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.


Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sun, 05/20/2012 - 11:10 | 2445079 Sandmann
Sandmann's picture

They did not go to Harvard Graduate School of Business - they went to Harvard College

Sun, 05/20/2012 - 11:33 | 2445110 I am a Man I am...
I am a Man I am Forty's picture

my bad, I stand corrected

Sun, 05/20/2012 - 13:51 | 2445351 Mary Wilbur
Mary Wilbur's picture

Didn't they drop out?


Sun, 05/20/2012 - 15:42 | 2445604 Fluffybunny
Fluffybunny's picture

Yes. Doesn't mean they didn't benefit from the time they were there.

Sun, 05/20/2012 - 11:35 | 2445113 littleguy
littleguy's picture

Yeah, their business turned out great. Didn't they just have a stellar IPO??

Sun, 05/20/2012 - 19:47 | 2446003 WonderDawg
WonderDawg's picture

Turned out great for those guys, they're bazillionaires. For the suckers that gave them their money, not so much.

Sun, 05/20/2012 - 11:10 | 2445078 Sandmann
Sandmann's picture

Harvard Business School is in BOSTON not Cambridge......

Sun, 05/20/2012 - 17:21 | 2445790 insanelysane
insanelysane's picture

I stand corrected as it is on the other side of the river.  Is that still Boston or is it Chestnut Hill or something?

Sun, 05/20/2012 - 11:32 | 2445103 littleguy
littleguy's picture

I concur entirely. I was a fellow at Harvard Medical School last year and can tell you that Harvard graduate students arrive thinking they know everything and leave comfortable in the knowledge that what they know is definitely correct because Harvard has the best 'teachers'. It's just about writing the best - tick all the boxes application, not about actual academics at all. 

Another case in point : Harvard Kennedy School hired Gordon Brown last year to lecture to the kids. Yeah, great institution. Let's have a man responsible for the destruction of the British economy lecture to the next generation. 



Sun, 05/20/2012 - 11:49 | 2445135 Sandmann
Sandmann's picture

Kennedy School is a joke. It wants to be something it can never be. It hired Gordon Brown because Ed Balls his sidekick went there and became best buddies with Larry Summers. There are lots of recycled types there like Meghan O'Sullivan from the Bush White House. It is simply a conveyor belt. Bruening, who deflated Germany became a Visiting Prof at Harvard University.

Anyway, the B School is the only place to be - it has the best campus and the best beach

Sun, 05/20/2012 - 13:58 | 2445369 RoadKill
RoadKill's picture

Say the idiots that have never been to the Harvard campus much less went to HBS.

Proud HBS grad here. The connections anglr only works 20 years later when 50% of your classmates are successful. The key is you sit in a room of well above average and driven people and discuss how to resolve hundreds of different types of problems.

Anuone that claims HBS and the rest of Harvard havent produced 10x more successful people then anyother single university system clearly hasnt done any research.

Sun, 05/20/2012 - 14:53 | 2445496 Sandmann
Sandmann's picture

Hey Roadkill - another Baker 20 Boy here !  Good to find another !!!

Mon, 05/21/2012 - 06:56 | 2446756 BidnessMan
BidnessMan's picture

Hello to Roadkill and Sandmann - a Section B'er here.  Guess that makes us the Three Amigos.

Sun, 05/20/2012 - 17:26 | 2445799 insanelysane
insanelysane's picture

You missed the point.  Successful because of insider trading and similar activities not successful because of actual independent thought or ideas.

Sun, 05/20/2012 - 19:51 | 2446014 billsykes
billsykes's picture

Actually I have to concede Roadkill is correct- I did some digging on a potential employer/coworker/investor at a company I was going to work at (he graded in the 50's- statistically I did find a higher success rate among early 80's and late 70's grads).
I dug through years of graduates and found the vast majority have done nothing special in their careers or have risen to the point where they can afford to have Adrenochrome shots.

I was actually surprised, I thought that most of these guys would be BSD, or entrepreneurs, but a huge number were just middle managers.  

Sun, 05/20/2012 - 11:09 | 2445076 Sandmann
Sandmann's picture

Not just George Bush - Mitt Romney too - and Jeff Skilling.

Sun, 05/20/2012 - 11:27 | 2445097 derek_vineyard
derek_vineyard's picture

Benny Bernanke undergrad at Harvard University.  Our world would be so much better off with all Harvard grads ex-patriated (or worse), and the building turned into a prison.

 Send your child to a weapons training school and buy him some farmland.

Sun, 05/20/2012 - 11:50 | 2445136 Sandmann
Sandmann's picture

but Bernanke roomed in the same House as Greenspan

Sun, 05/20/2012 - 15:39 | 2445600 Freddie
Freddie's picture

Kyle did a recent interview with Bob Pisani in his Dallas office.  Bob asked him about gold.  On the credenza behind Bob in Lyle's office was a cammo'ed sniper rifle with a scope and bipod.  It was not a Barrett.  I think it was the bolt action Remington or something.

