Kyle Bass Still Likes General Motors and sees high volatility soon

GM is Hayman’s largest position. Hayman still owns General Motors

Bass: Fed tapers to zero next week Kyle Bass, Hayman Capital Management, provides his view on central bank policy and the health of the global economy. Hayman discusses his currency outlook also.

   

Kyle Bass predicts more macro volatilityDiscussing the potential blow back from Japan’s debt crisis, with Kyle Bass, Hayman Capital Management.

Kyle Bass warns QE end will shake up markets


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 Thinks Japan’s Debt Crisis At “Transformative Moment”

Bass said recent ECB quantitative easing decision is "going to be difficult to stop" as he sides with Loeb over Ackman in Herbalife dispute

Kyle Bass is taking sides in the William Ackman / Herbalife Ltd. (NYSE:HLF) dispute, thinks Japan is at a “transformative moment” in its government debt crisis and likes one segment in the U.S. banking sector, and it’s not the banks.
Kyle Basson ECB’s quantitative easing program

The recent European Central Bank (ECB) announcement that it is engaging in U.S.-style quantitative easingis a historical benchmark that is providing opportunity. “It’s the beginning of something that is going to be difficult to stop,” Kyle Bass said on a CNBC interview.

“The opportunity right now happens to be in the currency market place,” but the impact will be felt by multinational corporations, he said. The rising U.S. dollar over the past 6 months one consequence, Kyle Bass said, touching on a trade that started in anticipation of the ECB move well before the official announcement.

Kyle Bass’s observations on Japanese government debt crisis

Kyle Bass is known for his keen observations regarding Japan’s government debt crisis, and his thesis is beginning to materialize. “When debt gets to 150 percent of gross domestic product and 25 percent of tax revenue is used on interest payments alone (with very low interest rates), when you get to that point you are already technically insolvent,” he said.

“It’s a bit hyperbolic to say they are headed for a crash, but we believe there are two outcomes,” that will impact the currency and rates. “So far the BoJ has bought all the bonds. They have monetized the fiscal deficit and will monetize the current account deficit. So far that has worked, meaning it held rates low and devalued the currency.” The Japanese currency has gone from 76 yen to the dollar to 108 yen to the dollar as a result. Kyle Bass doesn’t think this is the end, predicting that the yen is headed to 125 to the dollar “fast,” because for the first time the BoJ will run a full current account deficit.

“This is a transformative moment in their debt crisis,” he said.
Kyle Bass says U.S. housing market has rebounded nicely

When considering the U.S. housing market, Bass says it has “rebounded nicely,” as year over year home prices up 5 percent. “It’s not the double digit gains we saw in the last couple of years, but it is just normalized.” Housing should normalize to where median income is, he observed. How’s he playing this opportunity?

Kyle Bass is focused on one sector, and that is the non-bank mortgaging servicing sector. New capital rules for the banks require banks to sell non-performing loans, which should present opportunity.

When CNBC’s Andrew Ross Sorkin asked Bass what he thinks of the banks, he responded that he doesn’t own any banks, noting that capital standards are tougher and “regulations a lot tougher,” he observed.

“I don’t think there is huge opportunity there.”

When asked about Herbalife Ltd. (NYSE:HLF) and William Ackman, in the live broadcast (the recording of these comments was not posted) Kyle Bass said he supported Dan Loeb and Herbalife, noting that when he was invested he sent one of his hedge fund’s employees in to become a distributor and examine the business from the inside. “This is a legitimate business, it is not a Ponzi scheme,” he said, although he is no longer invested in the firm. Bass said he would take Loeb over Ackman any day.

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: Hayman Global Outlook Video And Presentation

Kyle Bass gave a presentation at the CFA SOCIETY DALLAS-FORT WORTH ANNUAL FORECAST DINNER on February 14th. Below readers can find the full video of Kyle Bass speaking as well as the 20 pages, the theme of which was titled, ‘Hayman Global Outlook Pitfalls and Opportunities for 2014 ‘ United States Fed Tapering & Improving Trade Balance 

• On December 18, 2013, the Federal Reserve announced it would ‘taper’ its monthly asset purchases by $10bn to only $75bn a month; subsequently, on January 29, 2014, the Federal Reserve announced it would ‘taper’ another $10bn to $65bn a month. 

• A continuation of the policy would see additional asset purchases cease by end of 2014 and stabilize the size of the Federal Reserve’s balance sheet. 

• The revolution in unconventional oil and gas projects that has emerged via fracking of shale have radically increased the hydrocarbon production occurring within the U.S. Revolution of Hydrocarbons in U.S As U.S. crude oil production has increased dramatically led by the shale oil revolution while U.S. consumption of petroleum and other liquid fuels has reduced off its peak in 2005, U.S. net imports have declined dramatically, a trend likely to continue. Unconventional Hydrocarbons Are Changing U.S. Trade 

• U.S. crude oil production has returned to levels not seen since the late 1980s. 

• It is one of a series of factors that has narrowed the U.S. current account deficit to the lowest point since the late 1990s 

• That period coincided with the largest USD rally since Paul Volcker slayed the inflation dragon in the 1980s. Japan Abenomics & Quantitative Easing Real Yield Divergence – U.S. vs. Japan 

• Japanese CPI has picked up while nominal yields remain close to all time lows forcing Japanese real yields into negative territory, part of the Bank of Japan’s attempt to force a reallocation of capital from JGBs further out on the risk curve. 

