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.