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New Guru Added: Kyle Bass of Hayman Advisors; Buys MMR, ATNY, TSRA, Sells RKT, KKR

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gurufocus

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GuruFocus is glad to announce that we have added hedge fund manager Kyle Bass of Hayman Advisors into our List of Gurus.

Kyle Bass is the Managing Member and Principal of Hayman Advisors LP’s general partner, formed in December 2005. Hayman Advisors serves as the investment manager to the Hayman Capital Master Fund LP and Japan Macro Opportunities Master Fund LP.

Mr. Bass is well known for his prescient investment analysis of the subprime crisis. In September 2007, he appeared as an expert witness before the House of Representatives Financial Services Capital Markets Subcommittee and in 2010, he appeared as a Financial Market Participant before the Financial Crisis Inquiry Commission, a bi-partisan 10-member panel established by Congress to examine the causes of the financial crisis. He is on the Board of Directors for The University of Texas Investment Management Co. ($16 billion AUM) and is a founding member of the Serengeti Asset Management Advisory Board.

Prior to forming Hayman Advisors, Mr. Bass worked as a Senior Managing Director at Bear, Stearns & Co., and as a Managing Director at Legg Mason, Inc. Mr. Bass graduated with honors with a Bachelor of Business Administration from Texas Christian University.

Kyle Bass makes bold bets according to his view on macro economics. He made a fortune in 2007 by betting against sub-prime CDOs. You can read his third quarter letter titled “Imminent Defaults” here.

Kyle Bass was a net seller during the third quarter. He bought only a handful of positions. He owns 12 stocks only as of Sept 30. These are the details of the buys and sells.

For the details of Kyle Bass's stock buys and sells, go to http://www.gurufocus.com/StockBuy.php?GuruName=Kyle+Bass

These are the top 5 holdings of Kyle Bass

  1. Golar LNG Partners LP (GMLP) - 796,348 shares, 2.8% of the total portfolio. Shares reduced by 24.48%
  2. Six Flags Entertainment Corp. (SIX) - 598,802 shares, 2.2% of the total portfolio. Shares reduced by 5.16%
  3. McMoRan Exploration Co. (MMR) - 1,300,000 shares, 1.7% of the total portfolio. New Position
  4. Imation Corp. (IMN) - 1,045,413 shares, 1.0% of the total portfolio. Shares added by 56.95%
  5. API Technologies Corp. (ATNY) - 1,747,938 shares, 0.9% of the total portfolio. New Position


New Purchase: Mcmoran Exploration Co. (MMR)

Kyle Bass initiated holdings in Mcmoran Exploration Co.. His purchase prices were between $9.94 and $18.46, with an estimated average price of $14.07. The impact to his portfolio due to this purchase was 1.75%. His holdings were 1,300,000 shares as of 09/30/2011. McMoRan Exploration Co. is engaged in the exploration, development and production of oil and gas offshore in the Gulf of Mexico and onshore in the Gulf Coast region, and in the mining, purchasing, transporting,terminaling, processing and marketing of sulfur. Mcmoran Exploration Co. has a market cap of $2.53 billion; its shares were traded at around $15.98 with and P/S ratio of 5.8. Mcmoran Exploration Co. had an annual average earnings growth of 6.6% over the past 5 years.

New Purchase: Api Technologies Corp. (ATNY)

Kyle Bass initiated holdings in Api Technologies Corp.. His purchase prices were between $4.09 and $7.2, with an estimated average price of $5.63. The impact to his portfolio due to this purchase was 0.93%. His holdings were 1,747,938 shares as of 09/30/2011. API Technologies is engaged as a prime system contractor in secure communications and a provider of electronic components and subsystems. Api Technologies Corp. has a market cap of $179 million; its shares were traded at around $3.28 with and P/S ratio of 1.6.

New Purchase: Tessera Technologies Inc. (TSRA)

Kyle Bass initiated holdings in Tessera Technologies Inc.. His purchase prices were between $12.03 and $17.69, with an estimated average price of $14.39. The impact to his portfolio due to this purchase was 0.3%. His holdings were 188,700 shares as of 09/30/2011. Tessera Technologies develops semiconductor packaging technology that meets the demand for miniaturization and increased performance of electronic products. Tessera Technologies Inc. has a market cap of $889.1 million; its shares were traded at around $17.35 with a P/E ratio of 14.7 and P/S ratio of 2.9. Tessera Technologies Inc. had an annual average earnings growth of 19.5% over the past 10 years.

