The 2008 sub-prime mortgage crisis wiped trillions of dollars from the plus side of world’s investment column. Millions of people lost their life savings and homes, but there were a few savvy Wall Street insiders that made a fortune when the market collapsed. Kyle Bass, the founder of Hayman Capital Management LP, was one of those insiders. Bass was an executive at Bear Stearns in 2008, and he knew that the mortgage bonds that banks were holding were worthless. Mr. Bass decided to place a bet that the market would crash, and he hedged that bet when he secretly told CNBC reporter David Faber that Bear Stearns was going to go belly-up.
Bass made a fortune from that bet, and he has been betting on risky assets ever since. Bass relied on his reputation as an investment genius to further his career and his investment company, but as time often does, Bass was outed not for being a genius but an investment buffoon that is willing to pull cards from the bottom of the deck to protect his investments.
One investment that turned out to be a financial disaster for him and his investors was his Argentina bond investment. Bass developed a friendship with former President Cristina Fernández de Kirchner. Cristina Fernández de Kirchner was a Peronist leader than had no concept of economic frugality. The country was billions of dollars in debt and the bonds that Bass invested in were worthless when Fernández de Kirchner defaulted on them. Bass invested in Argentina for the publicity more than the profit according to some of the investors involved in the transaction.
Hayman Capital Management had a sizable investment in General Motors when the information that GM had installed faulty airbags and faulty power steering mechanisms in some of their models. Rather than trying to fix the situation, Bass made things worse when he went on national TV and blamed the victims for the accidents. Bass said they were drunk or high while operating their GM vehicles.
The latest Bass mess that could turn popular opinion further against Mr. Bass is his partnership with another individual that targets pharmaceutical companies. Mr. Bass bets against pharmaceutical companies that are be investigated for patent violations brought by his partner. When the news breaks that a pharmaceutical company is under investigation, the stock in that company drops and Bass is there to reap the rewards. Wikipedia has the full story.