December 21, 2012

Kyle Bass Bought 9%+ of Two Companies

Kyle Bass of Hayman Capital has purchased close to ten percent stakes in 2 public firms, according to SEC filings published today. Kyle Bass bought 5,064,550 shares of Dex One Corporation (NYSE:DEXO) or 9.95 percent of the company. He also purchased 1,560,941 shares of SuperMedia Inc (NASDAQ:SPMD), or 9.96% of outstanding shares. What is interesting is that John Paulson is also large shareholder in these firms.

Hayman Capital has very small investments in equities, and both companies have a market cap under $100 million, making this a small transaction for the hedge fund.

SuperMedia Inc., (SuperMedia) is a yellow pages directory publisher in the United States. The Company also offers digital advertising solutions. The Company places its client’s business information into its portfolio of local media solutions, which includes the Superpages directories, Superpages.com, digital local search resource on both desktop and mobile devices, the Superpages.com network, which is a digital syndication network, and its Superpages direct mailers. In addition, the Company offer solutions for social media, digital content creation management, reputation management and search engine optimization. During the year ended December 31, 2011, the Company published approximately 1,000 directories in 32 states and distributed approximately 89 million directories to businesses and residences in the United States.

Dex One Corporation, formerly R.H. Donnelley Corporation (RHD), is a marketing services company that helps local businesses to reach consumers. It offers local businesses personalized marketing consulting services and exposure across a network of local marketing products, including its print, online and mobile yellow pages and search solutions, as well as search engines. Through its Dex Advantage, clients’ business information is published and marketed through a single profile and distributed via a variety of both owned and operated products, and through other local search products. On May 28, 2009, RHD and its subsidiaries filed voluntary petitions for Chapter 11 relief under the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. RHD emerged from Chapter 11 relief under Title 11 of the United States Code on January 29, 2010 (Effective Date). On the Effective Date and in connection with its emergence from Chapter 11, RHD was renamed Dex One Corporation.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

December 20, 2012

Kyle Bass New Year-end Interview























Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

November 27, 2012

KYLE BASS: The Japanese Politician Everyone Is Excited about Is Going To 'Detonate' a Bomb On The Economy

Japan is about to "detonate" a "debt bomb" and will be forced to massively devalue its currency, Kyle Bass says.

During an interview with University of Virginia business school professor: Ken Eades, Kyle Bass argues that Japan is already in a crisis, and that the possible election of Shinzo Abe next month will set off a chain of events that will result in a devaluation of the Yen and treasury yields skyrocketing. "In the next 12 to 18 months, I think you're going to see a move in their rates. Basically Japan is entering its final 'checkmate' phase of the chess game."

Japan is already running a -$100 billion trade balance, Bass says, and the country's GDP has been hit by Chinese boycott stemming from the Diayou/Senkuku islands dispute.

"You have a secular decline in the population happening, you have a balance of trade that's literally being rewritten and falling off a cliff and their GDP is now tracking -3.5, -4 percent.

"We think Abe's a shoo-in. And he said he's going to do everything possible to get to 3 percent inflation. He doesn't even know what he wishes for, because if he gets there, he detonates his debt bomb. "

"When there's a press release put on the BOJ's website from the MOF, the BOJ and the government — that's analogous to Bernanke, Geithner and Hillary Clinton issuing a joint press release saying 'we're going to end deflation'. This is how it begins to happen"

"Their backs are against the wall. They have a full crisis. They absolutely have to change the manner in which they deal with their currency."



Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

November 20, 2012

Kyle Bass Talks about the end of the Debt Cycle



Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

November 17, 2012

Kyle Bass New Letter: We Believe War Is Inevitable

Interest today rewards no genuine sacrifice, any more than does the rent of land. The owner of capital can obtain interest because capital is scarce, just as the owner of land can obtain rent because land is scarce. But whilst there may be intrinsic reasons for the scarcity of land, there are no intrinsic reasons for the scarcity of capital.”
. . .
“Thus we might aim in practice (there being nothing in this which is unattainable) at an increase in capital until it ceases to be scarce, so that the functionless investor will no longer receive a bonus[.] (emphasis added) “
This is nothing more than a chilling prescription for the destruction of wealth through the dilution of capital by monetary authorities

Central banks have become the great enablers of fiscal profligacy. They have removed the proverbial policemen from the bond market highway. If central banks purchase the entirety of incremental bond issuance used to finance fiscal deficits, the checks and balances of “normal” market interest rates are obscured or even eliminated altogether. This market phenomenon does nothing to encourage the body politic to take their foot off the spending accelerator. It is both our primary fear and unfortunately our prediction that this quixotic path of spending and printing will continue ad?infinitum until real cost?push inflation manifests itself. We won’t get into the MV=PQ argument here as the reality of the situation is the fact that the V is the “solve?for” variable, which is at best a concurrent or lagging indicator. Given the enormity of the existing government debt stock, it will not be possible to control the very inflation that the market is currently hoping for. As each 100 basis points in cost of capital costs the US federal government over $150 billion, the US simply cannot afford for another Paul Volcker to raise rates and contain inflation once it begins.

Hayek was, of course, right:
The current modus operandi by central banks and sovereign governments threatens to take us down Friedrich von Hayek's “Road to Serfdom”. Published in 1944, its message, that all forms of socialism and economic planning lead inescapably to tyranny, might prove to have been prescient. In the 1970s, when Keynesianism was brought to crisis, politicians were vociferously declaring that attempting to maintain employment through inflationary means would inevitably destroy the market economy and replace it with a communist or some other totalitarian system which is the “perilous road” to be avoided “at any price". The genius in the book was the argument that serfdom would not be brought about by evil men like Stalin or Hitler, but by the cumulative effect of the wishes and actions of good men and women, each of whose interventions could be easily justified by immediate needs. We advocate social liberalism, but we also need to get there through fiscal responsibility. Pushing for inflation at this moment in time will wreak havoc on those countries whose cumulative debt stocks represent multiples of central government tax revenue.