Kyle knows his stuff.

Sun, 05/20/2012 - 13:05 | 2445258 Sandmann
Sandmann's picture

Actually, it is Wharton that causes the problems - you will find the Wharton grads are the ones on Wall Street like Mike Milken at Drexel  - Wharton tends to produce Wall Street fodder more than Harvard.

Sun, 05/20/2012 - 16:31 | 2445681 Tom Green Swedish
Tom Green Swedish's picture

LOL.  Our last two presidents, and maybe the next one will be a Haarvard guy.  These people are sharks and distort the truth.

Sun, 05/20/2012 - 09:58 | 2444952 Yellowhoard
Yellowhoard's picture

KBass is da man.

He reigns.

He can explain the inane.

He can stand the pain

Till he's made the gains.

In short, the man is sane.

Sun, 05/20/2012 - 09:58 | 2444953 rxmitch
Sun, 05/20/2012 - 19:04 | 2445931 LongOfTooth
LongOfTooth's picture

How much credence does one give to a fellow who wears lipstick?


Sun, 05/20/2012 - 09:59 | 2444955 Motorhead
Motorhead's picture

Is Harvard still around?  I thought Larry Summers broke their bank with his sagacious financial advice.

Sun, 05/20/2012 - 11:52 | 2445140 Sandmann
Sandmann's picture

Harvard is so around that the 44th President of the United States went to Harvard Law School and is contesting the election against a graduate of the Harvard Business School in November 2012

Sun, 05/20/2012 - 13:45 | 2445336 Reese Bobby
Reese Bobby's picture

It took three Harvard numb-nuts to patch together this compilation of other people's work with some basic commentary?  Figures...

Sun, 05/20/2012 - 10:00 | 2444958 iamtheeggman wh...
iamtheeggman whooooooooooooo's picture

First they mock you. BI has an article on KB's bet on Japan here:

Kyle Bass's Most Famous Trade Is A Disaster, And It Is Never Going To Work Out

Sun, 05/20/2012 - 10:03 | 2444968 Lost Wages
Lost Wages's picture

Joe Weaselthal is so sleep deprived, his view of the world is delusional. But being right on one big trade and making billions of dollars can also make someone delusional, so Kyle Bass isn't out of the woods yet.

Sun, 05/20/2012 - 10:28 | 2445003 Winston Smith 2009
Winston Smith 2009's picture

First of all, Joe is a complete idiot.  He has generated so many articles where he has proven beyond a doubt that he has absolutely zero clue about anything financial more complex than balancing his checkbook. I have soundly trashed so many of his articles that I'm getting bored of doing it. And I'm not alone.  Often, others beat me to pointing out multiple, obvious, and often stupid misinterpretations in his articles.  I and others have done the same with Blodget.  So, basically, all he and Weasenthal have managed to do with their Business Insider site is provide links other people's (sometimes good) work sprinkled with their own columns which are usually garbage.  It pains me to see links to their site used on RT and The Keiser Report when the original author's site should be referred to.

And I've read and watched everything I can find that Kyle has said about Japan. Believe me, take his word for it if you don't do the same. It is as much of a no-brainer as was his prediction of the housing bust.  It will pay off eventually in a huge way, but only when exactly the same sort of hopium based, delusional thinking preventing the EU from tanking as it deserves to do has run its course.  And as he has pointed out, that can and has happened virtually overnight with bond markets.  But only really big players like him can keep pumping in money on that sure thing bet until reality sets in like it did in 2008.

Sun, 05/20/2012 - 11:39 | 2445120 Bollixed
Bollixed's picture

I was playing around on "The Onion" ( ) especially watching those great videos the other day, and then went to the BI website and lo and behold when you do that your senses can barely tell the difference between the two sites.

The BI website becomes a surreal landscape of nonsense in that context. Try it. Your brain will see BI as having the same level of foolishness only without the humor. So what you get is Henry's sensational headline writing with clueless folks like Joe the Dumber trying to write blurbs out of his ass. The combination lowers the IQ of the internet daily. It's weird entertainment, that's for sure...

Sun, 05/20/2012 - 12:29 | 2445194 palmereldritch
palmereldritch's picture

If Kyle's Short Japanese fund is skewed to Real Estate e.g.

then the toxic radioactivity of the Fukishima tragedy could realize a great windfall if Tokyo is ever deemed uninhabitable.

However, given such a scenario the short would readily approach a market to zero in no time and contraction would be rapid.

Even without that nightmare scenario the future for the country is one of increased health issues for its citizens and a crumbling energy infrastructure dedicated to non-nukes when it previously was disproportionately dependent upon it.  It's just a matter of time sadly, only the time frame is yet to be determined.

Sun, 05/20/2012 - 10:04 | 2444970 Bagbalm
Bagbalm's picture

You have to take a position before everyone else but close enough not to run out of money sustaining it. Not an easy task.

