Kyle Bass is a hedge fund manager. Hedge funds involve unusually risky investments, based on borrowed money. A more traditional investor can start off with $1 million dollars to invest, and might, if the investment is bad, end up with nothing. A hedge fund manager can start off with nothing, and end up $1 million in debt.
Kyle Bass graduated from Texas Christian University in 1992 with a BA in Finance, and has been immersed in the high stakes world of global finance and investment ever since. He started with Prudential Securities, then moved to Bear Stearns (where he got into hedge funds), then worked for Legg Mason, Inc., before he founded his own hedge fund, Hayman Capital, in 2006.
He soon burst into a global spotlight in the financial and hedge fund world by anticipating the subprime mortgage crisis in 2006 and 2007, investing millions of dollars in credit default swaps. When mortgage based securities went into default in great numbers starting in 2007, Hayman Capital made huge profits from those credit default swaps. It also profited from the economic difficulties in Greece in 2012, and Japan in 2013.
But recently Bass’ luck has turned bad. A major GM stock holder, he suffered when GM was hit by the scandal involving defects in its autos that disabled their airbags. Hayman Capital has placed large and possibly losing bets on the economy of Argentina, and the price of oil. He has become a major (and isolated) defender of the leftist and probably corrupt regime of Cristina de Kirchner in Argentina, for which (it is suspected) he has been rewarded handsomely by that regime.
In spite of those possible payoffs from de Kirchner, 2014 and 2015 have been bad years for Bass. To tide him over, he has formed the Coalition for Affordable Drugs. He short sells the stocks of pharmaceutical firms, that is, he places a “bet” of sorts that those stocks will become cheaper. Then the Coalition files law suits against those firms, claiming that their patents for important drugs are illegitimate. Voila!
Most recently, Bass claims that the China is in for a “hard landing” because of a looming banking crisis. China’s GDP is $10 trillion. There are $31 trillion dollars in its banking system. According to Bass, “emerging markets should never have 300% of GDP on their books.” What will happen to China as a result?