Presenting The "Kyle Bass" Harvard Business School Case Study

Tyler Durden's picture

How does one get a Harvard Business School case study made after them? Why by being constantly ahead of the curve, with the right trade, and being mocked by the same "access journalism and excel free" mainstream media which pushed subprime toxic grenades to anyone who listened, only to be proven correct time after time. In other words, by being Kyle Bass: the same Kyle Bass who lost money month after month on his Subprime short (full slide deck here), only to see it all made back, and then  some... quite a bit of some. Because it is not by following the herd that one makes the killer trades: it is by standing against it and by waiting for conventional wisdom (in this case that Japan's debt load is somehow sustainable - it isn't, but the kneejerk response still is one to treat JGB's as a flight to safety - this only works until it no longer does and the same math that had doomed the euro over a decade ago is finally grasped by all). Yes: he has lost 60% on his Japanese short fund since inception: so what? All it takes is one millisecond of Malcom Gladwellian insight and the formerly offerless market goes bidless. And that -60% is transformed to +XXXX.YY. Perhaps once the market takes long, hard look at the underlying reality of what the chart below implies, and that unlike in the US, where two-thirds of all financial liabilities are mopped up by the shadow banking system which provides an unregulated inflation buffer (there is a reason why the European bank system is 3x bigger than the US - the balance is made up of the 100% unregulated shadow banking liabilities most of which are held off the books!), Japan just does not have one.

(As a total tangent, we are always fascinated when "pundits" come up with "economic" theories explaining what they have absolutely no understanding of: namely the subversive role of shadow banking with its $20 trillion in assets which allows infinite asset rehypothecation, which more than any other three letter economic theory that has no bearing in practical reality, is the sole reason why Treasurys are a Giffen good... for now.)

Either way, below is the complete Harvard Business School presentation on Kyle Bass, on Heyman Capital and on the Japan Short ber, which we hope will put to rest some of the prevalent disinformation floating around.

 

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e2thex's picture

How is this going to impact bass fishing?

spanish inquisition's picture

If I had a nickle every time I heard that.....

francis_sawyer's picture

 "A nickle ain't worth a dime anymore"

~ Yogi Berra

(Kyle Bass 2012 edit: "It will be soon")

Harlequin001's picture

Let's all hope he can collect on his mega profitable shorts when the economy finally goes tits up.

Me, I'm buying gold, of the hard variety.

I suspect I will collect more in the long run...

Oh regional Indian's picture

Kyle Bass is a consummate insider. His Father was loaded and connected. 

This is not some genius who made a great bet. 

For crying out loud, even Bill Gates has a "story" or how about Steve Job's "Legends".

This probably personally nice guy comes from a Serious Bass Line. ;-)

He got richer because he was rich to begin with. HE "saved" 33 million dollars to start Hyman Capital. At what age?

I smell a Hilary Clintonesque Cattle Futures Super Genius Fortune in Mr. Bass's pre-science. 

Plus, the man Shoots beavers, finds them a menace. Shows you how much he understands "Flows" and "Banks" of the most important sort. 

There are Harvard Case Studies on Jack Squelch, Michael Milk'em and Chainsaw Al too. 

It's time to think for ourselves.

ori

Reach for your Own Core

CrashisOptimistic's picture

You are correct.

A TON of these "self made millionaires" were staked their startup.  Or they had a trust fund that was funding life and their "bold risks" were no risk at all.  

It's like the romantic story of hocking a calculator and a VW van to start a company . . . then you find out they started it in the parents' garage, they were 21 and how big a risk is a calculator and van.  That's a risk that can be recouped after a year on a regular job.

These guys with their 30 million dollar cap man firms who "hit it big" started in the early 90s when anything they bought went up.  Let's also keep in mind they parked that 30 million in Treasuries and went out to solicit money, did their 2/20 thing and when it tripled in the 90s, they kept 20% of it.

