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'Bond King' Jeff Gundlach is 'frustrated' by government bailouts of companies that piled on debt to fund share buybacks

Theron Mohamed   

'Bond King' Jeff Gundlach is 'frustrated' by government bailouts of companies that piled on debt to fund share buybacks
Stock Market2 min read

  • Billionaire "bond king" Jeff Gundlach slammed government relief for public companies on Monday night.
  • "I doubt I am the only person frustrated by National-Debt-financed bailouts of companies that leveraged up large to buy back stock to levitate share prices to enrich shareholders and company executives," he tweeted.
  • The DoubleLine Capital boss was likely referring to the "big four" US airlines, poised to receive billions in public support after taking on debt and splurging on share repurchases.
  • "The word 'bailout' needs to be labeled 'hate speech' directed toward every citizen who played by the rules," Gundlach tweeted last week.
  • Visit Business Insider's homepage for more stories.

Jeff Gundlach, the so-called "bond king" and billionaire boss of DoubleLine Capital, took aim at the recent spate of government bailouts on Monday night.

"I doubt I am the only person frustrated by National-Debt-financed bailouts of companies that leveraged up large to buy back stock to levitate share prices to enrich shareholders and company executives," he tweeted.

Gundlach was likely referring to the "big four" US airlines — Delta, American, United, and Southwest — that are set to receive billions in government aid. The carriers took on debt and spent tens of billions on share repurchases over the past decade, slashing their outstanding shares and driving up stock prices.

The strategy left them short of cash to weather the coronavirus pandemic, which has sparked a dramatic decline in passenger numbers as governments restrict travel and people stay at home to reduce transmission.

Read more: Goldman Sachs outlines a 3-part investing strategy to profit from the economy's reopening — including 4 stocks to buy for the recovery

President Donald Trump has signaled that more bailouts could be coming. He intends to "make funds available" for energy companies suffering from rock-bottom oil prices, he tweeted last week.

Gundlach's criticism of government aid follows a similar comment last week.

"The word 'bailout' needs to be labeled 'hate speech' directed toward every citizen who played by the rules," he tweeted.

Of course, Gundlach stands to gain if the government allows companies to collapse and markets to crash. The investor has reopened a short position against the S&P 500, he revealed in a CNBC interview on Monday.

Read more: RBC: The biggest investors are piling into 11 high-growth stocks to stay ahead of a market hammered by coronavirus fears

Read the original article on Business Insider

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