Kyle Bass: Meet the Texan investor who made millions from the credit crunch
- Kyle Bass founded hedge fund after saving $10million from Wall Street stint
- Gambled against sub-prime mortgage bond market before it crashed
- He has now started to bet against European countries including Greece
- Set to increase money by 650 times from Greek bet if default happens
Last updated at 3:48 PM on 3rd October 2011
It’s been a torrid three years for most people since the world economy began to go into meltdown. But not everyone has suffered.
Investor Kyle Bass has already made millions from the credit crunch and he is set to increase his money by almost 650 times from a Greek default.
He founded hedge fund Hayman Capital in Dallas, Texas, in 2006 in his late 30s after saving $10million from selling bonds for Wall Street firms.
In the money: Kyle Bass founded hedge fund Hayman Capital in Dallas, Texas, in 2006 after saving $10million from selling bonds for Wall Street firms
Mr Bass’s story so far has been documented in Michael Lewis’s new book 'Boomerang: The Meltdown Tour' - serialised in The Sunday Times.
Mr Lewis charts how Mr Bass was one of only 15 people who placed ‘enormous bets that vast tracts of American finance would go up in flames’.
Mr Bass believed as the sub-prime market collapsed that the financial crisis was being hidden by rich western governments.
Clever man: Mr Bass made millions by gambling against sub-prime mortgage bond market - and now he's betting on the collapse of whole countries
'It may not be the end of the world. But a lot of people are going to lose a lot of money. Our goal is not to be one of them'
Kyle Bass
A big issue he identified was large banks being treated as ‘extensions of their governments, sure to be bailed out in a crisis’.Kyle Bass
Mr Bass spoke to Harvard economics expert Kenneth Rogoff about sovereign balance sheets and finally realised the scale of the problem when he presented him with some research.
Professor Rogoff told Mr Bass: 'I can hardly believe it is this bad' after he had looked at their figures.
Mr Bass replied: 'If you don’t know this, who does?’ and thought: 'Holy s**t, who is paying attention?'
Falling prices: Traders work on the floor of the New York Stock Exchange in Manhattan last week, as the Dow Jones suffered another bad month
'I thought: "Holy s**t, who is paying attention?"'
Kyle Bass on sovereign troubles
This made Mr Bass believe another bigger economic crisis was brewing - and he started to buy ‘credit default swaps’ on European countries, according to the book serialisation in The Sunday Times.Kyle Bass on sovereign troubles
These let him bet against a bond’s price without owning it - like ‘default insurance on another person’s investments’.
He believes Greece, Portugal, Ireland, Switzerland, Italy and Spain are the countries least likely to be able to pay off their debts.
New Book: Michael Lewis's Boomerang: The Meltdown Tour - which features Mr Bass, left - is out this week
'We’ve bought a lot of this stuff'
Kyle Bass on his gold collection
A Greek default would make it pay down its debt by around 70 per cent, meaning every $1,100 bet would net him an astonishing $700,000, Mr Bass said.Kyle Bass on his gold collection
He said his mother tells him to put his money in 'guns and gold'.
Mr Lewis recalled him pulling out a huge gold brick from his desk drawer and saying: 'We’ve bought a lot of this stuff.'
Mr Bass, who lives in a 40,000 sq ft house, has also bought 20 million nickels for $1million. He said the metal inside each coin is worth 6.8 cents.
‘It may not be the end of the world,’ Mr Bass added. ‘But a lot of people are going to lose a lot of money. Our goal is not to be one of them.' source