The non?linearity of expenses versus revenues is what will bring them down.
"Pavlov's Party" is ending, and when it does, it will happen so fast no reac

Through travel and meetings around the world, it has become clear to us that most investors possess a heavily anchored bias that has been engrained in their belief systems mostly through inductive reasoning. Using one of the Nobel Laureate Daniel Khaneman's theories, participants fall under an availability heuristic whereby they are able to process information using only variables that are products of recent data sets or events. Let’s face it – the brevity of financial memory is shorter than the half?life of a Japanese finance minister.

Humans are optimistic by nature. People’s lives are driven by hopes and dreams which are all second derivatives of their innate optimism. Humans also suffer from optimistic biases driven by the first inalienable right of human nature which is self?preservation. It is this reflex mechanism in our cognitive pathways that makes difficult situations hard to reflect and opine on. These biases are extended to economic choices and events. The fact that developed nation sovereign defaults don’t advance anyone’s self?interest makes the logical outcome so difficult to accept. The inherent negativity associated with sovereign defaults brings us to such difficult (but logical) conclusions that it is widely thought that the powers that be cannot and will not allow it to happen. The primary difficulty with this train of thought is the bias that most investors have for the baseline facts: they tend to believe that the central bankers, politicians, and other governmental agencies are omnipotent due to their success in averting a financial meltdown in 2009.

In the end, the EMU won't look the same, if it exists at all.

The overarching belief is that there will always be someone or something there to act as the safety net. The safety nets worked so well recently that investors now trust they will be underneath them adinfinitum. Markets and economists alike now believe that quantitative easing (“QE”) will always “work” by flooding the market with relatively costless capital. When the only tool a central bank possesses is a hammer, everything looks like a nail. In our opinion, QE just doesn’t stimulate private credit demand and consumption in an economy where total credit market debt to GDP already exceeds 300%. The UK is the poster child for the abject failure of QE. The Bank of England has purchased over 27% of gross government debt (vs. 12% in the US). UK bond yields have all but gone negative and are now negative in real terms by at least ?1%. Unlimited QE and the zero lower bound (“ZLB”) are likely to bankrupt pension funds whose expected returns happen to be a good 600 basis points (or more) higher than the 10?year “risk?free” rate. The ZLB has many unintended consequences that are impossible to ignore.

Despite reading through Keynes’ works, we didn’t find a single index referencing the ZLB or any similar concept. In his General Theory, there are 64 entries in the index under “Interest” but no entry for the ZLB, zero rates, or even “really low rates”.

Our belief is that markets will eventually take these matters out of the hands of the central bankers. These events will happen with such rapidity that policy makers won’t be able to react fast enough.

On the lunacy of such "modern" "economic" "theories" as MMT (which may or may not stand for "Magic Money Trees")

The fallacy of the belief that countries that print their own currency are immune to sovereign crisis will be disproven in the coming months and years. Those that treat this belief as axiomatic will most likely be the biggest losers. A handful of investors and asset managers have recently discussed an emerging school of thought, which postulates that countries, as the sole manufacturer of their currency, can never become insolvent, and in this sense, governments are not dependent on credit markets to remain fiscally operational. It is precisely this line of thinking which will ultimately lead the sheep to slaughter.

The inevitable end of that supremely flawed monetarist experiment - the Eurozone:

Each subsequent “save” of the European debt crisis has been devised by the Eurocrats coming up with some new amalgamation of an entity that is more complex than its predecessor that is designed to project size, strength, and confidence to investors that the problem has been solved. Raoul, a friend of mine who resides in Spain, put it best:

“Let’s just clear this up again. The ECB is going to buy bonds of bankrupt banks just so the banks can buy more bonds from bankrupt governments. Meanwhile, just to prop this up the ESM will borrow money from bankrupt governments to buy the very bonds of those bankrupt governments.”

The EFSF, the IMF, the ESM, and the OMT (and who knows what other vehicles they will dream up next) have all been developed to serve as an optical backstop for investors globally. The Eurocrats are sticking with the Merkelavellian playbook of hiding behind the complexity of these various schemes. All one has to do is review the required contributions to said vehicles from bankrupt nations to realize that the circular references are already beginning to show in broad daylight. Does anyone stop to consider that the two largest contributors to the IMF are the two largest debtor nations in the world? Are things beginning to make sense now?

And finally, a less than rosy outlook for the entire "developed" world.

Trillions of dollars of debts will be restructured and millions of financially prudent savers will lose large percentages of their real purchasing power at exactly the wrong time in their lives. Again, the world will not end, but the social fabric of the profligate nations will be stretched and in some cases torn. Sadly, looking back through economic history, all too often war is the manifestation of simple economic entropy played to its logical conclusion. We believe that war is an inevitable consequence of the current global economic situation.

You can read the rest of the letter below as Kyle discussed also Japan’s situation and more on debt, issues and war:
Kyle Bass

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

November 16, 2012

Kyle Bass on Europe and some ideas



According to Kyle Bass “a popular revolt will happen” due to austerity and high unemployment. This will basically stop the kicking the can in Europe. Even though, Blackrock is buying European bonds, Kyle reminds that there were a very few people that got the credit crisis correct and the herd overall buys everything especially when it have a huge amount of capital. According to Kyle, buying Europe is like expecting Germany to leave the Euro in 3-4 years, as according to him, ‘joint-and-several’ liabilities will never happen when Germany is in.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

November 09, 2012

Kyle Bass of Hayman Capital: Short JGB

• Hayman is a global event-driven fund which is 90% long in short duration things like mortgage backed securities etc.
• Bass sees convexity in pricing and “all the convexity of world is in Japan.”
• The next 18 months will set the stage for the Japan
• Central banks have replaced traditional intermediaries – that is why global volatility is so low
• Availability heuristic - people can only process data from readily available data
• Accepting the logical conclusion is detrimental to many factors of our life
• 3 false axioms of Japan according to him
o (1) Can Japan run a current account surplus to self-fund? Bass says no.
o (2) Bank of Japan is not buying debt. Bass says false. Monetization is occurring.
o (3) Retail investors will actually be able to hold all the debt.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

November 02, 2012

Kyle Bass of Hayman Capital talks about Japan, SuperMedia and RMBS

Kyle Bass gave a presentation on the Best Ideas Investment Symposium in Dallas this month.

Kyle Bass mentioned that 90% of what he – aka Hayman Capital owns is in bonds. He said that they own tons RMBS/subprime exposure.

