment shop Mr. Gundlach is promising to launch in short order, other managers with strong mortgage businesses, such as Pacific Investment Management Co., could stand to benefit from the turmoil, observers say.
In an interview, the always-confident Mr. Gundlach said he's received a flood of calls from some of his former clients at TCW interested in doing business with him again in the future.
TCW executives, meanwhile, are touting the investment team at MetWest — a firm that earns top marks from many investment consultants — as the equal of Mr. Gundlach, albeit less flashy. Asked how clients and investment consultants have reacted to the changes at TCW, spokeswoman Erin Freeman, in an e-mailed response, said “TCW is focused on continuing to successfully manage its fixed-income assets.”
The initial reaction from institutional investors and investment consultants has been mixed.