Bill Gross’ spectacular fall from the top of the bond market has put tens of billions in play at a time when minuscule yields demand a fixed-income superstar. A brilliant, battle-scarred billionaire, Jeffrey Gundlach, stands ready to be coronated.

Bond manager Jeffrey Gundlach is wearing a white T-shirt, faded blue jeans and worn leather boat shoes as he traipses about the blooming morning glories in his perfectly landscaped backyard, perched high above a canyon overlooking the deep blue Pacific Ocean. It’s the middle of the afternoon on a work Monday in October; European bank stocks are tumbling; oil prices are down 25% since June; and against the backdrop of an anemic economy and 2.25% ten-year Treasury, the Federal Open Market Committee is about to make an important announcement. These are unsettling times in the financial markets, but for Gundlach it’s a picture-perfect autumn day in southern California, and he is living in paradise.

What’s next for the Fed? Gundlach would much rather discuss the iconic framed “Lemon Marilyn,” by Andy Warhol, above his mantel or how his “Progressions,” by minimalist Donald Judd, in the hallway is influenced by the Fibonacci sequence. “It is negative and positive space governed by a rule that happens to describe the shape of the solar system, which is exactly the opposite of what was popular in the ’50s, all this emotional stuff,” he says, pointing to his de Kooning. A few moments later he is explaining to a visitor that the geometry of the lot on which his new 13,000-square-foot, $16 million Tuscan mansion sits was designed to be in perfect harmony with the canyon cliff side it mirrors.

It is a paradise, but importantly Gundlach is finally feeling at ease because his new sanctuary is well fortified. Anyone wanting to get close to him or his prize paintings must breach the 8-foot wall surrounding his suburban residence or face the scrutiny of an armed naval vet at his front gate who asks visitors for a picture ID. Gundlach makes a point to show off one of the 50 concrete foundation caissons supporting his property. Each measures 3 feet in diameter and extends down as much as 75 feet through the porous desert soil into California bedrock.
After 30 years of staring into the black-and-green abyss of a Bloomberg terminal managing bond portfolios, Gundlach is making a statement with his magnificent new residence, one that underscores his ascendance in the business. Casa Gundlach is unlikely to succumb to the sudden mudslides known to take down other California palaces in places like Mill Valley or Malibu. And with a stellar performance record, $60 billion in assets under management and a killer contemporary art collection accumulated over the last decade, Jeffrey Gundlach has finally joined the billionaires club. More importantly, Los Angeles-based DoubleLine Capital, the house that Gundlach built in under five years, couldn’t be on better footing.

Just about a month earlier Bill Gross of Pacific Investment Management Co., the reigning master of the bond universe for two decades, requested an audience with Gundlach. In a scene that can only be described as Shakespearean, the incumbent bond king drove an hour up the 405 Freeway in the middle of the afternoon to Gundlach’s new castle to more or less grovel at his feet. Gross was certain PIMCO’s German owners were about to fire him, and he was asking his nemesis for a job–a portfolio manager position at DoubleLine. Gross said he wanted to run an “unconstrained” bond fund a small fraction of the size of the $200 billion-plus Total Return Fund he was famous for building. With the sun falling over the Pacific and shimmering on the surface of Gundlach’s infinity pool, Gross was deep in suck-up mode.

“He said to me, ‘I’m Kobe Bryant, you’re LeBron James. I’ve got five rings, you’ve got two, but you are maybe on your way to five and you’ve got time,’ ” says Gundlach, 55. (Gross, 70, refuses to comment on the meeting.) “ Bill was in his own world,” says a house-proud Gundlach, with a tone of disdain. “He doesn’t say anything [about my place]. Nothing. Doesn’t eat anything or even take a sip of water in three hours.”

Gross left the meeting with no deal in hand and ultimately jumped to Denver-based stock manager Janus Capital. From his office in Orange County’s Newport Beach, Gross now manages a $79 million mutual fund for Janus, roughly 0.03% the amount of assets he used to control.
Though a Gundlach-Gross alliance would have surely quickened the asset flight to DoubleLine from PIMCO–which has reported redemptions of $48 billion since Gross was forced to resign on Sept. 26–Gundlach claims to be relieved. “Our clients would have asked, ‘What is this? How is this going to work?’ I hear he is a difficult guy.”

http://www.forbes.com/sites/schifrin/2014/11/05/jeffrey-gundlach-king-me/

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