• At the same time, US inflation remains anchored while growth and the Federal Reserve’s tapering of its QE program has led to nominal yields creeping upwards; this has created a long term rising trend of US real yields. 

• The real yield differential has a strong correlation to the value of USD/Yen over time 

• Hayman expects the current divergence to continue and to force further Yen weakening.

Kyle Bass Presentation Hayman Global Outlook Pitfalls and Opportunities for 2014 by ValueWalk

Kyle Bass Presentation Hayman Global Outlook Pitfalls and Opportunities for 2014

Full presentation video and PDF below Presentation provided by: http://www.valuewalk.com/2014/04/kyle-bass-hayman-global-outlook-pitfalls-opportunities-2014/

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.

Why Japanese bonds look 'terrible': Kyle Bass

Hayman Capital's Kyle Bass believes Wall Street's recent declines in the biotech and social media sector, which spread to global stock markets last week, shows cracks in the Japanese economy. The Japanese Nikkei saw a huge drop last Friday, but the country's benchmark 10-year government bonds did not see yields change as investors fled stocks. Bass, one of the biggest critics of the Japanese economy, has made a big bet on Japan's economy devolving into a debt crisis. During an interview on CNBC's "Squawk on the Street" on Tuesday, the hedge fund manager said questions remain whether Japan will lose control of interest rates or whether the yen can serve as an "escape valve." Bass sees inflation quickly surpassing Japaneses bond yields, he said. "The interesting thing in this selloff in the marketplace and in tech ... and this huge selloff in Japanese equities, is that the Japanese bond market hasn't gone anywhere," Bass said. "Yields haven't collapsed, which is fascinating. So their bonds are acting pretty terribly in the environment of their equity market. So we'll see what happens."

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: General Motors shares could touch $50, despite probe

Bass, founder of Hayman Capital and owner of a big position in GM, said he believes the automaker's stock could trade in the high $40s or even touch $50 a share in 12 to 18 months, more than $15 higher than current prices. Bass told "Squawk on the Street" that GM is one of the cheapest stocks in the market. He also said the government could find itself liable for claims related to faulty ignitions because it took over the company when GM filed for bankruptcy in 2009. His bullish stance on GM came as a vehicle safety group attributed 303 deaths to faulty air bags in GM vehicles. "When I look at this, this was not a bankruptcy," Bass said. "It was a government takeover of GM. It may very well be that the government is liable for the claims that the government is looking into. A lot of these claims were discharged in bankruptcy and the government ran the company for a while. I find it kind of silly." During his interview with CNBC, Bass also explained why his hedge fund increased its stake in nonbank mortgage servicer Nationstar Mortgage Holdings, a company under scrutiny from New York state banking regulators. Earlier this month, New York State Financial Services Superintendent Benjamin Lawsky demanded information from Nationstar about its portfolio and practices as his office looks at whether smaller, nonbank servicers can handle large numbers of mortgages.



Bass added that nonbank servicers such as Nationstar don't generate large numbers of complaints compared to the number of delinquent mortgages they handle. "The banks are almost three times worse at doing this and yet the regulatory inquiry is in the nonbank sector?" Bass said. "Ben Lawsky should focus on who the worst players are and not who the best are."

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 bought Argentine bonds last year

Kyle Bass said he bought Argentine bonds at 55 cents on the dollar last year and has no plans to sell even as global investors say there’s an 86 percent chance Argentina will quit paying in the next five years. “There’s huge opportunity in these bonds,” said Bass, who manages about $2 billion for Dallas-based Hayman Capital Management LP. “I know you can’t see that today, but today’s the time to be thinking about it.”

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 Said to Invest in General Motors as a Bet on Detroit

In December 2013, Kyle Bass took a stake in General Motors Co. (GM), said a person familiar with the matter, indicating further investor confidence in the auto industry’s recovery as the U.S. winds down its ownership role.

“Detroit is back. And GM could lead the way forward on the equity front,” the Dallas-based fund founded by J. Kyle Bass said in a presentation published on the website HVST.com. “GM equity represents one of the most compelling risk/reward situations of any large cap in the world today.”

The largest U.S. automaker should increase in value by more than 40 percent in 12 to 18 months, Hayman Capital said in the presentation. The stake in Detroit-based GM is one of the hedge fund’s largest investments, said the person, who asked not to be identified because the matter is private. Hayman declined to disclose the size of its stake.

The U.S. Treasury expects to sell its remaining 31.1 million GM common shares by year-end, depending on market conditions, the government said last month. The sale would come after almost half a decade of U.S. government oversight following its 2008 bailout and 2009 bankruptcy. Bass, known for his prescient bet against subprime home mortgages before the financial crisis, said the U.S. exit is a trigger for the stock. “The U.S. government will be out of the way before the end of the year,” Bass said yesterday in a telephone interview. “They’ve been a source of constant selling pressure in the equity this year.”

GM should “at least trade in line” with its auto peers, according to the Hayman presentation. Bass said that by his reckoning, GM trades at three times Ebitda, while Dearborn, Michigan-based Ford trades at 4.4 times Ebitda.

“A strong case can be made that GM should trade at a premium to the group,” Hayman said. Bolstering that investment argument are the company’s “unique position and strong underlying fundamentals, a best-in-class leverage to global growth markets, improving operational efficiency from ongoing turnaround efforts and an improving product cadence.”

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.