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Baha Calling Gundlach ‘Jerk’ Bolsters Standing

Baha Calling Gundlach ‘Jerk’ Bolsters Standing
Bonnie Baha, manager of DoubleLine Core Fixed Income Fund (DBLFX). Photographer: Robyn Twomey/Bloomberg Markets

Calling a person who outranks you a jerk isn’t usually a smart step if you want to climb the ladder to success. It worked for Bonnie Baha.

Back in the 1990s, Baha was a vice president on the trading floor of TCW Group Inc., listening to Jeffrey Gundlach, a managing director, dressing down one of her colleagues.

“Jeffrey,” she recalls asking him, “why are you such a freaking jerk?” Gundlach gave her a sharp look and ignored the question, Bloomberg Markets magazine reports in its June issue. The next morning, when he strolled into her office, Baha says she thought he was going to fire her. Instead, he explained his behavior.

“I remember coming away from that conversation thinking, ‘You know, I kind of get him now,’” Baha, now 52, says. “And it’s been that way ever since.” Baha has worked with Gundlach for 22 years, currently as head of the global developed-credit group at his DoubleLine Capital LP, which manages $34 billion of assets.

Gundlach, DoubleLine’s founder and chief executive officer, recalls the exchange.

“I’m somebody that everybody seems to have an opinion about,” he says. “The reason I’m so polarizing is, if I don’t respect someone or don’t think highly of someone, it’s like they don’t exist, and people don’t like to be invisible.”

Unpopular Calls

Being visible has paid off for Baha and Gundlach. The $2 billion DoubleLine Core Fixed Income Fund she manages returned 11.5 percent in 2011 compared with 7.8 percent for the Barclays U.S. Aggregate Total Return Index, a benchmark for U.S. bonds. The fund returned 3.3 percent this year through May 7, compared with 1.7 percent for the benchmark, according to data compiled by Bloomberg.

Baha says she’s successful partly because she’s not afraid to make an unpopular call. She ordered TCW traders to sell any Lehman Brothers Holdings Inc. debt they owned, even at a loss, in the first week of September 2008, when the debt was valued at more than 90 cents on the dollar.

Lehman filed for bankruptcy on Sept. 15, 2008, plunging the value to the single digits. “People don’t pay me to hope; they pay me to make an assessment,” Baha says. “If you are managing risk by hoping that somebody is going to buy Lehman Brothers or whatever other bank is in trouble, you’re not really doing your job.”

Dropping MF Global

Gundlach supports Baha’s decisions. On Oct. 25, she e-mailed the trading desk asking that it drop dealings with one of the firm’s counterparties, MF Global Holdings Ltd., citing her “concerns about overall risk management and governance.”

DoubleLine traders objected, pointing out that they had done almost $5.4 million of business with MF Global in the third quarter. “I said, ‘Jeffrey, I want ’em off,’ and I said, ‘I’m getting a little bit of pushback,’” Baha says. “All I got was an e-mail back from Jeffrey Gundlach saying, ‘Remove them.’” The next day, DoubleLine closed out its business with MF Global, which filed for bankruptcy on Oct. 31.

“She’s very low risk, and I think that’s good, and that fits in with our philosophy,” Gundlach says. “The MF Global thing was really the first semi-controversial deletion. Who knew that a week later… It fell apart pretty fast.”

Baha originally aimed at a career in investment banking after earning her Master of Business Administration at the University of Southern California. A frazzled male interviewer from Goldman Sachs Group Inc. advised her to try asset management instead.

Still ‘Clubby Place’

“This is a great business for women, and it’s a great business if you have a great boss,” Baha says. A money manager’s performance can be measured in numbers based on the daily price of assets, she says, making it much more objective than measures of investment-banking prowess.

“Wall Street is still a very clubby place,” Baha says. “Firms on the buy side and the sell side are still pretty much male-dominated. Still, Jeffrey is the most fair and rational person I have ever worked for.”

Baha met her Algerian-born husband, Mustapha Baha, who’s now an angel investor, while at USC, where he earned a master’s degree in construction management. The couple have two teenage children, who joke with guests in Arabic, English and French over dinners of couscous served with three types of harissa for different spice tolerances.

Baha says Gundlach values quality of life, and that sets the tone for the whole company. “If it’s anything to do with family -- you want to leave early, you want to stay home -- no questions asked,” Baha says of her employees. “You don’t get those years back.”

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