Sun, 05/20/2012 - 10:06 | 2444973 ISEEIT
ISEEIT's picture

Kyle is likely correct, but if the payout is in USD, can he get rid of them fast enough to actually realize a gain?

Sun, 05/20/2012 - 10:17 | 2444990 MrPoopypants
MrPoopypants's picture

I thought a basic tenet of trading was to wait for price confirmation...

He could be making money now, to use for his Japan bet when it actually starts to take off.

Timing is everything. The market can stay irrational...etc etc

Sun, 05/20/2012 - 11:01 | 2445066 Winston Churchill
Winston Churchill's picture

As Bass often says,that bet is only a hedge for his trading.

Sun, 05/20/2012 - 10:17 | 2444991 apberusdisvet
apberusdisvet's picture

Bass will be proven right, not so much by technical analysis, but because Japan is doomed by the fact that the ongoing Fukushima radiation has no quick fix and if Reactor 4 goes, the country is doomed.

Sun, 05/20/2012 - 10:38 | 2445022 yabyum
yabyum's picture

If reactor #4 goes Japan will not be the only country that is in trouble. Start looking at birth defect trends in Japan and the west.

Sun, 05/20/2012 - 11:02 | 2445030 Winston Smith 2009
Winston Smith 2009's picture

No, that's not the primary reason.  It's all about demographics and debt to GDP.  Here is just one of many Bass interviews on this, but it doesn't cover every angle that he has discussed before in other interviews:

And, BTW, here's where Weasenthal makes his biggest (huge) mistake in that article.  It is so obviously clueless (as usual) that I won't even comment on it. Just think it through yourself:

"This is the key idea that Bass is missing, and why his trade is never going to pay off. For a country that borrows in its own currency, government spending finances borrowing! If Japan spends 100 billion yen on something, that's 100 billion yen out there in the world that will eventually wind up in a financial institution, where ultimately 100 billion yen worth of JGB will be purchased.
Sun, 05/20/2012 - 11:22 | 2445095 blabam
blabam's picture

Got a link for me? Haven't been following that story...

Sun, 05/20/2012 - 11:36 | 2445117 Winston Smith 2009
Winston Smith 2009's picture

A link to the Weasenthal article or Kyle Bass' correct analysis?  If its the former, it's in my above post.  If its the latter, do a Google search for Kyle Bass Japan and you'll find all kinds of correct analysis in his investor reports and interviews.

Sun, 05/20/2012 - 12:07 | 2445166 blabam
blabam's picture

I was asking Yabyum, but your post came through before mine!

Sun, 05/20/2012 - 10:46 | 2445007 Atomizer
Atomizer's picture



TPTB just needs to invent another snappy SIV program to remonetize the impeding train wreck. I’m sure they can persuade new sucker’s in the African Union to pony up on global debt obligations. Sweeping old problems under a new rug will enable kicking the can down the road possible. 



Edit: Forgot link

Sun, 05/20/2012 - 10:38 | 2445023 i_call_you_my_base
i_call_you_my_base's picture

Kyle Bass, proof that you can indeed stay solvent longer than they can stay irrational.

Sun, 05/20/2012 - 10:47 | 2445039 ISEEIT
ISEEIT's picture

It is about to get very ugly. I post 'strange' things all the time. I should not (do not much) care. I am 100% serious however in stating that I sincerely believe 'they' are about to go 'all in'.

Some strange shit is about to happen.

"they" isn't going to just go away. "they" are going nuclear.

Mark my words... The beast is in a corner and is about to lash out.

Get out of the way and allow it room to 'exercise' till it exhaust itself.

This beast is serious, is dangerous, and it is real.

Sun, 05/20/2012 - 11:01 | 2445063 yabyum
yabyum's picture

Iseeit? See what? Do not leave the ZH collective hanging. We thrive on da doom.

Sun, 05/20/2012 - 12:37 | 2445215 Atomizer
Atomizer's picture

ISEEIT: Wow! Thought I was the only one on this board. Channel what you see in a positive way by directing the audiance to the root problem. There is no beast, only individuals with modified DNA strands. This is why all the checkpoints are being implimented. God forbid if the general public ever knew.

Now they're aware that others know.

Sun, 05/20/2012 - 10:48 | 2445040 thesecondslowes...
thesecondslowestantelope's picture

what a horrible misquote of Hemingway...makes me think the rest of the paper is bunk too...not to mention the MBA's and PhD's that they give out there...but we all know that are better off going right to the source...

"How did you go bankrupt?" Bill asked.

"Two ways," Mike said. "Gradually and then suddenly."


Sun, 05/20/2012 - 10:56 | 2445050 bigwavedave
bigwavedave's picture

All Japan has to do is kill its old people. But some would say they would never do such a terrible thing. LOL

Sun, 05/20/2012 - 10:58 | 2445060 Winston Churchill
Winston Churchill's picture

Fukishima anyone.

Do NOT follow this link or you will be banned from the site!