One year ago tomorrow, Dec. 4, my boss, Jeffrey Gundlach, was fired as chief investment officer of the TCW Group. That day upended the lives and livelihoods of hundreds of my colleagues — both people who remained at TCW and the 45 or so of us who left and joined Jeffrey to launch DoubleLine Capital later that month.
Many people have asked those of us at DoubleLine if we knew what we were getting ourselves into. Hardly. After the news of DoubleLine's launch, former clients and consultants quickly came calling. Then on Jan. 7, TCW initiated litigation against the firm and Jeffrey that contained inflammatory allegations and the phones stopped ringing.
TCW emissaries soon followed up the lawsuit with offers of enhanced compensation to recruit away some of our people. There were no takers, in spite of the fact that, for three months, new accounts came to a near standstill. Those months were the most harrowing in my career. Five traders and analysts from the corporate and government bond units at TCW had followed me to DoubleLine. Each of us had families to support; none of us was drawing a salary. Imagine the weight on Jeffrey: eventually more than 50 people would cast their fate with him.
That time reminds me of the dire moment in the Christmas classic, “It's a Wonderful Life”. Mr. Potter, oligarch of the fictional town of Bedford Falls, seems on the verge of bringing down Bailey Brothers Building & Loan Association, and the film's hero, George Bailey. Falsely accused of theft, George decides that the world would have been a better place had he not been born. Clarence, an “angel second-class” eager to earn his wings, shows George what Bedford Falls would have become had George indeed never been born. Those of us who followed Jeffrey out the door experienced a twist on that story line: We had a glimpse of life at TCW without Jeffrey.
On the Monday following Jeffrey's termination, we returned to work to behold a surreal scene. It was like walking into your house and finding that complete strangers had moved in. Much like George Bailey's experience in the alternate Bedford Falls where no one remembered him, we were haunted by the obliteration of Jeffrey's presence in the very business he had led us to create over two decades. The personnel of Metropolitan West, the firm TCW acquired to replace Jeffrey, were sitting at our desks, using our computers, managing what had been our accounts. The same surrealism was on display to the outside world. For example, all traces of Jeffrey had been wiped from the TCW website.
People have asked me and other DoubleLine employees what it is about Jeffrey Gundlach that prompted us to follow him. Let me share with you my view of the man after having worked with him for 20 years.
To be perfectly honest, for most of the last two decades, I likely would not have described Jeffrey as a “nice” person in a George Bailey kind of way. However, like George Bailey, he is a good person and I have learned over the past 12 months that there is a material difference between those two human qualities. He doesn't suffer fools gladly. Many who work for him have been on the receiving end of his stinging rebukes. Jeffrey meted out these thunderbolts when he perceived people to be less than diligent in performing their jobs. Ultimately, everything we did was about the management of client funds. If you came up short in that regard, he would let you — as well as everyone else within the “blast radius” — know. Yet many of these same employees jumped at the chance to follow him to DoubleLine.
Years ago, I actually worked up the nerve to ask Jeffrey why he sometimes behaved like such a frickin' jerk. Full disclosure: those weren't my exact words, and I was ready to receive my own Jeffrey thunderbolt in return. Instead, he came into my office, closed the door behind him and talked to me about his life for almost two hours. It's a conversation I'll never forget, or share.
What I can share is my professional conclusion about Jeffrey Gundlach. Jeffrey has demonstrated more personal integrity than anyone else I have known. He is honest; some would say bluntly so. He treats people fairly. His rather healthy ego has an advantageous side effect in that he makes opportunities available to his employees that less self-assured managers would be hesitant to proffer. And there is no one who has demonstrated more remarkable presence of mind in a time of crisis. In 2008, I personally witnessed senior executives disintegrate under the tremendous fear and disorientation of the global financial meltdown. Working with Jeffrey on the trading desk and in investment allocation meetings, I never once saw him lose his composure or his ability to quickly assess events and make decisions — or lose sight of the client. Like George Bailey's devotion to the stakeholders in the Building & Loan, Jeffrey demonstrated for 24 years at TCW unwavering care in the custody of client funds. The crisis of 2008, however, was but a warm-up for the personal acid test that awaited Jeffrey at the end of last year.
Despite the trials that followed, on April 6, under Jeffrey's leadership, DoubleLine managed one of the most successful fund launches in the history of our industry. Today we are responsible for nearly $7 billion in assets under management. Not bad I'd say for a firm that has yet to mark its first year in business.
In Jeffrey, many of us at DoubleLine see a changed person, changed perhaps not only by the trials that began on Dec. 4, 2009, but also by the faith people inside and outside DoubleLine have placed in him. I still wouldn't call Jeffrey a “nice guy,” but he has become a nicer one. As should be obvious by this point, one of the benefits of being a part of Mr. Gundlach's wonderful life is that one develops a strong backbone. Despite enormous pressure, we held together through those dark days before the funds' launch. Today we are again providing for our families. Many of our people could easily have stayed on as citizens in the alternate Bedford Falls without our own George Bailey. In retrospect, we know that would have been selling ourselves short.
Bonnie Baha is a portfolio manager and heads the global developed credit team at DoubleLine Capital LP, a money management firm in Los Angeles.
