Kyle Bass is one of the few people that walked away from the 2008 financial meltdown with billions of dollars in his pocket. Bass was a small-time hedge fund manager in Dallas, Texas back in 2006. He started his investment firm, Hayman Capital Investments, when he left Bear Stearns. Bass was an executive at Bear Stearns, so he had a good understanding of the assets that Bear Stearns had under management at the time. Most of those assets were tied to subprime mortgages, and Bass knew the mortgages were a sham, so be bet that Bear Stearns would fail, and the mortgage crisis would turn Wall Street into a crying sibling that needed help from mother government.
Walking away with billions, Bass became an overnight investment guru, and every investor wanted to be associated with him. Hayman Capital became a hedge fund leader, and Bass became a walking version of an invincible superstar. But that title didn’t last long. Bass has a history of talking too much and investing in risky assets that don’t always make his partners happy. In fact, his prediction that Japanese banks would collapse didn’t’ happen, but he did make money when he bet against the yen. His investment in General Motors didn’t go as expected when GM had to pay billions for faulty airbags and power steering mechanisms in spite of Bass saying the victims were to blame, not GM.
In 2015, Mr. Bass said the euro was going to depreciate gainst the dollar, and that did happen. In 2016, Bass is betting that the Chinese yuan is going to depreciate. Bass also said that the United States has a 40 to 50 percent chance of falling into a recession because of the Chinese economic situation. Most economists say the U.S. is one step away from a recession, and that step will happen in 2016.
When Argentina defaulted on billions of dollars in bonds in 2010, Bass supported the president of Argentina by saying the four hedge funds that were holding the bonds were vultures. Bass continued to support the president in spite of the fact that her economic policies turned Argentina into a debt-ridden, recessionary country. It’ true that Kyle Bass has made the right bets on occasion, but his track record is not as solid as some investors think it is. When it comes to Kyle’s predictions these days, there is a lot more thunder surrounding him that positive financial rain.