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Kyle Bass of Hayman Capital, Bear Sterns
- Nathan Wailes
he made a ton of money from and became famous after the subprime crisis; "The Big Short" says that he just heard about the idea of shorting subprime bonds from a guy who had heard about the idea from Michael Burry.
My intro to the subprime meltdown was via this video, which was shown to my microeconomics class in the spring of '09. Bass is the only guy they talk to (iirc) who had predicted the crisis:
http://www.cnbc.com/id/28892719
Here's his bio from his subprime powerpoint presentation:
J. Kyle Bass currently is the Managing Member and Principal of the General Partner of Hayman Capital Partners, LP as well as Hayman Offshore Partners, LP. Hayman Capital Master Fund, LP is a Special Situations Investment Fund that launched in February 2006.
Prior to forming Hayman Capital Partners, Mr. Bass formed, in April 2001, the first institutional equity office in Texas for Legg Mason, Inc. where he was the Managing Director in charge of advising special situation accounts on investments. While overseeing all of Legg Mason's institutional equity business in Texas, Mr. Bass covered key special situation accounts for the firm in New York, Connecticut and Texas.
Prior to joining Legg Mason, Mr. Bass was employed from August 1994 to April 2001 at Bear Stearns & Co. Inc., where he became one of the youngest Senior Managing Directors in the firm's history (at the age of 28). While at Bear Stearns he primarily advised event-driven hedge funds on investment strategy. He began his career in September 1992 at Prudential Securities where he was a top broker in his nationwide training group. He remained at Prudential until August 1994.
Mr. Bass graduated with honors with a B.S. in Finance and Real Estate Finance from Texas Christian University in May of 1992. He attended TCU on a Division I scholarship for both academic achievement and diving.
Date-Specific Links
2002 - Gumball rally
http://www.youtube.com/watch?v=0bNgR7NoFYs
His posts on m5board: http://www.m5board.com/vbulletin/member ... kbass.html
2007.11.15 AEI Panel - Is the Rating Agency System Broken or Fine?
http://www.aei.org/events/2007/11/15/is ... ine-event/
Transcript (trying opening it in IE if Chrome makes it look weird)
2008.03.19 D(allas) Magazine profile
http://www.dmagazine.com/Home/2008/03/1 ... prime.aspx
2010.01.13 Testimony Before the FCIC (Financial Crisis Inquiry Commission)
Video of Testimony (he starts at ~11:24)
Written Testimony
2010.10 CNBC Discussion of Hyperinflation
http://www.youtube.com/watch?v=bCYIBf4_GMw
2010.11 AmeriCatalyst 2010
http://www.youtube.com/watch?v=WWgtzwqWh60
- woman on right mentions that Kyle hired private investigators as part of his research into the subprime crisis
- guy on left describes hedge funds as the best early-warning system that politicians have
8:30 - Kyle: "9 and a half percent would have wiped out everything through the single-lay" - huh?
12:00 - 100% of the job growth in the past 10 years has been in government-subsidized industries: health care, defense, and education; he doesn't think there's been much real job growth
2011.03.02 Institutional Investor - The zero interest rate policy trap [op-ed]
http://www.institutionalinvestor.com/Ar ... Id=2776006
2011.10.27 interview on some EU TV show
2011.11.04 Economic Outlook Summit
http://www.youtube.com/watch?v=r-i2Y4L_MCc#!
2011.11.07 AmeriCatalyst 2011
http://www.youtube.com/watch?v=5V3kpKzd-Yw
- he recommends buying a little of the mortgage insurer MTG; but Michael Burry, in an interview with Bloomberg in Sept. 2010, said that he didn't think the recovery would be that robust, and that he wasn't getting into a lot of these housing companies: "I feel that some of the future crises that we're going to face and some of the future hurdles we have will be an impediment to achieving some good gains in some of those investments."