And let's also remember one more critical thing.  No one ever writes articles about the guy who lost 5 million and went back to work as an insurance adjuster.  Think they don't exist?  They do, at a 1000:1 ratio to the success stories (largely because their parents didn't stake them 30 million).

Oh regional Indian's picture

CrashISO, I was in the Silly Con Valley in it's boom wheeling and dealing with the best and brightest.

It was one big circle-jerking, double-booking, mutually benefitting rip-off.

Company I was at was a near $ 4 Billion dollar stock-swap on March 10th 2000. One loser was forced to marry a really well run company.

Soon, they were both dust, but a few legends had been created, Hummers had been bought, breathless TV coverage was had.

And I heard and saw legends being made. Around paper tigers and what I now know to be coke snorting, wife prostituting masons. And like anywhere else in the US, it helped to have a jewish board-member. Immensly helpful.

So yeah, I can see some Kyle worshippers got their panties in a twist. Get over it guys. 

Think for your-self. All these tigers and creations for your distraction.

ori

thorgodofthunder's picture

And I heard and saw legends being made. Around paper tigers and what I now know to be coke snorting, wife prostituting masons. And like anywhere else in the US, it helped to have a jewish board-member. Immensly helpful.

Mods, why is this ignorance and hatred permitted on your site? Don't you grasp the fatal damage it causes to your credibility.

To the racist poster- my dad was in the Holocaust. He barely survived but lived to tell the stories and teach the lessons of such moral depravity. Perhaps you should watch some historical footage of this atrocity to properly understand the danger of your attitude.

Oh regional Indian's picture

Chill dude, this is not Germany. It's okay to say Jew. Just like it's okay to say Hindu or Christian.

If statement of a fact that Silicon Valley is loaded up to the gills in the Vulture Capital sector with people of Jewish origin is...HATEFUL, RACIST...whatever...

I can see footage of many things that never happened the way they were purported to have happened. Like the Appolo Moon LAndings. Next you'll say they really happened too, right? 

Meanwhile Eli Weisenthal has been proven to be a lying schmuck, not quite a mensch it seems and Anne Frank's Diary has been proven fake too.

And there is a number that keeps dropping, and dropping and dropping. And no mass graves have been found, only meticulous IBM kept recoreds of deaths, births, cause and effects...

By the way, the British starved, raped, shot, ppisoned or otherwise killed probably a 100 million Indians over 300 years, and in their leaving, promulgated a split that caused another 5 million die at the borders of India and Pakistan.

Yet, we are allowed to talk about it all. All of it. Cause, effects, people, circumstances, all of it. Open debate. 

It's not verbotten to mention the Genocidal Raj, or the instigated partition or the sowed communal dis-harmony.

Thin skinned twit calls himself thor the god of thunder.

...

Sun Tsu's picture

Kyle Bass is no relations to Perry R. Bass.

Change your moniker to SOPRANO...

CrashisOptimistic's picture

I wasn't commenting particularly on him.  Know nothing of him and care nothing about him.

The points were general, and accurate in reply to a poster.

FutureShock's picture

Screw you guys, Bass is the smartest guy in the room. I don't care what kind of advantage anyone gets, rich or not, he knows his shit. He also went to those guys to see how they were figuring thier CDO models and told them they were wrong or stupid to have an unsustatainable growth model. He did not hope no one figured out what was happening so he could profit. Seems like an ethical guys in a far from ethical business. Some one needs to get him to run the Fed or treasury.

Cosimo de Medici's picture

Bass put $5 million of his own cash and clients put in $28 million for the $33 million start-up.  Since Bass had been a Snr MD at Bear, having saved $5 million is pretty average.  Bass is not from the Perry/Sid Bass et al family.

As for Jobs and Wozniak, anybody else here on Zerohedge start an Apple?  What's stopping you?

 

Oh regional Indian's picture

No shit dude. Jobs and Woz in a leedle garage...

That was the movie. Kay?

ori

 

RobertMugabe's picture

ORI proving once again to be one of the more useless contributers in the ZH comment section..

