Kyle Bass — the principle and founder of Hayman Capital Management — is known for his his pessimistic views on the economy.
You might recall that he has a stash of weapons at his Texas compound and he bought up a bunch of nickels because he believe the coins will be worth more than 5 cents.
Anyway, the Texan hedge funder, who correctly called the subprime debt crisis, has been shorting Japan because he thinks the country is toast due to its high levels of debt.
And now his Japan short is the subject of a 28-page Harvard Business Review case study by Robin Greenwood, Julie Messina and Jared Dourdeville, Absolute Return reports.
Here’s the summary of the report, which is available for purchase.
In late December 2011, Hayman Capital founder and portfolio manager Kyle Bass was reviewing Japanese government budget projections for 2012. The projections appeared contrary to Hayman Capital’s views on Japan, where the fund had built a bearish position. Japan had the world’s highest debt burden, whether expressed as a percentage of GDP or government revenue. Guided by recent global events, Bass forecast that Japan would soon experience increases in interest rates, a devaluation of the currency, and, eventually, a restructuring of the country’s debt.
According to Absolute Return, Bass was vindicated at the end of the report.
HBS explained what could happen in Japan by quoting Earnest Hemmingway’s description of going broke: “It occurs very slowly, then all at once.”
In case you missed it, check out 15 Brilliant Insights From Hedge Fund Superstar Kyle Bass >