The Rise and Fall of Kyle Bass

Kyle Bass is the founder of Hayman Capital Management based in Dallas. He is famous for giving a correct prediction of the subprime mortgage crisis in 2008. Although once considered a genius of some kind who could never get it wrong, that magic touch seems to have been his biggest undoing. Bass has made some really bad mistakes in his career. It is amazing how he never seems to turn down any invitation to go on TV to give analyses that only serve his own interests.

Once a fierce business investor, Bass had some of the most innovative ideas for both medium and long term investments. He was a firm believer that if anyone wants to allocate capital for the next 3-5 years, then you should begin now. He was agonistic as to what sub-sector of energy people need to invest notably pipelines, downstream, upstream or infrastructure. Bass believed that there are places in the cap structure for each of these industries where once you put new capital, it will generate good returns.

He holds that energy rebounds and this can only be compared to the 2009 housing rebound. This he believes was driven by three major pillars namely: shortfall in inventory, Wall Street Investment in distressed properties and foreign capital. He predicts that demand will remain high based on the assumption that global GDP will remain a positive. It is hoped that Bass’s predictions will be correct and that he will not suffer another worst performance come end of year.

Bass Unhealthy Alliances

Aside from making bad calls, Bass has also formed unhealthy alliance; case in point is his allegiance to Argentinean Cristina Fernandez. When the country defaulted on its sovereign debt for the second time in 13 years, Bass came to her defense and rationalized it. This made him look out of touch with reality. He has continuously supported Kirchner’s irresponsible economic policies and played deaf to the degree to which her and her cronies have continued to rip off their own country.

Unfortunately that is not the only mistake Bass has committed in his career. In order to make good of his investment in General Motors, Bass went on live TV and shifted blame for fatalities caused by faulty power steering and non deploying airbags in the company’s cars. The company was aware of these shortfalls and refused to address.

Many observers still cannot explain why Bass who at one point was on top of things at hedge fund industry would stoop so low. It still remains a mystery what Bass is cooking up his sleeves next. It is unfortunate that the industry can no longer hold his stock picking magical powers in high esteem anymore.