Kyle Bass: Bang or Bust

 

Kyle Bass, founder of Dallas based fund, Hayman Capital Management, made his fortune by predicting the subprime mortgage crisis of 2008, considered by some to be some kind of genius who could do no wrong. Since this time, Kyle Bass has made bad decision after bad decision and has created undesirable allegiances with most everyone else in the business. In an example of one of his bad decisions and desire to gain his fifteen minutes of glory, Kyle Bass, in order to save his investment in General Motors, blamed the deaths of non-deploying airbags and faulty steering in GM cars onto the dead victims rather than the faulty cars. Elsewhere sanctions against Bass are being considered by the Patent Trial and Appeals Board. Why would someone once considered a genius in the hedge fund market engage in such buffoonery in order to fatten his already overflowing pockets?

 

Being all about the money has been the bottom line of Kyle Bass since first becoming widely known. Having given his predictions on the Japan and China markets, as well as McDonalds and big oil companies, Bass uses these predictions to make money as well. In what could be considered the best, or the worst, decision ever, Bass has decided to take on China, the world’s second largest economy. Estimating that China is sitting on a “ticking time bomb of debt”, he determined that it would only be a matter of time before this debt collapse and the Chinese government is forced to devalue the Yuan. Bass is betting that if the debt bomb explodes, the government will have to then devalue the currency to save the banking system. Being confident in his prediction, he initiated a condition that would allow him to keep a part of the fund’s fees once he distributes the winnings to his investors. With a $5 million minimum investment into Hayman Capital, Bass is looking at a huge pay day if the prediction is correct. Bottom line, Bass seems to be hit or miss with his predictions, but he seems to make money regardless if those predictions are right or wrong.

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