Kyle Bass is famous in the hedge fund world. Bass is the investor that went against the system and bet that the subprime mortgage industry was overleveraged and would collapse in 2008. He was right, and his small hedge fund made a bundle of money. Bass was considered the wonder boy of the investment industry back then, and new money from investors poured into his firm, Hayman Capital Management. For four years, the Hayman Capital fund produced exceptional returns, and Bass became a wealthy Texan by anyone’s standards.
Bass never misses an opportunity to showboat in front of interviewers, and he always gives his opinion on economic issues as well as any other issues that are headline financial news. But Kyle Bass got caught in his egocentric investment trip in 2014, and the hefty returns that his partners were enjoying started to dry up. Bass turned to a few legendary investors for advice. One of them was T. Boone Pickens. Pickens lives in Dallas, and he is well-known for his success in investing in the energy sector.
The Wall Street Journal published an article recently that highlighted a conversation between Pickens and Bass. Pickens allegedly told Bass that the domestic oil supply would not exceed the domestic shortage capacity. Based on that advice, Bass placed a big bet in the energy sector, and it hasn’t paid off. The Highland Capital fund is down seven percent in 2016, and that has investors very nervous. In fact, Bass has made his investors nervous for the last 24 months because of his investment strategy and his actions.
When Argentina defaulted on their bonds two years ago, Bass was the guy that took Argentina’s side when four other hedge funds were stuck with billions of dollars’ worth of bad bonds. Bass was also the guy that backed General Motors when the faulty steering and airbag mechanisms caused the death of several GM car owners. Kyle Bass is the man that is upsetting the pharmaceutical companies because he is using inside information to take advantage of a drop in the value of their stocks.
It’s not T. Boone Pickens fault that Kyle Bass is in the middle of a financial meltdown. Bass has made some poor decisions, and they are catching up with him.