Downtown L.A. investment manager TCW was once a stable, even stodgy firm. Things have changed.
And it’s not just because of the Jeffrey Gundlach debacle, which started in 2009 when he was fired and launched a rival, DoubleLine.
To be sure, that’s still a lingering issue. But today, new owners reportedly have to cut costs to pay down debt, which could lead to layoffs. Meanwhile, incoming executives have moved into power positions while long-timers have stepped down.
Departures just within the past few weeks include Mark Gibello, an executive vice president, and Peter Viles, formerly TCW’s head of corporate communications and now chief of employee communications at Farmers Insurance Group.
Late last month, three equity analysts and a stock trader left and joined fellow TCW alumni Husam Nazer and Brendt Stallings at DoubleLine Equity LP, a Gundlach stock mutual fund manager founded this year. Nazer, Stallings and their team represent the biggest chunk of TCW employees to join up with Gundlach since about 40 left the firm shortly after his firing in December 2009.
Sources familiar with TCW say newly promoted executives from Metropolitan West Asset Management, which was acquired by TCW in 2010, could be playing a role in driving away managers and other employees, along with cost-cutting under new ownership.
A spokeswoman for TCW declined to comment and the firm’s new owner, Carlyle Group LP in Washington, did not return calls.
When Carlyle acquired TCW from French bank Societe Generale SA in February, it did so with a $355 million loan that TCW must now repay. TCW is now looking for ways to come up with that money.
Reuters reported in December that the firm plans to cut $14.6 million from its annual budget by paring down headcount and executive compensation. The news service based its report on documents TCW submitted to several banks as it was trying to secure financing for the Carlyle takeover.
Geoffrey Bobroff, president of mutual fund consultancy Bobroff Consulting Inc. in East Greenwich, R.I., said cuts make sense in the wake of the Carlyle acquisition and TCW’s new debt load. He cautioned, though, that too much cutting could undermine TCW’s ability to grow its business and attract more assets.
“Their first focus is to have enough earnings to cover the cost of carrying and then reducing leverage,” Bobroff said. “But in asset management, you also need assets to grow the business. If all your attention is on paying for and reducing leverage, you will miss opportunities to grow.”
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