SuperMedia Debt 

Kyle Bass likes Supermedia debt. The company filed for bankruptcy and defaulted on billions of debt. Now debt trades at 66 cents and equity is almost zero. Now the company is also trying to merge with the competitor DexOne.

Kyle Bass recommends everyone not to own Japan

Kyle points out that there's 80-200 trillion in global debt. In 18 months Japan will structurally fall apart. He said: "There's no chance at Japan repaying their debt."

He says psychology is important so look at anchoring bias. It's important to think about how others think about debt. Japan's debt to GDP is the worst in the world. Their debt is 25x their revenues.

Bass said there are 3 axioms that are actually false:

1. Positive current surplus, Japan not self-funding: This is flat false he says.

2. Bank of Japan not monetizing the debt: Bass says they're already buying 2/3rds of the bonds today.

3. Retail investors will always support JGB's: Bass says Japan has a secular population decline.

He also illustrated how Japan is trying to sell JGB's by showing advertisements of a schoolgirl band selling them and sumo wrestlers pitching JGBs which is looks like a clear Ponzi scheme which desperately needs money to keep going.

Regarding the Softbank/Sprint deal since it was mentioned earlier in the panel by Lee Cooperman, Kyle Bass said that Softbank paying 20 billion yen to buy broken telecom is basically exporting yen as investors are starting to flee the currency.

Bass says that Japan has one of the "largest structural fiscal deficits in the world." He doesn't know when exactly this collapse happens as this could go on for a few years? He notes the timing on this sort of thing is very hard to peg, but it will "absolutely happen."

He said that playing options on this scenario is the best way as you get paid a ton when it happens and you lose a little while waiting.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

October 23, 2012

Doom Heralded at Hayman Capital by Widening Trade Deficit: Japan Credit

Japan’s worsening trade gap will make it harder to service the world’s largest debt, fulfilling part of the doomsday scenario that Hayman Capital Management LP is betting on.

The nation’s 10-year note yield may rise toward 10 percent from the world’s third-lowest of 0.79 percent, while the yen weakens, said Richard Howard, who oversees Dallas, Texas-based Hayman’s Japan-focused fund with J. Kyle Bass. That would represent the developed world’s second-highest borrowing costs after Greece, and a surge to that level by the end of 2013 would cause losses of 42 percent for investors purchasing the securities now, data compiled by Bloomberg show.

Data yesterday showed Japan had its biggest half-year trade deficit on record. Hayman, which manages about $1 billion, made $500 million by predicting the U.S. housing market collapse, and Bass has said since at least 2010 that Japan’s $12 trillion bond market is heading for a crash. So far, the debt has returned 3.1 percent in the past two years, Bank of America Merrill Lynch data show, while yields touched nine-year lows.

“It all came down to this idea that there was an internal self-funding mechanism in Japan, that essentially the Japanese economy and interest-rate environment could exist separate to the rest of the world,” Howard, 32, said in an Oct. 18 interview in Singapore. “It wasn’t going to last forever, and in fact it is rapidly approaching a turning point.”

Japan’s imports exceeded exports by 3.22 trillion yen ($40 billion) in the six months ended Sept. 30, the biggest trade deficit for a fiscal half-year period, according to Ministry of Finance data going back to 1979. The nation posted a shortfall in September for a third-consecutive month.

Current Account

The country has public debt equivalent to 237 percent of gross domestic product this year, the biggest debt-to-GDP ratio globally, estimates by the International Monetary Fund show. The ratio for the U.S. is 107 percent.

Ten-year Japanese government bond yields are less than half that of similar-maturity Treasuries and reached 0.72 percent in July, the least since June 2003. Japan’s current account, the broadest measure of trade, has been in the black on an annual basis since at least 1985, according to government figures, helping the country finance a budget deficit domestically for lower borrowing costs.

When Japan’s current account turns to deficit, “the marketplace is going to realize that it requires international capital, either repatriated Japanese capital or fresh new international capital, to buy Japanese government debt in order to keep funding the government,” said Howard. “That is the beginning of a cycle to put upward pressure on yields.”

RBC Samurais

On a monthly level, Japan reported a record deficit in its current account in January, showing the impact of rising energy imports following last year’s record earthquake that triggered the shuttering of nuclear plants.

Elsewhere in Japan’s credit markets, Kanagawa Prefecture plans to sell 20 billion yen of 20-year bonds next month, according to a statement yesterday by Daiwa Securities Group Inc., which will manage the offering with Mizuho Financial Group Inc.

Japanese municipal notes and the debt of government- affiliated organizations have handed investors a 0.02 percent loss this month as of yesterday, compared with a 0.08 percent decline for sovereign securities, according to Bank of America Merrill Lynch data. Global government bonds have also lost 0.17 percent in the period, the data show.

Royal Bank of Canada registered to sell as much as 600 billion yen of Samurai notes, according to a filing yesterday with Japan’s Ministry of Finance. Samurais are yen-denominated notes issued in Japan by overseas borrowers.

Yen Effect

The yen strengthened against most of its 16 major peers in the past six months as the euro region’s debt crisis boosted demand for the currency as a refuge. It touched 80.01 per dollar today, the weakest since July 6, before trading at 79.96 as of 9:51 a.m. in Tokyo, compared with its record high of 75.35 reached Oct. 31.

The stronger yen makes Japanese products costlier overseas and weighs on exports while encouraging domestic companies to acquire assets abroad. Softbank Corp., the country’s No. 3 mobile-phone career, agreed this month to buy a 70 percent stake in Kansas-based Sprint Nextel Corp. for $20.1 billion.

Proceeds from overseas investments have grown ninefold since 1985 through last year, helping alleviate a slump in exports. Japan had its first annual trade deficit last year in at least 27 years, Ministry of Finance data showed.

Household Wealth

Slower growth and more than a decade of deflation have prompted Japan’s banks to channel deposits into JGBs rather than loans. Domestic investors account for 91 percent of the total ownership of the nation’s debt, according to data from the Bank of Japan.

Japanese households held a total of 1,515 trillion yen of assets at the end of June, more than half of which were bank deposits, central bank figures showed. That’s bigger than the U.S.’s annual economic output in dollar terms and compares with 1,124 trillion yen of general Japanese government debt.

