DoubleLine’s Gundlach Says Chanos Is Greatest Hedge Fund Manager

  • Would invest his money with ‘dour, curmudgeonly’ short-seller
  • Yellen likely to sound dovish on interest rates, Gundlach says

Jim Chanos, founder of Kynikos Associates, is the best hedge fund manager because he’s permanently bearish and avoids the group think that led others in his industry to lose money last year, according to bond manager Jeffrey Gundlach.

“The greatest hedge fund manager in the world is Jim Chanos,” Gundlach, chief executive officer of DoubleLine Capital, said Thursday during a wide-ranging presentation in Beverly Hills, California. “Jim Chanos is a permanent bear. He’s dour, he’s curmudgeonly, he’s bearish as hell all the time.”

Gundlach said he would personally invest with Chanos, who’s best known for short-selling. Unlike Chanos, prominent managers including William Ackman, David Einhorn and Leon Cooperman lost money last year because they were unable to benefit from momentum stocks, Gundlach said.

“It’s not a trending market,” Gundlach said. “You can’t just play momentum.”

Gundlach’s $59.7 billion DoubleLine Total Return Bond Fund is up 2 percent in 2016 and has outperformed 97 percent of its Bloomberg peers over the past five years. DoubleLine Capital’s total assets under management stood at $99.7 billion as of Thursday, according to Ron Redell, the Los Angeles-based firm’s executive vice president.

‘Dovish’ Yellen

Gundlach said Federal Reserve Chair Janet Yellen, who’s scheduled to appear Friday in an interview with Harvard University Professor of Economics Greg Mankiw, will “be dovish,” and temper expectations for a rapid series of interest-rate increases.

The probability of a rate hike at the Fed’s mid-June meeting is about 28 percent, according to futures market data compiled by Bloomberg. The Fed is unlikely to raise rates unless that probability exceeds 50 percent, Gundlach said.

Other topics Gundlach touched on:

  • Donald Trump will be elected president and go on a debt binge, which will initially boost the U.S. economy before causing repayment problems similar to those currently facing Japan.
  • Oil prices are bound for long-term declines as the technology improves making electric cars and renewable energy sources more economical.
  • U.S. commercial real estate has bubbly characteristics in some markets, with low rates of income to the value of the property. More buildings under construction will dilute landlords’ power to raise rents.
  • The stock market is more likely to go down than up, with the possibility of the S&P 500 Index falling more than 20 percent to 1,600.
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