The Kyle Bass Conundrum

Don’t confuse “Gass” and “Bass”. Kyle “Gass” of Tenacious D hasn’t suddenly exploded on the financial scene; he’s completely separate from Kyle Bass–though considering Bass’s lucrative investments, perhaps he wishes otherwise. Bass has a rock star/bad-boy status with the financial community today and on the financial blogging circuit. He’s got a rock star status because he hit the scene in 2007 and successfully predicted the 2008 sub-prime lending crisis that knocked America for a loop. Kyle Bass is a hedge fund manager, and so he was able to properly advise a number of clients and himself make some lucrative investments. Again Kyle Bass scored a goal when he successfully predicted an economic implosion, and subsequent stimulus “solutions”, in Japan. Now he’s got his sights set on China, and many wonder whether or not his predictions will prove lucrative once more.

Bass believes the Chinese economy is on the edge of collapse. He believes this because he’s noticed that their spending/lending is far in excess of the country’s ability to produce equitable goods. Their Gross Domestic Profit (GDP) is less than their spending. I.E., China is making bets that she can’t cash.

Surrounding China are a bevy of Asian countries “aggressively”, as Kyle put it, lending to the stumbling juggernaut with aims likely similar to Kyle’s: cashing in on economic implosion.

But if Kyle is right, it means savvy financiers should pay attention. The difficulty is, he has ties to Cristina Fernandez de Kirchner, a well-known Argentinian socialist. Are her socialist tendencies shared by Kyle vis-a-vis their congress together? Well, that’s semething difficult to definitively say.

If that were the only mar to Bass’s exceptional resume, it might be something to dismiss. The thing is, Kyle Bass is also well-known in political circles for engineering stock-market drops. He created The Coalition for Affordable Drugs. This organization had an ostensible goal aimed at diminishing the cost of pharmaceutical medication. The end result was that stock of many big-time pharmaceutical firms dropped, and Bass made a killing in the stock market because of it. Politicians on both sides of the political fence started scrambling to erase that loophole as a result, but Bass came out “smelling like a Rose”, as the saying goes.

So will his predictions in China serve as actual indicator’s of the country’s economic situation, or are they another scheme to manipulate the stock market in order that Bass profits directly? It’s hard to tell, isn’t it? It seems as Bass’s media appearances go up, his fund performance diminishes. But at the same time, the guy is still making successful predictions. Maybe the key is in diversification. If there are a variety of funds with Bass, leave him with a couple and withdraw the others until the storm passes over. Or don’t; it’s really up to clients and their hedge-fund manager, not article-writers and their readership. The only thing for sure in all this is that it makes sense to keep a close eye on Kyle Bass.