2011.11.10 brief interview
http://www.youtube.com/watch?v=-quUyId2WZ0
2011.11.11 Interview on Hard Talk (BBC)
http://www.youtube.com/watch?feature=pl ... F_QF1XTXI#!
2011.11.31 Hayman Capital Q3 Letter to Investors
http://www.scribd.com/doc/74335711/Hayman-Nov2011
2012.05.09 CNBC Interview at SALT
http://www.valueinvestingworld.com/2012 ... -cnbc.html
2012.05.20 Bass' Japan Fund is Seeing Losses
http://www.valuewalk.com/2012/05/kyle-b ... for-april/
http://www.businessinsider.com/japan-is ... ult-2012-5
http://blogs.reuters.com/breakingviews/ ... ks-lethal/
2012.10.03 Interview w/ CNBC
http://video.cnbc.com/gallery/?video=3000119228
2012.11.01 Bass at the Great Investors' Best Ideas Investment Symposium
http://www.marketfolly.com/2012/11/kyle ... japan.html
2012.11 Bass @ UVA Business Conference, and Hayman 2012 Letter
http://www.zerohedge.com/news/2012-11-2 ... uper-cycle
2012.10.01 AmeriCatalyst Keynote
http://www.youtube.com/watch?v=JUc8-GUC1hY
3:00 - mentions a book called "the swerve"
3:14 - mentions Lucretius' "The Nature of Things"
4:30 - makes the point that nations' debts have gone from 80 trillion to 200 trillion in the past 10 years, which is "the largest peacetime accumulation of debt" in history(iirc)
5:00 - predicts this will end in war; he doesn't know who the war will be between
~10:00 - he says that we should expect to see CPI prints(?) to go up and production prints(?) to go down, and they're already starting to do that. In other words, if I understand him correctly, he's saying that society put money into the wrong ventures and now it's paying the price by having less stuff and paying more for it.
~11:00 - he says people are still fleeing EU banks
18:20 - refers to kahneman's research about how people base their intuitions on what they've experienced in THEIR life, and not all of the available data. So basically people nowadays haven't lived through past turbulent times and so aren't as afraid as they should be.
19:30 - predicts more social unrest over lack of food
~24-25 - he tells good anecdotes to make the point that public officials are not necessarily going to tell you when they're about to devalue the currency. "Their job is to promote confidence; their job is not to tell you the truth."
~32 - he says that the Madoff episode can help us predict when Japan will blow up: when more people are leaving the system than entering
~40-44 he talks about where Hayman has its money
~45 - he talks about reasons to be optimistic about the US
47:30 - he mentions two possible catalysts for the Japan crisis: 1) going current account negative, 2) an EU crisis (restructuring?)
55:50 - he mentions he's trying to read everything Keynes wrote, he refers to the General Theory. I honestly couldn't understand what he was saying.
58:30 - Q: What's your opinion on renting vs. owning? [not sure I understood what the Q was about]
2013.03 Talk @ Myron Scholes Global Markets Forum
http://media.chicagobooth.edu/mediasite ... 321383101d
terms to become more familiar with:
yield curve
zero lower bound
NPLs
30:45 - predicts the yen will go above 250 and rates will go into the teens
31:45 - starts taking questions
32:00 - Q: Let's assume Japan will crash; what does it mean for the rest of the world? Is China going to end up
32:55 - He thinks there will be a war, and he has guesses about who it'll be, but he doesn't say what his guess is.
33:54 - he uses the term NPLs
35:05 - Q: What'll happen to Japan's holding of US Treasuries?
36:50 - Q: If you were made the finance minister of Japan tomorrow, what would you do?
37:00 - A: I'd quit. There's nothing they can do at this point.
37:50 - Q: What are you looking for in the swaps market to blow it all up?
38:37 - Q:
39:45 - Q: Do you have a forecast for Japanese equities (Nikkei)?
A: I think about two past events: 1) the Mexican Tequila crisis; the markets tanked. 2) The Zimbambwe market did well as they did inflation. He analogizes it to slowly boiling a frog.
