Kyle Bass Is Having A Bad Day - Greek Bank Stocks Crash To 16-Month Lows

Just over a month ago, Kyle Bass discussed why he was long effectively "long Greece."

Bass penned a Bloomberg editorial in which the hedge fund founder and CIO called on the IMF to stop bullying Greece publicizing the fact that he is now effectively long Greece. Greek government bonds have performed reasonably well so far this year: They’re up about 16%, and if Bass is right, they could have another 20% to 30% over the next 18 months if the IMF abandons its insistence on austerity and acknowledges that debt relief will need to be part of the long-term alleviation of debt. Bass added that, in the near future, voters will elect a more business-friendly government that will help reestablish the country’s creditworthiness, much like the government of Mauricio Macri did for Argentina. 

I think you also have an interesting political situation in Greece where I think there's going to be a handoff from the current Syriza government to kind of a more slightly-center-right but very economically independent new leadership in the next, call it, 18 months.

 

And so, I think you asked why now? And I think you're starting to see green shoots. You're starting to see the banks do the right things finally in Greece and you are about to have new leadership.

 

So, I think that you're going to see - and if you remember Argentina as Kirschner was going to hand-off – hand the reins over to someone that was much more let's say focused on business and economics than being a kleptocrat, I think you're going to see something again slightly similar in Greece where you have leadership today that might not be the right leadership and the government-in-waiting, I believe, and I think you know Mr. (Mitsutakous) - I think you're going to see something great happen to Greece in the and next, kind of, two years.

Then, just yesterday, the founder and chief investment officer of Hayman Capital Management, which manages an estimated $815 million in assets under management, told CNBC that he's been invested in Greek bank stocks that are trading at a quarter of book value.

According to Bass, foreign investors are waiting on the sidelines for a tectonic political shift to take place in 2018. The country is now preparing to end its international bailout program next year, with more than €320 billion (US$372 billion) in national debt. On Monday, Greece announced it will distribute 1.4 billion euros ($1.63 billion) as a social dividend to pensioners and others hit hard by the country's austerity program.

"My best guess is a snap election for prime minister will be called between April and September of next year and Prime Minister Alexis Tsipras will lose power.

 

"When that happens, there will be a massive move into the Greek stock market. Big money will flow in as investors feel more confident with a more moderate administration.

 

"It's going to take Kyriakos Mitsotakis, president of New Democracy, the Greek conservative party, to be voted in as prime minister to reform the culture and rekindle investor confidence," said Bass.

 

"I have no doubt €15 billion in bank deposits will come back to Greek banks if he's elected. The stock and bond markets will also jump following the election."

All of which brings us to today.

Greek bank stocks crashed over 8% today - plunging to the lowest since July 2016...

And in context, that's not good...

However, Bass is not pertrubed. As he explains, economic activity will get reenergized with the right leadership. The sectors global investors are eyeing right now are real estate, energy and tourism.

"There is so much potential," he said. "Pimco, Lonestar, KKR are all looking to buy commercial properties in Greece."

He also noted that the country will have marquee privatizations over the next two years.

"From my perspective, we have to fix two things in Greece for the market to take off," Bass said. "First, Greeks have to stop evading taxes. Second, they have to start repaying their loans."

Well if you believe him - you just got an 8% discount on your entry.

Comments

hedgeless_horseman Thu, 11/16/2017 - 15:06 Permalink

  "From my perspective, we have to fix two things in Greece for the market to take off," Bass said. "First, Greeks have to stop evading taxes. Second, they have to start repaying their loans."Any minute now.

Laowei Gweilo Gaius Frakkin'… Thu, 11/16/2017 - 20:50 Permalink

Kyle Bass has had a bad decade lol post-housing crisis, his fund got a lot of stocks wrong, e.g mortgage insurer MTG (he bougt high and sold very low, and then missed a 1300% rally)then he got japan wrongthen he got china wrongand now he's getting greece wrong he's living proof that being able to be right once about a black swan means you're zero more likely to predict when the next one will occurhe may be right about which will eventually be a black swan -- idealistically, he should be right but when? oh he's been losing a lot of money for an entire decade being wrong on 'when'

In reply to by Gaius Frakkin'…

Endgame Napoleon 07564111 Thu, 11/16/2017 - 17:10 Permalink

Business loan fluidity won’t improve if they do not pay them, but why are they having so much trouble now, post EU? I do not remember hearing that Greece was an economic basketcase before they joined the EU. Greece is the originator of democracy and the best of Western culture. Why can’t they parlay those historical gifts into an economy-sustaining tourist industry? Maybe, it is because the tourist industry does not generate a lot of high-paying, tax-revenue-boosting jobs. Greece needs to find a way to combine the tech revolution with its tourist-magnet qualities.

