Wednesday, April 18, 2012

Kyle Bass: Worth Listening To

Kyle Bass is a guy that I sit up and listen to every chance I get, and you may want to as well (although emulating his driving might get you in trouble).  "J. 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 (via CDO's), before that market crashed. Bass was born in Miami, where his father managed the Fontainebleau Hotel, and later the Dallas Convention and Visitors Bureau. He attended TCU on a diving and academic scholarship, and graduated with a BA in Business Administration. Bass began work with Bear Stearns’ brokerage firm in their Dallas office. He became senior managing director at 28, then left to run the Dallas office of Legg Mason, where he focused on the housing industry. Bass enjoyed risk-taking hobbies and, in 2002, raced a $200,000 Porsche from Manhattan to Los Angeles in the Gumball 3000 race. Ignoring speed limits and using a helicopter spotter, he won the rally’s “Hottest Wheels” award for once reaching 208 mph. After saving $33 million, Bass founded Hayman Capital in February 2006 as a "global special situation fund". Bass and his staff did months of research to find out which CDOs were composed of low quality mortgages. Beginning in mid-2006, Bass used leverage short-selling of $4 billion of subprime securities to the synthetic CDO market. By December 2007, a wave of foreclosures swept the US, and Bass was featured on Bloomberg TV as making a fortune “betting against the subprime borrower.” Hayman Capital leveraged $110 million into $700 million through this short sale play. In 2011 Bass was featured in Michael Lewis's best-selling book Boomerang for purchasing 20 million nickels ($1 million), saying that each 5 cent nickel is actually worth 6.8 cents. Also in 2011, Bass initiated a huge position in Greek and other European sovereign debt through credit default swaps. Media reports were that he could profit up to 650 times his investment should these countries default on their debt obligations." (Wikipedia)