Sold Out: Rocktenn Co. Cl A (RKT)

Kyle Bass sold out his holdings in Rocktenn Co. Cl A. His sale prices were between $46.38 and $66.4, with an estimated average price of $55.5. RockTenn is one of North America?s manufacturers of paperboard, containerboard and consumer and corrugated packaging. Rocktenn Co. Cl A has a market cap of $4.15 billion; its shares were traded at around $58.25 with a P/E ratio of 11 and P/S ratio of 0.7. The dividend yield of Rocktenn Co. Cl A stocks is 1.3%. Rocktenn Co. Cl A had an annual average earnings growth of 19% over the past 10 years.

Sold Out: Royal Bank Of Scotland Group Plc Ads Series M (RBS.PM)

Kyle Bass sold out his holdings in Royal Bank Of Scotland Group Plc Ads Series M. His sale prices were between $10.31 and $17.29, with an estimated average price of $13.6. .

Sold Out: Kkr & Co. L.p. (KKR)

Kyle Bass sold out his holdings in Kkr & Co. L.p.. His sale prices were between $10.5 and $16.09, with an estimated average price of $12.75. Kohlberg Kravis Roberts & Co. provides a range of asset management services to its investors and provides capital markets services to its firm, its portfolio companies and its clients. Kkr & Co. L.p. has a market cap of $2.86 billion; its shares were traded at around $12.83 with a P/E ratio of 9 and P/S ratio of 6.6. The dividend yield of Kkr & Co. L.p. stocks is 3.1%.

Sold Out: Target Corp. (TGT)

Kyle Bass sold out his holdings in Target Corp.. His sale prices were between $46.44 and $52.76, with an estimated average price of $50.28. Target Corporation operates large-format general merchandise and food discount stores in the United States, which include Target and SuperTarget stores. Target Corp. has a market cap of $35.58 billion; its shares were traded at around $52.7 with a P/E ratio of 12.3 and P/S ratio of 0.5. The dividend yield of Target Corp. stocks is 2.3%. Target Corp. had an annual average earnings growth of 9.2% over the past 10 years. GuruFocus rated Target Corp. the business predictability rank of 5-star.

Sold Out: Apache Corp. (APA)

Kyle Bass sold out his holdings in Apache Corp.. His sale prices were between $82.57 and $128.47, with an estimated average price of $106.73. Apache Corporation is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids. Apache Corp. has a market cap of $38.18 billion; its shares were traded at around $99.44 with a P/E ratio of 8.9 and P/S ratio of 3.2. The dividend yield of Apache Corp. stocks is 0.6%. Apache Corp. had an annual average earnings growth of 15.2% over the past 10 years. GuruFocus rated Apache Corp. the business predictability rank of 2.5-star.

Sold Out: Energy Xxi Ltd. (EXXI)

Kyle Bass sold out his holdings in Energy Xxi Ltd.. His sale prices were between $21.51 and $34.89, with an estimated average price of $27.82. Energy Xxi Ltd. has a market cap of $2.4 billion; its shares were traded at around $31.44 with a P/E ratio of 18.5 and P/S ratio of 2.8.

Sold Out: Diana Shipping Inc. (DSX)

Kyle Bass sold out his holdings in Diana Shipping Inc.. His sale prices were between $7.66 and $11.08, with an estimated average price of $9.07. Diana Shipping Inc. is a global provider of shipping transportation services. Diana Shipping Inc. has a market cap of $613.9 million; its shares were traded at around $7.49 with a P/E ratio of 5.1 and P/S ratio of 2.2. Diana Shipping Inc. had an annual average earnings growth of 23.9% over the past 5 years.

Sold Out: Universal Business Payment Solutions Acquisition C (UBPSU)

Kyle Bass sold out his holdings in Universal Business Payment Solutions Acquisition C. His sale prices were between $5.85 and $6.05, with an estimated average price of $5.99. .

Sold Out: Royal Bank Of Scotland Ads Pfd. Q (RBS.PQ)

Kyle Bass sold out his holdings in Royal Bank Of Scotland Ads Pfd. Q. His sale prices were between $10.62 and $17.5, with an estimated average price of $14.1. .

