Kyle Bass, founder and principal of Hayman Capital Management, L.P., located in Dallas, has stated that 2015 has been the worst year of the last ten. His interview on Wall Street Week, noted that he expected a rebound in energy prices in 2015, but it didn’t materialize. His optimism continues, as he feels there is a massive opportunity in energy. Kyle Bass’ states that if you are looking for a medium term investment idea, you could allocate capital for the next three to five years. Investing now and into the energy space over the next 6 months.
With an agnostic view as to what type of energy, one should invest in, Bass believes there are investments in; infrastructure, pipelines, producers, upstream or downstream. Bass strongly believes these can put new capital and generate substantial returns. He believes that this type of trade is not for everyone, as it’s very tough to invest as a non-professional. There was a prediction of China’s devaluation, which happened. Bass is quoted from CNBC:
“China many years ago attached its currency to the dollar: they hitched their wagon to our star very smartly because back then our goal was to depreciate our dollar through inflation. So we issued debt to the rest of the world to depreciate the dollar. And so now the real problem is China has hitched their wagon to our star, and their currency has effectively appreciated about 60% versus the rest of the world since 2005 and it’s killing them… China’s effective exchange rate moving up versus the rest of the world made their goods and services a little bit more expensive each year and now that labor arbitrage is gone. And if that labor arbitrage is gone, and the banking system has expanded 400% in 7 years without a nonperforming loan cycle, my view is we are going to see a non-performing loan cycle.”
Bass goes on to say: “We are not short Chinese equities, but we are very invested in the Chinese currency: we think we are going to see a pretty material devaluation; we think it’s going to be in the next 12-18 months.”
Bass was fortunate as his predications of the 2008 mortgage crisis, not only made his fortune, but also international headlines. During this time he became a superstar and genius. That seem to fall apart as time went on, something UsefulStooges has reported about Kyle Bass, and his magic touch dissipated. He has since made several bad calls. He chooses not to turn down invitations to go on TV and give analysis that invariably serves his own bottom line.