Precious's picture

Unfortunately Kyle Bass knows nothing about the psychology and behavior of Japanese people.  Therefore he will never understand why he is completely wrong.  Japanese people culturally and occupationally can endure great burdens, as we see from their recovery after being bombed into oblivion by US tactical and nuclear bombs.  Still, you never even hear the Japanese complain about this (unlike the incessant chatter from the victims of the European holocaust (even though I would say the nuclear bombing of Hiroshima and Nagasaki is much more of a real holocaust).  Japanese don't complain because Japanese people hate excuses and they hate people who complain.  If there is a problem in Japan, people simply do their best to over come the problem.  Since Japan is one of the most educated populations in the world, they can accomplish a lot if desired.  In addition, there is not the youth-worshiping in Japan that goes on in the west.  Therefore, old people in Japan still provide a lot of value to society.  Many work into their nineties, some even more.  Unlike the USA, old people in Japan are considered important and useful, not burdens.  So, in short, Japan still has, and will continue to have, a reserve of resources available.  The Japanese, in a country with little energy resources, limited fertile land, still has the third biggest GNP in the world. A country the size of California, and it has the 3rd biggest economy.  Okay.  Explain that.  Explain why similar geographical nations (like Britain, Indonesia) don't even come close to Japan's productivity.  There is one reason.  Japanese culture.  Japanese don't make excuses.  So, go ahead and short Japan, Kyle.  They will gladly hand you your ass on a platter.  You're welcome for the free lesson.

Precious's picture

Uhh.  Show me where I'm wrong.  Also, if anything, this is an understatement.  I could have gone on much longer, but there is no reason to pile it on.  The point is sufficiently made here.  I have another dozen reasons why Kyle Bass is wrong.  They just are not necessary to add.

LowProfile's picture

Being "highly educated" doesn't imply that their population as a whole understands MMT, central banking, history of fiat currencies, fall of empire, etc. Is Japan's population 100% privately educated, or did they get goobermint approved educations?  I REST MY CASE.

I personally like personal gold ownership as a metric for how "educated" a population is.  Hint:  Japan SUCKS DEAD DOG BALLS using that metric.

And culturally?  They are one of the most isolationist and racist populations on the planet.  And let's not forget the numerous pop culture gems they have given us, e.g. Tubgirl and tentacle porn.

There is much to like about Japan, but those positive qualities aren't going to get them out of this jam without a lot of pain.

Precious's picture

You spend far to much time playing video games, reading glossy magazines in airports and singing karaoke in Roppongi.  Why don't you get out once in a while and see the other 99% of Japan that isn't infected with western cultural viruses and other depraved western lessons.

Regarding gold, I suppose you have your personal assaying kit ready when the crisis hits, so you can sell all your gold to pay for your dinner at Pizza Hut.  Or maybe you are a gold bear.  It's impossible to know from your infantile prattle.

LowProfile's picture

Wow, ad hominem much?  Assume much?  Straw man much?

And for someone who uses "Precious" as a handle, your pejoratives surrounding gold are jarringly out of character.  Methinks I smell a troooooollolo...

 

You might want to visit this portion of the thread http://www.zerohedge.com/news/presenting-kyle-bass-harvard-business-scho... and rethink your thesis.

Precious's picture

Have you seen Lord of the Rings?  Do you know what it's about?  Do you think it's a story about a metal called Gold?

markmotive's picture

Precious - fair points on Japan. But I don't think the Japan bears would dispute this. If the Japan bear case is accurate, it's because Japan has painted itself into a fiscal corner.

I guess what the Japan bears argue is that Japan won't go bust because of a lack of ingenuity and drive, it will fail because of a lack of options.

Precious's picture

Japan deserves an extensive amount of criticism.  There are many problems and challenges.  Some are unique.  Some are the same as other places.