Sold Out: Energy Partners Ltd. (EPL)

Kyle Bass sold out his holdings in Energy Partners Ltd.. His sale prices were between $10.78 and $17.67, with an estimated average price of $13.83. Energy Partners, Ltd. is an independent oil and natural gas exploration and production company based in New Orleans, LA and Houston. Energy Partners Ltd. has a market cap of $556.1 million; its shares were traded at around $13.82 with a P/E ratio of 17 and P/S ratio of 2.3.

Sold Out: Royal Bank Of Scotland Group Plc Ads Series N (RBS.PN)

Kyle Bass sold out his holdings in Royal Bank Of Scotland Group Plc Ads Series N. His sale prices were between $10.11 and $17.3, with an estimated average price of $13.47. .

Sold Out: Immersion Corp. (IMMR)

Kyle Bass sold out his holdings in Immersion Corp.. His sale prices were between $6.1 and $10.3, with an estimated average price of $7.7. IMMERSION CORP. develops hardware and software technologies that enable users to interact with computers using their sense of touch. Immersion Corp. has a market cap of $176 million; its shares were traded at around $6.08 with and P/S ratio of 5.6.

Added: Imation Corp. (IMN)

Kyle Bass added to his holdings in Imation Corp. by 56.95%. His purchase prices were between $6.72 and $9.92, with an estimated average price of $7.77. The impact to his portfolio due to this purchase was 0.38%. His holdings were 1,045,413 shares as of 09/30/2011. Imation Corp. develops, manufactures and markets worldwide a widevariety of products and services for color management, imaging and data storage applications. Imation Corp. has a market cap of $226.2 million; its shares were traded at around $5.88 with and P/S ratio of 0.1.

Reduced: Golar Lng Partners Lp (GMLP)

Kyle Bass reduced to his holdings in Golar Lng Partners Lp by 24.48%. His sale prices were between $23.2 and $28.89, with an estimated average price of $26.43. The impact to his portfolio due to this sale was -0.74%. Kyle Bass still held 796,348 shares as of 09/30/2011. Golar LNG Partners LP is a limited partnership primarily focused on owning and operating floating storage and regasification units (or FSRUs) and LNG carriers under long-term charters. Golar Lng Partners Lp has a market cap of $349.7 million; its shares were traded at around $29.14 . The dividend yield of Golar Lng Partners Lp stocks is 5.5%.

Reduced: Earthlink Inc. (ELNK)

Kyle Bass reduced to his holdings in Earthlink Inc. by 51.02%. His sale prices were between $6.82 and $8.095, with an estimated average price of $7.41. The impact to his portfolio due to this sale was -0.66%. Kyle Bass still held 816,100 shares as of 09/30/2011. EarthLink provides a full range of innovative access, hosting and e-commerce solutions to thousands of communities through over 7,500 dial-up points of presence, and broadband and wireless technologies. Earthlink Inc. has a market cap of $679 million; its shares were traded at around $6.3 with a P/E ratio of 10.2 and P/S ratio of 1. The dividend yield of Earthlink Inc. stocks is 3.2%. Earthlink Inc. had an annual average earnings growth of 15.4% over the past 5 years.

About the author:

gurufocus
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 3.6/5 (13 votes)

Comments

kirrct
Kirrct - 2 years ago


nice addition. we needed a bear who seeks out every opportunity to pound the table about the world going to hell in a hand basket.
pwdrhead1711
Pwdrhead1711 premium member - 2 years ago


Kyle actually states the obvious. Anyone, that doesn't agree with his assessment of the worlds sovereign debt situation is clearly a buffoon. The challenge is not predicting the disaster but timing it right. My grandfather always used to say: "the only difference between salad and garbage, is timing". Kyle went all in on the mortgage disaster, and won. Kyle now has the time to spend contributing to gurufocus.com, because, he has all his positions in place and he will simply sit and wait for the inevitable. When catastrophe hits the world, his investments in commodities will soar, loans taken out in Yen will be paid back for pennies, and short positions on the bond market will see to it he profits in the triple digits again. He will get richer as the world becomes drastically poorer, and if anyone attempts to take anything from him his investment in Craft International will prove to be the best hedge ever. I look forward to Kyle's contributions to this fantastic online resource...

