Gundlach, who oversees $100 billion (68.18 billion pounds)at the Los Angeles-based DoubleLine, also said the Tesla-SolarCity deal is "a complete confidence destroyer" for Tesla Motors Inc (>> Tesla Motors Inc) shareholders.

Gundlach, whose DoubleLine purchased beaten-down European stocks a week ago, said in a telephone interview that the firm expects Britain to vote on Thursday to stay in the EU "so you want to sell on the pop. European stocks have been rising, so we are expecting one more push into the vote."

Gundlach also chimed in on Tesla's proposed acquisition of SolarCity Corp (>> SolarCity Corp), which Tesla's Chief Executive Officer Elon Musk called a "no-brainer."

"This is a poor idea for Elon Musk," Gundlach said. "This is damaging to his reputation and to the way he operates."

Gundlach, known on Wall Street as the 'Bond King,' said Wednesday that the Tesla-SolarCity deal wreaks of "bad corporate governance. I feel like there is reputational damage for Musk because he is all about creating good things."

Gundlach had proposed two years ago that Musk cut a deal with competitors in which Tesla would stop making cars and instead supply automakers' batteries.

Shortseller Jim Chanos of Kynikos Associates blasted Tesla's proposed acquisition of SolarCity, describing it as a "brazen" bailout and "shameful example of corporate governance at its worst."

"SolarCity, whose bonds were yielding 20 percent yesterday, is a company headed toward financial distress," Chanos said in an emailed statement on Wednesday. "It is burning hundreds of millions in cash every quarter, a burden that now Tesla shareholders will have to bear, at a total cost of over $8 billion."

Shares of Tesla were down about 10.5 percent on Wednesday, while SolarCity rose about 3.26 percent.

Chanos, whose firm has been betting against Tesla and SolarCity shares, said the combined drop in the market value of the two companies was more than the equity value of the deal itself, "which means that Tesla shareholders think SolarCity shares are essentially worthless.

"Finally," he added, "it is hard for me to believe that this deal was not being contemplated when Tesla, and Mr. Musk himself, sold shares just a few weeks ago."

Overall, Gundlach said about Musk: "This deal feels like he has lost his Midas touch. I also feel like Musk is trying to do too much."

(Reporting By Jennifer Ablan; Editing by Diane Craft and Alistair Bell)

By Jennifer Ablan

Stocks treated in this article : Tesla Motors Inc, SolarCity Corp