- In general he analogizes investing in Japanese equities to picking up a dime in front of a
41:45 - Q: How can retail investors profit from Japan's fall?
A: You guys just don't have access to the same tools.
44:00 - He tells two stories to stress that the governments are never going to tell you when things are bad.
45:00 - Q: What'll happen to the US?
A: Rates will go down b/c people will be fleeing to the US.
47:00 - Q:
47:43 - Q: ?
A: He tells a story of how Karl Rove got Medicare D passed to buy votes from the old people and get Bush a second term. The point of the story is to show how laws get passed.
50:50 - Q: Could Japan fix it by letting more people in?
A: Not gonna happen; they're way too xenophobic.
52:00 - Q: What instruments are you using to make money off this? What're the right physical assets to own?
A: Regarding the second question: Productive assets. We're basically using the same kinds of instruments that we used for the subprime crisis.
54:40 - Q: What are you buying? Guns or gold or both?
A: I don't think we'll have anarchy; I think the systems will keep working. So you don't really need to buy guns. If you asked me, Which one investment should I buy and hold for 10 years?, I'd buy gold in yen and just go to sleep.
2013.04.09 Brief appearance on Bloomberg
http://www.bloomberg.com/video/perplexe ... znJVw.html
- They mention that George Soros has stopped hedging with gold because he (Soros) said that it didn't perform as he wanted it to during the Cypress crisis. I need to rewatch Bass' response.
2013.04.04 7 minutes on CNBC
http://video.cnbc.com/gallery/?video=3000159028
- they get Bass' comment on Japan announcing it's going to try to get to 2% inflation
2013.05.23 Speech & Q/A
http://www.youtube.com/watch?v=gJfvLADP3HE
decent summary: http://www.zerohedge.com/news/2013-06-1 ... odoxy-west
2013.06.03 Hayman Letter to Investors
http://www.zerohedge.com/news/2013-07-0 ... folio-risk
- on Page 8-9 he makes a very specific prediction:
The speed and depth of the Chinese policy response will help determine the severity and duration of this crisis. If the Chinese address the issue quickly and move decisively to rein in credit expansion and accept a period of much lower growth, they may be able to use the government and People's Bank of China's balance sheet to cushion the adjustment in the economy. If, however, they continue on the current path and allow this deterioration to reach its natural and logical limit, we will likely see a full-scale recession as well as a collapse in asset and real estate prices sometime next year.
Also:
China's contribution to global growth is enormous, but perhaps equally as important is its role in generating growth in developed and emerging economies. A slowdown, whether significant or extreme, in the Chinese economy heralds very bad news for asset prices around the world. A growth crisis centered in Asia will further exacerbate the instability and volatility in Japan and have a devastating impact on second derivative marketplaces such as Australia, Brazil and developing markets in South East Asia. The combination of rich valuations and further threats to growth has led us to dramatically reduce risk in the portfolio and actively position ourselves to withstand the uncertainty and instability ahead. [from the context of the rest of the letter, "reduce risk" seems to mean getting out of equity markets and maybe other things as well]
2013.11.22 - Darden School of Business - Energy Panel moderated by Kyle Bass
https://www.youtube.com/watch?v=adzeJzOYbRI
2013.12.03 - Kyle Bass interviewed in new Drobny book
http://www.businessinsider.com/kyle-bas ... ok-2013-12
2013.12.04 - Kyle Bass Answers Questions At iCIO Investment Summit
http://www.valuewalk.com/2013/12/kyle-b ... nt-summit/
Questions for Kyle Bass
- Your bio in the subprime presentation said "He began his career in September 1992 at Prudential Securities where he was a top broker in his nationwide training group." 1) Why do you think you were a top broker in your trading group? In other words, how would you explain your distinguished performance? Was everyone else not as knowledgeable about the markets? Did they not work as hard? 2) Why/How did you end up at Prudential? Was that the best firm that would take you? Were they nearer to your family?