In the first place, however, the Japanese are extremely poor at communicating outside Japan.  However, that doesn't mean we should misinterpret what's actually happening or follow the wrong signals.

k. pablo's picture

Their dwindling birth rate will trash many of their cultural advantages.  No tax base = no way to sustain social spending = worsening sovereign debt picture.

Global Hunter's picture

you are probably right about the Japanese culture however their "leadership" is doing everything it can to cover up Fukushima and is complicit in its very own nuclear holocaust (albeit slowly) of their own people.  Their very own people, think about this: it doesn't matter how much they don't complain if they're being slowly poisoned to death and illness does it?

Precious's picture

If you notice, I didn't say anything about the leaders of Japan.  The leaders of Japan are tools of the USA.  I entirely spoke about the "people" of Japan.  That has nothing to do with their puppet leaders, who are basically just lackeys for the DC establishment. By the way, do you know who sold Japan the nuclear reactor shit?  GE.  Do you know why? Because the US Goverment told the Japanese politicians to make sure and buy that nuclear reactor shit from GE.  The US Government is the source, the impetus, and the strategist, of Japan's misguided foray into nuclear power.  Tell me what this has to do with Japanese people?

Global Hunter's picture

OK lets forget about "leadership" and focus on the Japanese people...your words "So, in short, Japan still has, and will continue to have, a reserve of resources available."

Ummm not if they're all being slowly poisoned to death is the point I'm trying to make, I don't care how polite they are, how hard they work or how little they complain.  

Precious's picture

Have you ever even been to Japan?  Did you ever work in Japan?  Do you know any Japanese people?  Can you speak Japanese?  Do know anyone in the health care industry in Japan?  Were you in Japan during the big earthquake, tsunami and nuclear meltdown?  Have you walked around Japan with a geiger counter? Do you know even one person who runs a business in Japan?  Do you know even one Japanese farmer?  Actually, do you even know one native Japanese person?

LowProfile's picture

No, no, yes, some, no, no, no (seen lots of scary videos though), no, no, several.

You're missing the point.  The Yen is heading for a crisis.  Your Nipponfilia is blinding you.

Precious's picture

Fine.  You can place your bet.  By the way, India and Japan need to be best friends forever.  It's a good match.

LowProfile's picture

You might want to visit this portion of the comments http://www.zerohedge.com/news/presenting-kyle-bass-harvard-business-scho... and rethink your thesis.

Precious's picture

That's what you would call "circular reasoning."

Global Hunter's picture

Lookit here mate, the Japanese culture has A LOT of positive qualities, however they've been on a path to slow self destruction since the false flag attack on a Chinese railway line and subsequent rape of Nanking.  Sorry no I have not walked around Japan and do not speak Japanese if that is a prerequisite for having an informed opinion I suppose I can't say the Holomodor was an unjust tragedy because I don't speak fucking Ukrainian either.  

Take your blinders off they are in a demographic death spiral and are being poisoned to death because their people were sold out to foreign capitalists.

edit: I don't speak fucking Cambodian either so I suppose I can't say whether Pol Pot was being reasonable or not when he killed a million of his countrymen either.

Precious's picture

It doesn't take much a thinking mind to figure out Pol Pot was a murderous despot.  Whether to short Japan and why, is a wholly different intellectual exercise.

Precious's picture

Aha.  A technical chartist.  All clear now.  The straightest line between two points.  IT'S SCIENCE !  Yipee.

 

By the way, I'm getting all kinds of texts and emails from Chinese in there Mercedes, thanking you for your concern about Nanking and so on.  They really appreciate it and they hope you find a job soon.

Oh regional Indian's picture

Precious, I can answer yes to 99% of your burst of questions.

Considered it my other home. Then, after 6 years of doing business with them, at the highest levels, and multiple trips to Japan, I have to agree it's done for. Japan is culturally, morally and demographically destroyed, all parts of it.

Even my most refined and educated and old family and connected friends are all blind to Fukushima and the other 50 reactors that are all on Seismic zones with no way, no path, no viable method even, to clear all the spent fuel.

Just follow Reactor 4 for now. 

