We will probably never know exactly what Kyle Bass was thinking, but it does seem as though he fell into a snare that he thought was going to be a gold mine. The oil industry took a downturn over the last year that led to the big drop in prices, the result that benefited consumers but left some investors and hedge fund firms facing losses. Kyle Bass was one of those hedge fund managers who had made investments in oil, predicting that the energy sector was going to have a big bounce back in prices, just as the housing market took a tumble in 2008. He had taken words from oil magnate T. Boone Pickens who had said that “oil supply will not overtake the domestic storage capacity.” Pickens denies that what he said was meant as actual investment advice.
The blame for that debacle can mostly be put on Bass himself, whose hedge fund firm Hayman Capital was a success in its early years. Kyle Bass had been in the financial industry with Prudential Securities, Bear Stearns and Legg Mason, at all of which he had become proficient at strategically placing client investments. When he founded Hayman Capital, he believed that a housing crisis was imminent due to the studies he had conducted on subprime mortgages, and the spending habits of Americans.
Kyle Bass made several egregious decisions recently, one of which was choosing his friends wrong. One friend in particular he got wrong was Cristina Fernández de Kirchner, known as a despotic president in Argentina, and her bad economic choices have driven the country into debt. Americans holding Argentina’s debt wanted full payment of amounts due to them, and Bass criticized them as “holding a poor country hostage.” Bass also defended GM when their leaders were put on trial for failing to address safety features responsible for killing passengers in several accidents. He did so because of a large amount of investments he had with the company. Finally, Bass got in trouble with the US Patent Trial and Appeals Board for abusing the patent review system when his organization, the CFAD kept challenging patents, and then short selling pharmaceutical stocks.