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Road Ahead for DoubleLine

Jeffrey Gundlach outlines the infrastructure logistic in setting up his new firm.

Eric Jacobson: Jeffrey, I want to ask you about your new firm again. Obviously the endeavor of setting up a new firm lock, stock, and barrel, is quite a big challenge. You've done a lot in a very short time. And you also have an agreement to work with Oak Tree, another firm here in Los Angeles. Talk a little bit about what--there's still a lot of work ahead in terms of the nuts and bolts of compliance and all the regulatory work, especially if there's going to be mutual funds, the systems and so forth.

Can you give us a snapshot picture of what you think that road ahead is going to look like? That's a whole different endeavor than just managing money. Not that that's a small thing.

Jeffrey Gundlach: Sure. One of the main attractive features of the Oak Tree interest in DoubleLine was that many of the things that you've just referenced we will immediately, and have already begun, drilling into Oak Tree's infrastructure of human resources, technology for sure, and the other things that you mentioned. They, Oak Tree, started a firm under somewhat similar circumstances and know exactly what it takes to do it. They've been very successful at building that firm in a way that has been sort of a role model of how to do it in the industry.

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They are in contact with us all the time, the principals of Oak Tree, helping us with advice and all that setup. So that gives us the luxury of a relaxed pace of setting up our own infrastructure correctly.

I'm not anything resembling a one-man show when it comes to running the firm. In fact, I'm the CIO and CEO of DoubleLine, but CIO is a title I never thought once about dropping, because that's what I do.

I have always spent a few hours minimum per day in the market, trading the market, understanding the market, and I am committed to continuing to do that on a full-time basis. We have seven principals at DoubleLine. We will have 80 employees probably within a six- or eight-week period. We will be fully operational and service all of the aspects that you alluded to.

So we're very motivated. Our interests are completely aligned with our clients'. We are equity holders in the firm. The platform is never going anywhere again, because we own it. And we have a lot of energy for this project, and great enthusiasm for doing it all correctly with the I's dotted and the T's crossed.

And with the support people, my CFO, my COO, a managing principal. Phil Barach is president. These are all people who will have certain administrative burdens, but the amount of time that all of us dedicate to the market will actually not drop a bit, and in fact will probably go up.

The way I think about it is, I've always felt that one of the worst jobs was to be salesman on Wall Street, a bond salesman. Because you get yelled at by your clients and then you get yelled at by your traders. You're being yelled at by both sides.

And I started to realize as we were establishing DoubleLine, that actually I was sort of in the same situation. We have outward-facing to clients--and fortunately they don't yell at us very much. But then I had to manage up into an organization.

Now as CEO of DoubleLine, I don't have that whole left side of the equation to worry about. All I have to worry about it facing out to the client. So in a very strange sense, being CEO of DoubleLine actually seems to be freeing up time, because I don't need to be worried about managing my organization within an organization within an organization, it's just the organization.

So in a certain way, the burden of duties on managing the business is less, not more, and the amount of help that I have right by my side, shoulder-to-shoulder, just couldn't be better.

So the team is incredibly energized, committed to the business. We intend on growing a suite of mutual funds that really, we hope, can be viewed as standard-bearers for the industry.

Jacobson: Thank you very much. We appreciate your time.

Gundlach: Thank you, Eric.

Jacobson: I'm Eric Jacobson with Morningstar. Thanks very much for joining us.

 

Eric Jacobson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.