Old Japan and old Japanese values will not work in this evolving paradigm. Even in the deepest parts of Japan you find perfect roads and humongous factory complexes supporting so called "rural" Japans old world charm. 

They will need to die to rise again. Like all of us.

ori

Precious's picture

Culturally: Please elaborate - objectively if possible.

Morally: Please elaborate - again objectively if possible.

Demographically: The world is no longer driven economically by manual labor.  Japan has acquired intensive scientific skills needed to compete in the present century.  Please refute this.

Global Hunter's picture

"the world is no longer driven economically by manual labour.  Jonestown has acquired intensive scientific skills needed to compete in the present century".  Shit man brainwashed much?  I hope for your sake you're still young.

You have it all backwards, if they turn their backs on the western model and influence and work using their hands rather than their heads, yes they have a chance.

Precious's picture

I really hope you didn't mean "Jonestown".  That would be a whole different discussion thread.  Please say it was just a freudian slip.

Oh regional Indian's picture

Precious, One simple realization opened my eyes to Japan's great lie.

A quote:

Japan…. living a Perpetual Nuclear Sunrise in the aftermath of WWII. Supplied on the cheap by it’s master, nuclear energy meant the lights could stay on 24/7. The factories could produce 24/7. You could build bridges to nowhere for decades, 24/7.  You could party 24/7.

Machines, even giant, electricity sucking robots on giant assembly lines, could run 24/7. Driving it to it’s current export behemoth position.

Power 24/7 ruined Japan. It became a mechanized and mechanistic nation. They exist like automatons. Hive-mind at it’s zenith. Always living in 50/60 Hz. 24/7.

Japan could choose to be in-efficient (on the big picture) and still out-sell their competition on price. Their power was virtually free. Cost is a monetary expression of embedded energy. Viola!

But Japanese people are like Machines. Except for carefully crafted social etiquette, they have no concept of spontaneous combustion. They live in their free-energy produced gadgetry and other consumer oriented wizardry, purposeless. It’s a really sad sight, especially for someone like me, who has studied and learned much from Old Japan (Zen and Budo especially). It’s gone except in an over maintained facade… Just like Japan.

http://aadivaahan.wordpress.com/2010/09/03/the-curse-of-free-energy/

ori

Precious's picture

Of course you realize there is presently not one (or maybe just one recently) nuclear power plant running in Japan.  Are all those robots, factories, workstations, supercomputers, chip fabs, bioreactors, trains, subways, and appliances now turned off?  I left out one question.  Have you ever even been to a Japanese factory?  Please.  Try to add some credibility.  If what you say is true, how could Japan have continued economic output for the last year, while nearly all nuclear power plants have been simultaneously shut down.  The facts just don't support your argument.

Oh regional Indian's picture

I have seen Kyoto inside and out, places where even most Japanese do not get to go. I know Japan.

And think, a nation destroyed by a war had the money to pay for 55 Nuclear reactors.....leading, bleeding, heck...radiating edge technology in the 50's and 60's.

And then the curse of Mr. Deming, taking non-linear Japan and putting them on an assembly line. Changed Japanese character into linear, trend following robots. Anywhere you go. The trend is always clear in Japan. And Japanese TV? Always lowest common denominator focussed. 

Nuclear was approximately 30-35% of Japanese power. Now, common people are being blacked out and power-cut, to keep those factories rolling. A dear friend is making an absolute killing selling cheap Korean Gensets (under 2 KW), gas fired, kerosene powered, multi-fuel.... and he cannot sell them fast enough. 

See? It's the same shit here in india (as in it's always been like this here)... companies pay bribes to keep the power on, common folk see 4-6 hour daily power cuts.

Again, it is a looming crisis, because Oil is ultimately headed up, unless a war intervenes and send us into a deflationary death spiral first. Regardless, Japan is on thin ice. It needs to do somethign radical, not bow and fume.

Currently, I can best describe Japan as Bow and Fume.

Fuming....

ori