People in the News

Michael Lewis homes in on Kyle Bass’s killer instinct in new book

October 03, 2011   Rob Copeland

Doomsday investor among those ‘temperamentally ill-suited to solitude and silence,’ Lewis writes.

  Bass left all but his mental artillery behind when he gave a keynote speech at the 2010 AR Symposium.

Though bestselling author Michael Lewis tackles the troubles of Iceland, Ireland, Greece and others in his latest book, "Boomerang," it is Texas hedge fund manager Kyle Bass who gets the prime opening profile.

The famously contrarian Bass, who manages the $900 million macro-oriented hedge fund firm Hayman Advisors, does not disappoint. Hurtling across a sprawling Texas ranch in the dead of night, Bass whips out an infrared U.S. Army sniper rifle and opens fire on beavers from the back of his Jeep. In addition to the rodent slaughter, Bass takes Lewis on a daytime ride across his ranch outside Dallas.

"He enjoys the unsettled life," Lewis writes in the book, which will be released Tuesday. "We hopped into his Hummer, decorated with bumper stickers ('God Bless Our Troops, Especially Our Snipers’) and customized to maximize the amount of fun its owner could have in it: for instance, he could press a button and, James Bond-like, coat the road behind him in giant tacks."

On the markets, Bass offers an analysis that would be no surprise to attendees of the 2010 AR Symposium, where he delivered a sobering economic outlook. In the book, Lewis writes that Bass urged him to buy as many nickels as possible to hedge against the depreciation of fiat currencies and to take advantage of the value of the underlying metal. To prove his sincerity, Bass whipped out a photo of 20 million nickels he is having stored in a Brink’s vault in downtown Dallas.

"Here’s the only way I think things can work out for these countries," Bass says of Greece, Spain et al. "If they start running real budget surpluses. Yeah, and that will happen right after monkeys fly out of your ass."

Bass declined to comment on his appearance in the book. While his view are broadly represented, Lewis doesn’t mention the trade that Bass now considers one of the most asymmetric bets in history: His wager that Japan will finally reach a point, which he calls a Keynesian endpoint, when the country will no longer be able to finance its debt without either debasing its currency or selling significant amounts of debt to foreigners. The result could lead to a massive drop in the value of the Yen, the bonds or both. The outcome would be a payoff that would make the returns on the subprime trade look small by comparison. But Lewis, whose stories for Vanity Fair have taken him around the work, hasn’t yet written extensively about Japan.

Look for a full review of Lewis’ "Boomerang" in the November issue of AR.

See also:
Kyle Bass is betting on veterans

Kyle Bass on debt, Japan, Greece, Iceland and popular economic delusions

Kyle Bass expects a radical government intervention in Japan

Actually Michael Lewis wrote a article about Japan as an appendix in Liar's Poker I believe It was a what-if scenario of Tokyo suffering a serious earthquake and all the antiquated custodial records of who owns what stocks and bonds were destroyed. It was very entertaining, and in light what what happened in Japan this past March, Tsunami and all, it was vaguely prophetic.

synchro Oct 16, 2011

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