Standard & Poor’s said in a report yesterday that Japan’s deficits are likely to remain high for several years, and it runs the risk of a credit downgrade if its “debt trajectory were to remain on its current course.” S&P rates the sovereign AA- with a “negative” outlook.

The IMF said in its Fiscal Monitor report released this month that the Japanese government’s plan to double the 5 percent sales tax by 2015 won’t be sufficient to “put Japan’s record-high debt ratio on a downward path.”

‘Lot Higher’

A tumble in JGBs may happen in two steps, where a sell-off pushes yields a couple hundred basis points higher, triggering concerns about the government’s ability to refinance its debt, said Howard. That could push yields “a lot, lot higher” toward double digits, he said.

As to what may trigger the surge, “something very interesting” is likely to happen within the next 18 months, Howard said, declining to be more specific or to say how the fund is executing its Japan strategy. The risk to Hayman’s scenario is that concern about the rest of the world will sustain demand for Japanese assets as a haven, he said.

So far, financial markets are signaling little concern that Japan will fail to pay off its debts. The cost to insure JGBs against nonpayment for five years has fallen 67 basis points this year to 76 basis points yesterday, set for the biggest annual slide in data going back to 2005, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Investment Surplus

Tomoya Masanao, head of portfolio management for Japan at Pacific Investment Management Co., said on Oct. 10 that the nation’s debt is the “cleanest dirty shirt.” Pimco, which runs the world’s biggest bond fund, has been adding to its holdings of JGBs over the past two to three months, he said.

Ten-year JGB yields may hold in a range of 0.8 percent to 1 percent in the next 18 months, said Akio Kato, team leader for Japanese debt in Tokyo at Kokusai Asset Management Co. That compares with the five-year average of 1.2 percent.

“I don’t foresee a situation where the trade deficit offsets the investment surplus, driving the current account into the red,” said Kato, whose company runs Japan’s biggest mutual fund with $42 billion in assets. “It’s reasonable to assume that Japan’s bond market can still continue to retain investor confidence.”

Source: Bloomberg

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

October 20, 2012

Kyle Bass: Buy Guns and Gold


Kyle Bass is one of the chosen 15 people who have made use of the subprime trade of CDS. He has been interviewed a couple of times recently and had very interesting ideas to share. Bass recently bought a record number of 20 million nickels for a price of 1 million US dollars. Bass says that the worth of each metallic coin is around 6.8 cents. Ken Rogoff reports his shock on the numbers that have been shared by Kyle Bass. The new investment thesis that Bass has come up with stats that the crisis caused by subprime mortgage was not the cause of the problem, buts it affect. The main reason for the problem is that there is just too much debt and this is never a good sign because after the crisis, this debt is transferred to the balance sheets of the public.

"Our biggest positions now are Japan and France. If and when the dominoes fall, the worst, by far, is France. I just hope the U.S. doesn’t collapse first. All my money is bet that it won’t. That’s my biggest fear. That I’m wrong about the chronology of events. But I’m convinced what the ultimate outcome is.”

“If Japan had to borrow at France’s rates, the interest burden alone would bankrupt the government.”

By the time the next crisis came our way, the gold market was most probably going to collapse as more pending future contracts were on hold than the total available gold.

“We’ve never had this kind of accumulation of debt in world history,” Bass said.

An important point to remember here is that the banks that invested huge amounts of money were being started to be treated as much more than just private financial institutions. They were considered as a symbol of their local governments and it was assumed that they would be bailed out in the time of crisis. The public debt of all the rich countries appeared to be at a dangerously high level and as a result of the crisis, this level increased further. As a fact, the official public debt was no longer considered to be the public debt and it actually contained the different debts of a country's banking system. Bass goes on to say,

“I believe that Germany and the balance of the Eurocrats will attempt to default Greece within the euro zone first. The frictions associated with such an event will prove to be problematic and the usual benefits of a substantially weakening currency that would historically accrue to the country in default will not be available to Greece. Greece will therefore be forced to go back to the drachma at some point in the near future.”

Continuing with his discussion he states that

“In the end, it is most likely that after Greece and the next peripheral country begin to hard default, Germany will exit the [European Monetary Union] and recapitalize their own banks. After recently conducting a population study on the German people, we have determined that the overwhelming majority of the people of Germany think that they would be better off never having formed the euro in the first place. Two thirds of the people do not think that they have any obligation to bail out profligate members of the EMU. The market’s hopes rest upon Germany and the [European Central Bank] going ‘all-in’ at some point in the future. I don’t think that is likely at all.”

“There is no playbook for how the world will most likely deal with a cluster of sovereign defaults…I believe it will all read like fiction from here. The organizers and members of the EMU are desperate and have nowhere to turn. The circular references of the optical backstops [International Monetary Fund and European Union] are showing in broad daylight.”