In reply to by 07564111

PGR88 Thu, 11/16/2017 - 15:26 Permalink

Bass uses really cool, insider financial analyst phrases in his interviews, and has a authoratative expert demeanor.And he also makes really bad mistakes.

geno-econ Thu, 11/16/2017 - 15:36 Permalink

For " something Great to happen in Greece  in the next two years ", something Great has to happen in the EU (especially banks), Syria, Libya, Lebenon, Eastern Europe, Turkey and Brexit----unless Bass is talking about finding oil and gas reserves near the Greek Islands  

Zeej Thu, 11/16/2017 - 15:50 Permalink

meh everytime i see bass walking down the street or riding his bike it seems hes got a new skinny blond 20 something by his side.seems to be doing okay but clearly should have checked out of the "market" long ago... 

WallHoo Thu, 11/16/2017 - 16:30 Permalink

All of you stupid fucks who make fun of greeks for not paying taxes and loans,brace yourselfs for some compouting(interest) asshole reaping in a town near you... 

Endgame Napoleon WallHoo Thu, 11/16/2017 - 17:20 Permalink

Feet-on-the-ground, pragmatic, debt-averse Americans cannot relate. We call child-tax-credit checks up to $6,269 for people who make too little to pay income tax “tax reductions.” A hyped sales pitch certainly does accompany it, with lots of references to part-time workers as “hard working families.” It is just a decoy for the real dealmaking on the upper rungs of the tax code, however.

In reply to by WallHoo

WallHoo Endgame Napoleon Fri, 11/17/2017 - 01:54 Permalink

I know...Ive seen what you wright and i have upvoted you many times but...In greece they tax you more if you have children(despite the fact that greeks are disapearing) not less.Americans are so fucking blessed and they dont understand how the rest of the world operates... These new tax cuts in the USA represent an economic rent-boon for the uper class,while the state goes deeper into debt and then sudenly the deficit is so large,budget cuts will be needed cause "american are living outside their means".I ve been there,i just feel sorry that your country is played by the same book. Those fucking leaches wont stop untill everyone is in perpetual debt serfdom... 

In reply to by Endgame Napoleon

Paracelsus Thu, 11/16/2017 - 23:47 Permalink

  I watched a great doco about the Korean war once ,Pork chop hill or one of those epic last stand places now forgotten. They interviewed these two or three Greek veterans and it was nice to hear them talking about the part they played. Cutoff from support,outnumbered and still very brave. Great guys... 

fiddy pence ha… Sat, 11/18/2017 - 02:33 Permalink

Has anybody called bullshit on why Kyle, whoused to think he understood China, is nowlooking at Podunk Greece? Unless he's lyingon purpose, or he has a secret we don't knowabout yet.The only thing that IS working in the new Greeceis the tax system. They're raising taxes duringa depression.The "commercial properties" Kyle's friends arebuying are all the derelict buildings that the troikacreated, and that Greeks can't pay taxes on. They'regoing under the hammer.THAT is what will bring down Syriza (the 'radical' lefties)Those Greek banks are all foreign-owned, and bought on thecheap, thanks to the troika. Those banks have no newdebt to create. Everybody is broke. They have the biggestpile of NPLs in the EU (what a surprise), and folks arewithdrawing their notional savings. So, the banks are gettingfresh Euro bills from the printers and handing them to thepublic, but who is going to pay for this hemorrhage? Greeksalready "know" that , one day, their banks are going toerase their savings. The EU is THIS MONTH discussing cuttingsavings insurance and putting in capital controls instead.Like I've said, what they are doing to Greece (you really shouldfind out) is going to be done all across the EU and world. andit ain't pretty.