CG
superguru
Superguru - 2 years ago
pwdrhead1711 - How are positioning your portfolio to benefit from this obvious?
mcwillia
Mcwillia - 2 years ago
Kyle Bass is a Guru, he should be added. Like him or not, his sovereign analyses are of paramount importance. All of his macro analyses are worthy of our consideration and debate. They enrich the dialog of the site. This is the kind of reason I am willing to pay to remain at Gurufocus.
kirrct
Kirrct - 2 years ago
i think it probably should read "anyone WHO" instead of 'that' but, admittedly, no importa.

what contribution do we expect Kyle Bass to make to this site? that is, will he be making contributions directly to gurufocus (GF) or will GF now simply add any commentary that he publishes to the site?
Morrissett
Morrissett - 2 years ago
PwdrHead, let's talk about buffoons.

Do you actually believe Kyle Bass is getting on GF to add his thoughts? Do you think all the "Guru's" on this sight are chipping in here? Do you still believe in the tooth fairy?

Christ man, you can't be a grown adult an think he's jumping on this website to share ideas with you. The most you'll ever see about Bass on this site is a little form called 13f-hr. That's pretty much all this site is... minimum legal reporting standards for long positions in publicly listed equities.

Also, how would commodity prices soar if the world's major economies crash? Think this stuff through junior. [Plus, you're making an assumption he even has "commodity positions"]

mcwillia
Mcwillia - 2 years ago
Kyle has, apparently, a million dollars of nickels sitting in a warehouse somewhere, on the theory that a nickel is worth 5.03 cents or something...maybe that counts as a commodities position?
mcwillia
Mcwillia - 2 years ago
Kyle Bass' Japan Short:

Still The Widow-Maker Trade.


Like Kyle, I worry about a JGB rollover crisis and Yen hyperinflation. His JGB/Yen short may not work out, however, since the crisis likely won't happen soon enough for the short to profit. Here's what may delay it:

  • Japan has been super-stockpiling forex reserves by its present interventions to suppress the yen rate. These will later be spent defending the yen, pushing off the crisis day. The present interventions can be done at ZIRP rates, so Japan piles up a forex warchest for free. The current account will add even more over time. Further yen suppression will, too. These forex reserves now equal over 20% of GDP. These will not eliminate a determined currency assault, but they will delay the effects far longer than people suppose. The longer Japan remains the risk-off haven, the bigger this will swell as the government capitalizes on this win-win forex situation. Extrapolation from the costs of their current interventions, Japan could now sustain a 20 yen/$ boost constantly, for over a year.
  • Household savings are still 16x the national budget. As they die in ever greater numbers, death/estate taxes channel a big amount of this directly into the national treasury. This alone could alleviate immediate marginal rollover problems instead of worsening them. Politically, the Diet could easily increase this tax and very quickly reap a windfall. It would be much easier than the sales or vat tax, and the Keidanren plus the banks and LDP would be able to force it through, especially by trading concessions to farmers, whose vote is hugely disproportional to the elderly, owing to perennial failure to redistrict.
  • The budget will certainly cut military spending (greater reliance on U.S. security as we worry about China more) and by increasing the Health co-pay for individuals under the national health insurance. The first is politically very popular, the second is easy via ministerial actions insulated from real democracy. Privatizations of Japan Tobacco, Japan Post, public utilities, etc. will also produce brief windfalls of approximately 2/3 of one year's annual bond dependence.
  • Most importantly, the rollover crisis will be partially self-correcting. The Government will not intervene until the 135-160 range. At that time, the forex stockpile will be twice as powerful as now, and the longer they wait, the easier intervention will be. Meanwhile, Japan GDP will be skyrocketing as the exporting engine explodes to life. Bank and Ins. Co. balance sheets will show net improvement as overseas carry-trade investments increase in value, easing credit and exerting negative rate pressure. In the 170's, tax revenues would be swelling, current account-driven upward pressure on the yen would be extreme, and the forex warchest spending would be decisive.
  • Next, the Japanese people have a ridiculous capacity for austerity, legendary obedience, literally suicidal willingness to support Japan, when asked. If the emperor were to ask the people to 'buy bonds' they would.
  • Also, odds of default are high in countries with external creditors, but politically much harder in countries where sovereign default injures mainly its own nationals. This creates much more political solidarity and appetite for true reform than can has been the case in Greece and Italy, where nationalism is at odds with austerity. In Japan, these forces are in mutual support.
  • The continual productivity gains combined with Japan's low industrial utilization mean that there is much less domestic demand for investment of national savings, so the savings glut burns off even slower and can more easily be lent to the government in the form of JGB's than would be the case in a healthy economy.