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

October 03, 2012

Kyle Bass - News on Debt and Other Issues



Transkscript
Inspire our students. let's solve this. . our own david faber is in larue, texas. investors are convening to discuss all kinds of issues. david, i see the jacket is on. take it away. reporter: jack ket is on because it's so bright out and i had a white shirt on. it's a magnificent day here. one of our hosts is kyle bass. thank you for having us, as always. sure. and you and i are going to start off where we start many of our interviews, mainly talking about debt balances throughout the world. deleveraging has been taking place around the world. in fact, you hear about it, the deleveraging the economy. that's not the case, right? we try to look at the world in its totality and when you look at on balance sheet corporate debt, they've grown from $80 trillion, 11% growth rate when you have a population growth of 1.2, realty gdp growth of 3.8 and debt growth of about 11. central bank balance sheet of 16. you can't just do this for very long. what you're seeing is leveraging on the government side. you're seeing central banks that are starting to do open-ended money printing. so it makes it difficult. you're looking now at the sort of further end of this chart. we didn't have it all in on global oh population, real gdp, 10% global credit increase in that and then central bank is printing money. everybody printing money. you and i have been having this conversation for years and it doesn't appear that things have gone off the rails yet. even europe is somehow staying together. i guess it's perceived to be saying together. 90% of your money and now you have owning the greek debt. that's going to have to get wiped out as well. you will still see what they need to do because certainly german economy benefits from the europe. extended family? maybe not. so imagine 17 nations that have basically been fighting for the last 200 years agreeing to seed their sovereignty to a higher power. it boils down to something more simple that it can't happen. when you look at global debt balances, the world and interesting adjective and historically what has happened, when you get to 250%, credit market debt, historically two sides of deficit spending going to a war and winner goes the spoils and losers go to defeat and default. the reason it's so difficult for us to understand what the playbook looks like going forward, we never did hear before. we're starting to see debt inflation. think about it, we had a hyper-levered economy and world going into the financial crisis. we lost trillions and trillions of dollars because of that leverage. the first trillion were replacing what was lost. and the subsequent printing and when you think about what we're seeing in southern europe, much higher than expected and gdp prints much lower than expected so you're seeing this cost push type of inflation push-up. debasing their own buying power at the end of the day? it takes time. it certainly does take time. you and i are going to be sitting here next year and the year after that having the same conversation? i hope so. i hope things are not going to fall off the rails as much as they could. do you think they could? yeah. i've spent enough time in d.c. they all shake their heads when you talk about debt sustainability and you leave and nothing happens. nothing changes. this fiscal cliff is not going to happen. they are going to vote it down the road another year. sequestration never works. it's fairly easy to see what is going to happen. how do you invest around that? what do you do? they don't want any parts of equity. they know that you've made coaching arguments and have been largely right directionally with what is going on but they wonder, where do i put my money? what do you tell them? we have more than half of our portfolio in bonds, believe it or not. the things that created and made your name, let's face it, in terms of being short that market. so now you're long a lot of residential mortgage-backed securities? right. we own about 1% of the market. we have a large investment in that marketplace. basically i think the u.s. housing markets played out. it's about 6.25 years and we're 6.50 years in our cycle. i think housing is going to flatten out. that makes housing affordable as it can possibly be. we don't think housing is going to go up at any point in time in the near future. you don't? it's not going to go down anymore. why won't it go up? there seems to be signs that prices are starting to creep up, affordability is definitely there. it is. but anyone who has already thought about buying is house has already bought a house. you have household formation rate in the u.s. about 1.2 million people, population growth of about1.5%. so it's going to take a few years to absorb the shadow inventory. everything just tells me that when yo income and home prices, they should be parallel. you and i have had many conversations about this macro world you're describing, way too much debt. what are you doing to play that or are you not even playing that? in our portfolio, we actually own what we call event-driven situations in either credit or equity and the way that we hedge our kind of the corpus of our portfolio is th dramatically misprices option ality. so there is enormous convexity in various areas of the world. and we can spend just a small amount of capital and have enormous convex positions. and i believe it's all in japan. but at the end of the day, i think many people would say this has not been -- even if you were right on this crisis as it's moved along, in europe for example, you have not been in position to profit from it the way you were from having seen subprime coming. it's just not the same. right. the opportunity is --s as a fiduciary, if i sit on a public.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

September 15, 2012

Kyle Bass: Japan will follow Europe's debt crisis nightmare

Japan is about to follow Europe's deep debt crisis, said Kyle Bass, a hedge fund manager and founder of Heyman Capital, said on CNBC.
Although investors are focused on the situation in Greece and other European countries, Japan will soon reminded himself stated Bass.
"Things in Greece will get out of control in the next 30 to 60 days," said the investor, who became known for his large short positions in subprime mortgage-backed securities before the collapse of the sector in 2007-2008.
"Japan is a market crossroad ... I've never seen a more understated option throughout their lives, "he says.
Bank of Japan effectively monetized the country's debt by buying Japanese government 50 trillion. yen, says Bass.
There are many dangers associated with strategies of central banks trying to print his escape from the debt crisis. These are inflation and loss of confidence in the stability of the debt, says Bass.
In his impending crisis is obvious. "The simple fact is that we are not talking about an exercise in quantitative easing. The question is when, not whether the system will collapse. "
Japan's aging population and the burden of system benefits, are the main factors giving rise to the debt problems.
Bass words as illustrated cites convicted of financial fraud Bernie Madoff fund manager. "He taught us anything," said Bass. "Can not promise anything, as long as you do not have to do them."
As for Europe, Bass rejects the idea that Greece can adhere to contractual agreements. "The bankruptcy will be controlled and eventually they will have to abandon his promises to the Troika," he said, referring to the European Union (EU), International Monetary Fund (IMF) and European Central Bank (ECB).

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

Kyle Bass of Hayman Capital Readies Irish Version Of Main Hedge Fund

Kyle Bass is taking his flagship hedge fund onshore-in Europe.
Bass' Hayman Capital Management plans to launch an Irish-domiciled version of its main fund, HFMWeek reports. The Dallas-based firm will offer Hayman Advisors as a separately managed account packaged within an Irish Qualified Investor Fund.
The move will give non-U.S. investors greater access to Hayman, which has US$1.1 billion in assets under management.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

July 12, 2012

Kyle Bass thoughts on Japan

These are recent thoughts of Kyle Bass from the SALT Conference Panel

Kyle Bass believes that the bottom in the USA housing market will be reached soon. The possible time-frame according to him is between 12 and 18 months.

Regarding Bass’s most popular thesis” “Japan”, he says that today more diapers are bought for adults in Japan than for children. Kyle Bass compares Japan to Bernie Madoff and points out that Ponzi schemes work until there are no more buyers and money coming in - you can make promises and there won't be any issues as long as you don't have to follow through. Japan has made much promises but the fact is that the interest rates to service its debt consume half of the government revenues. This reveals how big the debt is.

As a matter of fact, Japan is already monetizing a lot of debt so it's just a matter of time before the market starts to get out or the currency crash.

Kyle Bass admitted to making a mistake in 2009 by not anticipating all the printing by the sovereigns.
Today the manager of Hayman Capital advocates as best investments: long non-agency MBS credit while shorting Europe and Japan. Kyle Bass also said that Greece would be "ungovernable" very soon.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

May 30, 2012

Kyle Bass: Japan will follow Europe's nightmare of debt crisis

Bank of Japan actually monetize the debt of the country by buying local government, said hedge fund manager

Japan is about to follow Europe into the abyss of debt crisis, said Kyle Bass, a hedge fund manager and founder of Heyman Capital, said on CNBC.

