The Rise and Fall of Kyle Bass

Kyle Bass was born in Miami, Florida on September 7, 1969. After completing his business education at Texas Christian University, it seemed as if Bass was well on his way to becoming a top hedge fund manager. Indeed, Bass would achieve many successes including founding Hayman Capital Management in Dallas. However, despite his early successes, the more recent years of his career has seen troubling ethical and financial questions arise.

After leaving Legg Mason, INC as a managing director, Bass set out on his own and started his hedge fund in 2006: Hayman Capital Management. It would be with this fund that Bass would enter the financial world spotlight and become a rising superstar of investing. In 2007 he took advantage of the subprime mortgage crisis when he betted against residential mortgage backed securities that he predicted were likely to default. After the ensuing mass of foreclosures that spread all over the country, Bass became well-known for correctly predicting and benefiting from this crisis.

After he was thrust into the media spotlight and began to give his investment analysis to viewers, he did not fare so well. One such misguided analysis was his support of Argentinian President Cristina Fernández de Kirchner and her failed economic policies. When Argentina defaulted on its debt for the 2nd time in thirteen years, Bass continued to advocate Fernandez’s economic policies for Argentina. The New York Post even compared Bass to leftist Argentinian economy minister Axel Kicillof.

His work via the Coalition for Affordable Drugs is perhaps even more notorious and raises many ethical questions. Bass is accused of selecting specific pharmaceutical firms, short selling their stocks, and then challenging their patents through the Coalition. The result is that the stock prices of these companies plunge, allowing him to make hefty profits. The situation has got to the point where the Patent Trial and Appeals Board-a government agency- is weighing options to formally sanction Bass for abusing the system via his many patent challenges.

In an almost complete reversal since his founding days of Hayman in 2006, it was estimated that Bass had lost almost 30% in 2014. According to Jim McTague , who wrote an article on Bass’s “comeback” plan, Bass is currently betting on rising oil prices. Bass is also still supportive and optimistic on the Argentinian economy. Given his recent track record, many investors may well proceed with extreme caution prior to taking action on these assumptions.

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