The new bond king, Jeff Gundlach, has outperformed his well-known peers by finding value in strong debt offerings.  But as he considers purchasing the Buffalo Bills football team will he, like many financial greats before him, overpay for the team and even find difficulty in his investment management business?

Jeff Gundlach

Jeff Gundlach along with Celebrities shows interests in Buffalo Bills

Jeff Gundlach is joining celebrities and financial heavyweights in showing interest in purchasing the team after Bills owner and founder, Ralph Wilson, passed away in March.

According to a report first published in the Buffalo News, Gundlach is in the market for the team along with the likes of celebrities such as Jon Bon Jovi, Donald Trump along with financial and political heavyweights such as the Pritzker family in Chicago.

Jeff Gundlach, who grew up in Buffalo and is now a resident of Los Angeles, will potentially purchase team with former Bills hall of fame quarterback Jim Kelly to purchase a minority interest in the team with an unnamed majority buyer.

Jeff Gundlach chasing his dreams

Owing the Bills is reported to have always been one of Jeff Gundlach’s dreams.  He was preparing a bid in 2011, according to a report in the Wall Street Journal. “I’m trying to put a group together to buy it,” he said in the report, while mentioning the idea was put in front of several wealthy clients of his money management business. At the time he characterized the early stage discussions by saying: “Now, I’m thinking about thinking about it.”

However, becoming the owner of a sports franchise might not be in his best business interest.  A trader’s legend is that when a trader purchases a professional sports franchise, considered an ego play, their trading business experiences difficulty.

No tangible link between trading performance and sports ownership

While there is no tangible link between trading performance and sports ownership, the primary example given is managed futures trend follower John Henry.  Henry was an algorithmic trader, creating one of the original trend following programs.  He took his mathematical skills from the trading arena into baseball, using statistics and probability analysis to ultimately deliver Boston a rare world championship in 2004.

Henry’s managed futures trading fund, established in 1981 and considered one of the legendary early trend following traders, was said not to have adapted his algorithms, which was becoming a popular industry movement during the period when Henry owned the Boston Red Sox.  After suffering from volatile trading and diminishing returns, John W. Henry Company closed its doors in 2012.

It’s a cautionary tale that the well-respected bond investor would do well to avoid.