Although investors are focused on the situation in Greece and other European countries, Japan will soon remind myself, says Bass

"Things in Greece will get out of control in the next 30 to 60 days," said the investor, became famous for their large short positions in subprime mortgage bonds before the collapse of the sector in 2007-2008

"Japan is a market crossroads ... I've never seen more undervalued opportunity in our lifetime, "he says.

Bank of Japan actually monetize the debt of the country by buying Japanese government 50 trillion. yen, Bass argues.

There are many dangers associated with strategies of central banks trying to print his escape from the debt crisis. These are inflation and loss of confidence in the stability of the debt, says Bass.

According to the approaching crisis is obvious. "The simple fact is that there is not an exercise in infusing liquidity. The question is when, not whether the system will collapse. "

Japan's aging population and the burden of system benefits, are the main factors resulting from debt problems.

Bass illustrates the words as an exemplar convicted for financial fraud Bernie Madoff fund manager. "He taught us anything," says Bass. "You can promise anything and everything as long as you do not have to do them."

As for Europe, Bass rejects the idea that Greece may adhere to contractual agreements. "Bankruptcy would not be controlled and eventually they will have to abandon their promises to the Troika," he said, referring to the European Union (EU), International Monetary Fund (IMF) and European Central Bank (ECB).

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

May 18, 2012

Kyle Bass and Japan Update

It seems that so far Kyle Bass’s bet against Japan is not working. Still it might be too early and we could be near Japan’s debt crisis. According to private sources the Macro Opportunities Master Fund was down 29% for 2012. This fund has CDS on Japan as well as leveraged shorts on bonds and probably the yen.

What is interesting is the fact that another great hedge fund manager David Einhorn, the manager of Greenlight Capital is also bearish on Japan as of recently. He believes that Japan bonds must go down and soon the yen will start weakling. Einghorn stated that Japan no longer has a trade surplus and its currency the yen must finally stop going up. In addition, he said that the Bank of Japan is having a hard time controlling some of the issues in the marketplace and 9% of REITs in the US are owned by the Japanese.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

April 17, 2012

Kyle Bass: Buy after Big Debt Crisis – Japan, Europe, UK …

Kyle Bass: "Plan B is, to the extent that I'm right, and you start to see sovereign dominoes falling and the focus ends up on Japan very quickly, what do you do with your money? Well, if we go to +4 in GDP to -3 or 4 in global GDP, and we have an equity market contraction of 40 or 50 percent, you're going to need some money to buy. That's going to be the greatest time in the world to buy once these restructurings happen."

We see now why Kyle doesn’t own much stocks and he is mostly short stocks or owns only a few special situations. He has also pointed out that the USD is the best currency in an environment like this. If he is right, investors will need US dollars to buy cheap assets in few years. According to him the world cannot growth until debts disappear and there is only one way for it to happen.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

April 03, 2012

Kyle Bass: Japan is next to face Sovereign Debt Crisis

According to Kyle Bass of Hayman Capital, Japan is the next in line to face a sovereign debt crisis and very soon the markets’ focus will turn on it. He expects deflation that will lead to a correction in equity prices because such economic shock will spread to the world economy and if he proves to right, economic growth might go to minus 3 – 4%. That will lead to a stock market correction of 40-50% and that will be a time when investors need to have cash to buy cheap stocks. He believes that it will be the best time to buy equities, right after these big restructurings. He mentions that Japan is next after Europe but it is still unclear to us whether the European debt crisis is finished or not. We believe it is not and before we move to Japan, we will have more problems in Europe and probably more restructurings.

According to Kyle Bass, it depends on Japan and Europe, how long time USA has until a debt crisis. In his opinion it is 3-5 years away. If he proves to be right, it might be wise to hold significant cash portfolio weighing.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 22, 2012

Kyle Bass loves asymmetric bets

Kyle Bass of Hayman Capital prefers to make investments in situations that could earn the hedge fund extraordinary profits. He looks for asymmetric bets where the risk-adjusted-return is out of norm. For example by predicting in 2009 that Greece will restructure, he bought cheap CDS and that resulted in a bet where the risk/return is 1/500… It seems that today Kyle Bass is having similar bet but on Japan. He believes that the focus will soon be on Japan and the country will face a debt crisis within 2-3 years. According to unofficial information, Hayman Capital betted on Japan problems by CDS, swaptions, puts on Yen as well as options on JGB. It’s hard to predict the risk/return here but we believe it’s between 1/15 – 1/100. Kyle Bass has expressed his pessimism about the yen many times on different TV programs. His target is 120 USDJPY which is about 45% from current levels.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 12, 2012

Kyle Bass: Gold is Going a Lot Higher

This is a transcript from an interview with Kyle Bass of Hayman Capital. He explains why he's so bullish on gold, with CNBC's Bob Pisani

Bob: Are you still bullish on gold?

Kyle Bass: I think that the pattern is set. The pattern is set that we are going to continue to monetize fiscal deficits  by expanding central bank balance sheets. Call it how you wanna call it, LTRO, QE any kind of acronym that the powers want it to be called but I call it  money creating out of thin air and that is why gold has a further to go.

Buy Gold

Bob: aks what will happen to the price of gold if China and India economies slowdown:

Kyle Bass: When you think about the way that India is now... they have significant inflation, if they have stagflation we will continue to see gold going higher.

Bob: Can you explain the decision to buy physical gold?

Kyle Bass: It costs you certain amount of money to roll the contract. As far as I know it costs 19 basis points per year and the holding and insurance to keep physical gold is cheaper than that. From a Fiduciary perspective physical gold is a must. Kyle store and insure gold at HSBC.

Gold is currently taxed as collectable at 28%, should there be some change to that?

Kyle Bass: Gold must be taxed as every other asset that you own. It is just a simple asset. Piece of art work, collectibale-gold coin, equity must be taxed the same especially if held long-term.


There is so much talk about gold these days. Should we go back to a gold-standard?

Kyle Bass: I don't think so. I'm not an advocate of such. Ting an enourmas economy to one metal coming out of the ground would probably be a bad idea but ting it to a basket of goods and services might be a good idea. Because we need to limit the amount of capital created in the system.

I just don't understand the logic behind it.


