Dou­ble­Line launches stock man­age­ment di­vi­sion

The Pak Banker - - 6BUSINESS -

Dou­ble­Line Cap­i­tal LP, the $53 bil­lion firm run by star bond in­vestor Jef­frey Gund­lach, said it is now man­ag­ing stock port­fo­lios in a new di­vi­sion called Dou­ble­Line Eq­uity LP.

The firm, which sur­passed $50 bil­lion in bond as­sets last year after launch­ing in 2009, said in a news re­lease that it has tapped for­mer TCW Group Inc port­fo­lio man­agers Brendt Stallings and Husam Nazer to ex­pand its stock di­vi­sion. In an in­ter­view, Gund­lach, Dou­ble­Line's chief ex­ec­u­tive of­fi­cer and chief in­vest­ment of­fi­cer, said stock mu­tual fund strate­gies suf­fer from a lack of new ideas. "We think the eq­uity business is ripe for cre­ative think­ing," he said.

Gund­lach said he plans to start with one or two mu­tual funds that of­fer a strat­egy fo­cus­ing on U.S. stocks, and quickly follow with a hedge fund whose strat­egy would fo­cus on "best ideas" in in­ter­na­tional stock in­vest­ing.

"We're re­ally not pre­pared to do a lot of in­di­vid­ual stock se­lec­tion out­side of the United States," he said. Gund­lach had hinted at the firm's move into stocks in a we­b­cast on Septem­ber 11, cit­ing the broad dis­in­ter­est in eq­ui­ties and their po­ten­tial as a hedge against in­fla­tion.

He said that some of the stock funds he plans to of­fer will have a strat­egy that fo­cuses on spe­cific sec­tors among small and mid-cap stocks, while oth­ers will have a broader strat­egy that could vary widely in its stock se­lec­tion.

Gund­lach said Dou­ble­Line's business plan had been to build the firm's bond man­age­ment side to be­tween $50 bil­lion and $60 bil­lion in as­sets be­fore di­ver­si­fy­ing into ar­eas such as stocks, a goal it has achieved.

"This is our first move to di­ver­sify. There's very likely to be one if not two more over the course of 2013," Gund­lach said. He said he is seek­ing to reach a max­i­mum of about $10 bil­lion in as­sets within Dou­ble­Line's eq­uity di­vi­sion.

Gund­lach has made pointed calls on stocks in the past, in­clud­ing one at the Ira Sohn in­vest­ing con­fer­ence in May to buy nat­u­ral gas while bet­ting on a de­cline in the shares of Ap­ple Inc, the world's most valu­able tech­nol­ogy company.

Gund­lach rec­om­mended trad­ing the vo­latil­ity in Ap­ple's stock price. "Ap­ple's flop­ping around like a fish in a boat. When it has a big rally, you should prob­a­bly sell it. When it goes down a lot, you should prob­a­bly buy it," he said, and re­it­er­ated a call he on CNBC in Novem­ber that its stock price may drop to $425 a share. Ap­ple's stock was up 3.2 per­cent to $549.03 at the close of trad­ing. Dou­ble­Line To­tal Re­turn Bond Fund, the firm's flag­ship, earned a re­turn of 9.2 per­cent in 2012, beat­ing 97 per­cent of other U.S. mort­gage- fo­cused funds, ac­cord­ing to Lip­per. The fund, which over­sees $37.1 bil­lion, took in $19.7 bil­lion last year, mak­ing it the most popular mu­tual fund by as­set growth.

Pa­cific In­vest­ment Man­age­ment Co, the world's largest bond fund man­ager with $1.92 tril­lion in as­sets as of Septem­ber 30, 2012, be­gan mov­ing into eq­ui­ties when it launched its first ac­tively man­aged stock mu­tual fund in 2010.

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