Jeffrey Gundlach thought it was "quite likely" that DoubleLine Capital, the firm he launched after being fired by his former employer, was going to fail six months after its formation, he said in court.
"We were losing tons of money" in June 2010, he told jurors on Tuesday. "It was quite likely the business would fail."
But in the following months, the firm attracted more clients and launched more funds and by the end of the year closed out with $6 billion in assets under management and $10 million in revenue, he added.
Gundlach and his former employer, Trust Company of the West, are locked in a trial that has given a rare glimpse into the inner workings of investment firms and the big personalities who run them.
TCW fired Gundlach in December 2009 and sued him a month later, accusing him of stealing trade secrets, plotting to form a new company using TCW proprietary information and gutting the firm of its entire mortgage-backed securities team.
Gundlach fired back with a counter-lawsuit, alleging his former employer owed him hundreds of millions of dollars in compensation.
In the weeks following his termination, Gundlach went on to form DoubleLine, along with three of his co-defendants in the case. Roughly 45 TCW employees, largely from the mortgage-backed securities group, followed.
Gundlach, who calls himself "The Pope" and "The Godfather," returned to the stand on Tuesday for his third day of testimony. He told jurors he repeatedly instructed DoubleLine employees not to use TCW data and to turn in devices that contained such data.
TCW is a unit of French bank Societe Generale (SOGN.PA).
The case in Superior Court of California, County of Los Angeles is Trust Co of the West v. Jeffrey Gundlach et al, BC429385.