I think that the people who are deemed to be gold bugs, you know, are talking to a portfolio to a certain, yes I own some but when I tire our whole economic future as a nation to that idea, if you think about rationality it's a bad idea.






Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 11, 2012

Kyle Bass Likely Made $10 Billion on Greek CDS

This is an update on how much Kyle Bass possibly made from his CDS on Greek debt and how much will soon receive. We still do not have the official numbers but we believe the profit is about $10 billion which will put Hayman Capital on top of performing hedge funds as well as Kyle Bass in the billionaire's list.

It is unknown how much CDS Kyle bought but average CDS contract signed is for $10 million. According to unofficial information Bass bought $15 million of Greek CDS, and that means he will receive $10 billion USD when the insurance is paid. Bass might have bought more, in which case he might now be one of the richest people in the world but we still don't know.

Considering that he has $726 million assets under management and that about 20% of the assets were put in CDS and other instruments to bet against Greece, Portugal, Ireland, Japan... we believe that Greece bet is at least $15 million. As soon as we have the official numbers we will update this post.

More about his bet was posted in the previous post: Kyle Bass Profits 700 times on Greek CDS payout

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 10, 2012

Kyle Bass: Profits 700 times on Greek CDS Payout

Kyle Bass bought CDS on Greece debt in 2010 around $1,000 per $1 million debt. He has been an advocate about Greece going into disorderly default and triggering CDS payouts. So far Bass is wrong that Greece will face disorderly default as it seems that it’s controlled one, but still the CDS has been activated as there is credit event according ISDA. That will trigger the CDS payouts and Kyle Bass’s fund 

Hayman Capital

will earn about 700 times on his CDS investment. Let’s repeat again “70,000%” return on investment! We have no information how much CDS on Greek debt he purchased in 2010 but we believe that his fund will earn millions.

Bass is known for his uncommon investment bets as well as talented mind. He currently holds physical gold. Platinum as well as 20 million 5 cent Canadian Nickels. His 700 times return on his investment will earn him many fans in the investment world. The true value of his holdings will be fully revealed when the payout rates are decided after an auction of the old Greek debt.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 07, 2012

On Why Kyle Bass owns so much gold

"My opinion is very simple as a fiduciary... to the extent that you own gold and you are going to own it a long time --it's not a trade. It costs us about 90 basis points a year to roll it through financial futures contracts," he said.
"And then we went and looked at the COMEX. The COMEX at the time they had about $80 billion in open interest between futures and futures options. In the warehouse they had $2.7 billion of deliverables. So $80 billion in open interest - $2.7 billion in deliverables. We’re gonna own it a long time. You're on the board, as a fiduciary, what do you do? That’s an easy one. You go get it. So you go take a billion of $2.7 billion and you let them worry about the rest."
"When I talked to the head of deliveries at COMEX NYMEX, I was like, 'What if 4% of the people want deliveries?' He said, 'Oh Kyle, that never happens. We rarely ever get a 1% delivery.' And I asked, 'Well what if it does happen?' And he said, ‘Price will solve everything' And I said, 'Thanks, give me the gold.'
It is noteworthy to mention also that Kyle Bass owns physical platinum bars as well as Canadian nickels. It seems he is worried about runaway inflation and believes metals are best to protect him.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 06, 2012

J Kyle Bass recommends that investors stay in cash

Investors should be more in cash. To the extent that he is right about the order of debt events, the USD will be strong short to medium term and EUR and JPY will be weak.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 05, 2012

Kyle Bass is worried about France and UK

The UK and France are both in trouble, according to Kyle Bass of Hayman. Bass said when you looked at a particular country's banking system such as Iceland, it didn't take a genius to figure out it was going to blow up.
"Regulators weren't paying attention to the size of the host country's banking systems in relation to the sovereign's ability to maintain losses," he said.
According to Hayman Advisors' estimates, the UK is in "big trouble" and France is in "huge trouble" just as the Europe as a whole is.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

Kyle Bass 2012

"If you think a 50% default in the private sector is what's going to save Greece, you're out of your mind."
"Does anyone know what Greece’s on-balance sheet financing cost is? Forget their market rates. What does it really cost them today for their weighted average cost of capital on balance sheet? Does anybody know? That’s interesting."
"We all know they’re in trouble, but no one looks at the numbers. They borrow at 4.4%. Their two-year money is at 100% and their 10-year money is at 27%. They borrow at 4 and they’re spending 16% on interest. For those of you who think that a 50% default in the private sector is what’s going to save Greece, you’re out of your mind. It is a full write down of what the Troika doesn’t own." So, it seems that this 70% haircut of the private sector holdings will not be enough, if Kyle Bass is right, and we will soon face the need of additional haircuts.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 03, 2012

Hayman Capital Partners: Psychology is on Top

Kyle Bass

believes that psychology is more important than the quantitative analysis that is why in his fund, they pay more attention to it and try to understand it. "We have been conditioned to believe there is always this savior out there," Bass said. "There's an optical backstop designed to make everyone believe countries can't default." "It's where we stand to day on Greece on Italy. I think it's really important to think through that psychology," he said. "Those optics are starting to come into question."

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 02, 2012

Kyle Bass Letter; Hayman Capital Letter

Kyle Bass Hayman capital, shared its most recent letter with us called “The Hidden Bank Run Across Europe”.
“As European leaders press forward with failed attempt after failed attempt to suppress borrowing costs, control spending, reduce deficits and prop up what the markets have already told us is a broken monetary system, the data tells us that the citizens of the most troubled and profligate nations are losing confidence in the Euro dream. Trust has been lost, confidence in the system is being lost, and the ultimate consequence of this break down – sovereign defaults —are imminent.”
View more Hayman Capital Letters
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Kyle Bass Bio



Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

March 01, 2012

Kyle Bass: USA has more time than Europe and Japan

Hayman Capital Kyle Bass, shares that USA has more time until a debt crisis than Europe and Japan do. In his opinion, USA has 3-5 years and believes that Europe and Japan might accelerate it a little bit. It seems that the political elite think that USA has 10 years, but they are wrong. USA doesn’t have a lot of time for adjustments, and it seems the politicians are not doing what is needed so at the end, we will face the same fade as Japan and Europe. J Kyle Bass made pessimistic forecasts about the development of the European crisis as well as the coming one in Japan.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

February 29, 2012

Kyle Bass Hayman Capital - PIGS Banks Face Bank Runs

According to Kyle Bass of Hayman Capital Management, PIGS nations will leave the Eurozone. That is absolutely in line with the view of Felix Zulauf that EZ countries will leave because they need devaluation of their currencies and adjustment mechanism. In 2012, 2.5 trillion EUR debt must be rolled-over, at the same time when deposits are leaving the PIGS nation banks. J Kyle Bass points out that at the end, debt must be restructured and banks will face big losses. He recommends that we find stable banks outside the EZ, so we find safety for our money. Kyle Bass Japan views are still that the country will face debt crisis right after Europe.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

February 24, 2012

Kyle Bass - Greek Orderly Default is Impossible

Restructuring is the only one way out of this debt mess, and "restructuring means default." Kyle Bass, managing partner of Hayman Capital, told CNBC. He believes that it will be a hard defaul and then will be a hard to stop the contagion. The EZ will have 17 different TARPs in his opinion. In USA it was easier, but in Europe, every zone member will have to baioul it's banks alone. Europe will go in recession and the asset markets will go down, but still banks will not fail as they will be supported at the end.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

February 22, 2012

Kyle Bass continues to favor the USD

Kyle Bass of Hayman Capital, continues to prefer the USD and keep his negative views on the EUR and YEN prospectives. According to unofficial informations, Kyle Bass holds most of his cash in USD. That is not unexpected, as he expects big deflation, crashes of European countries and Japan. It seems that a long USDJPY and short EURUSD, might prove to be profitable positions long-term. Still, Bass keeps his hedgies of physical gold, nickels, farmland and platinum.

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

February 12, 2012

Kyle Bass Recommends Investing in Productive Assets

This is not a cyclical rebound from a crisis. You shouldn't be buying stocks because a low P/E ratio, because the E is wrong.  We’re going to see declines, and people don’t know how to position themselves for declines.

If you’re an individual you need to be much more conservative then you even think you need to be. Return of capital is much more important in the next few years than return on capital.

In the environment we’re talking about here, the U.S. dollar should be fine in the short to medium term, if we’re right about Europe and Japan. I think you should be more in cash, and hanging onto productive assets and less invested in financial assets (stocks, derivatives).

Productive assets like farmland, real estate could still experience losses but they should provide a better inflation hedge.

I took physical delivery of gold, and it had to do with the fractional reserve nature of the COMEX.

What’s going to happen in Europe is going to happen very soon.  The 30-year bond rate in the U.S. could go lower than 2% if money starts running to the U.S. during the upcoming European sovereign crisis.

I don’t get paid to be an optimist or a pessimist, I get paid to be a realist. Being a realist in this scenario is pretty negative.

Don’t believe these governments, when they tell you that everything is going to be fine….think about Mexico in 1994….if you remember the crisis, the day before the government devalued 60% they said they wouldn’t devalue. The government can never tell you what they are about to do….the key takeaway is develop your own opinion.

Source: BusinessInsider

Kyle Bass, an American hedge fund manager, is the Founder of Hayman Capital. He received extensive coverage in the financial press for profiting $590 million by short selling the sub-prime mortgage bond market, before that market crashed. In 2011, Bass initiated a huge position in Greek sovereign debt through CDSs. Media reports were that he could profit up to 650 times his investment should Greece default on its debt obligations.

Kyle Bass Urges Texas Fund to Hold Gold Hedge

Kyle Bass, the Dallas hedge-fund manager, urged overseers of Texas (STOTX1)’s state university endowment, the second-largest U.S. college fund, to stick with a $1 billion investment in gold bullion even as the fund’s assets decline.
“I’m against selling any of the gold,” Bass said today at a meeting of fund directors in Austin, citing the need for a hedge against mounting risks driven by government deficits in the U.S. and Europe. “As every day goes by, I see deflation in the things you own and inflation in the things you need.”
The $19.1 billion in endowment funds overseen by the University of Texas Investment Management Co., or Utimco, lost almost 3.8 percent on invested assets in the four months through December, preliminary figures distributed today show. The Standard & Poor’s 500 Index of shares gained almost 4 percent over the same period, including reinvested dividends. In 2011, the Texas fund’s allocations rose in real estate, natural resources and hedges to protect against slumping equities.
“Ho-hum performance is how I’d characterize our hedge fund portfolio,” said Bruce Zimmerman, Utimco’s chief executive officer, referring to second-half 2011 performance. Hedge funds manage about $7.5 billion of the $19.1 billion. Their results aren’t indicative of their abilities and no major change in the roster of funds is being considered, he said in an interview.

Wary Outlook

Charles Tate, chairman of Capital Royalty LP in Houston, and other Utimco trustees echoed the wary outlook held by Bass, citing concern that the Federal Reserve’s plan to keep interest rates low for two years may only delay an economic decline.
The Fed’s governors, led by Chairman Ben S. Bernanke, “are scared as they can be of deflation,” said Ardon Moore, president of Lee M. Bass Inc., an energy company in Fort Worth, Texas. “This is a grand experiment and they typically never end well.”
People with large amounts of private wealth are holding more cash than most endowments and public pensions, expecting equity prices to decline over the next few years, said Moore, who based his assessment on conversations with asset managers.
His company is owned by Lee Bass, whose $2.1 billion net worth in September ranked him among the world’s 600 wealthiest people, according to Forbes magazine.
Kyle Bass, a managing partner at Hayman Capital Management LP and a Utimco trustee who isn’t related to Lee Bass, faulted the world’s biggest central banks for expanding the money supply by what he said was $15 trillion during the past five years. In April, he advised the fund on holding gold bars rather than futures contracts.
Gold futures for April delivery, the most-active contract traded on the Comex today in New York, touched $1,763.80 an ounce, the highest price since Dec. 2. The metal, which reached a record $1,923.70 on Sept. 6, climbed 11 percent last month, the biggest January rally since 1983.
The University of Texas and the Texas A&M University systems are subsidized by endowments overseen by Utimco. Harvard University in Cambridge, Massachusetts, had the biggest U.S. college endowment in 2010, the latest figures available.

Source: Bloomberg