Now, none of these individually eliminates a rollover crisis, but collectively they do push it back, beyond what the costs of a current hedge justify. So, this may still be a widow-maker trade.
pwdrhead1711
Pwdrhead1711 premium member - 2 years ago


Morrissett

If you have to ask, I probably shouldn't waste my time explaining how currency devaluation relates to an increase in commodity prices. I am sure $100/brl oil has nothing to do with the devaluation of the dollar.

Some reading material for your break from Barista duties or between your community college classes:

http://en.wikipedia.org/wiki/German_papiermark
pwdrhead1711
Pwdrhead1711 premium member - 2 years ago
Superguru,

The whole system is like domino's. The trick is staying out in front of the Dominos before you get knocked down. I am betting that the Eurozone and the euro fall first, then Japan, USA last. There is a reason countries like Singapore, UAE and Switzerland are growing wealth at a break neck speed. To answer your question I am borrowing money in yen and euros and investing in Singapore, UAE, and Norway. Norway is solid, low sovreign debt, good per capita savings, and a responsible government. Finance your house in yen or euros for starters, and deposit your savings in Switzerland or Norway. Debtors win with the devaluation of a currency, and savers win with a strong currency...
pwdrhead1711
Pwdrhead1711 premium member - 2 years ago


From wiki...

Norwegians enjoy the second highest GDP per-capita (after Luxembourg) and fourth highest GDP (PPP) per-capita in the world. Today, Norway ranks as the second wealthiest country in the world in monetary value, with the largest capital reserve per capita of any nation.[citation needed] According to the CIA World Factbook, Norway is a net external creditor of debt.[2] Norway maintained first place in the world in the UNDP Human Development Index (HDI) for six consecutive years (2001–2006),[4] and then reclaimed this position in 2009 and 2010.[15] Cost of living is about 90% higher in Norway than in the United States and 50% higher than the United Kingdom.[citation needed] The standard of living in Norway is among the highest in the world. Foreign Policy Magazine ranks Norway last in its Failed States Index for 2009, judging Norway to be the world's most well-functioning and stable country. Continued oil and gas exports coupled with a healthy economy and substantial accumulated wealth lead to a conclusion that Norway will remain among the richest countries in the world in the foreseeable future.

I would have written it in my own words but the Barista's wouldn't have believed me!

mcwillia
Mcwillia - 2 years ago
Kyle's Japan Short: April 2012 Update

You have to hand it to the Japanese Ministry of Finance. Their subtle control of the yen, and interest rates, is breathtaking, and they have delayed Kyle Bass' short once again. I'll explain what they did. Keep in mind, Japan needs to do several contradictory things at once, namely push down the value of the yen to stoke exports and ease the real burden of interest payments on debt, without causing domestic inflation, which harms banks and JGB demand, while at the same time, avoiding any appearance of intentionally devaluing the yen, as this could trigger a currency flight and JGB crash.

The Fukushima nuclear crisis gave them a golden opportunity. First, they could ratchet up debt a bit merely on the excuse of the earthquake, calling it "reconstruction bond' issuance. OK, pretty mundane but it worked. Nobody begrudged them this debt. But they could also gain political points by shuttering all the nuke plants, strengthening the party in its coalition. This would seem economically disastrous, since it forces Japan to begin massive energy imports and stokes inflation. But actually, the energy imports pushed down the yen considerably, significantly offsetting the effects of incoming safe-haven capital flows. Score 1 for the Ministry. Also, it boosted tax revenues nearly 4% on higher fuel taxes. Score 2 for the Ministry. The weaker yen boosted corporate tax revenues. Score 3 for the Ministry. It also created enough inflationary pressure to avert yet more deflationary news, easing pressure on the Bank of Japan to ease and monetize, which could have spooked the market into a JGB flight. Score 4 for the Ministry. OK, pretty nice work for the boys at Okurasho. Four birds with one stone.

But it got better. Iranian sanctions arrived, giving Japan another incredible opportunity. They can buy this oil on credit, since no cash can make its way through the SWIFT system to Iran. Of course, they would need a waiver from the U.S., and of course, this was sought and obtained. This keeps foreign exchange in the country and notes piling up in the hands of Iran, notes which can be disregarded someday, if default is encouraged as part of new sanctions, or if the Iranian assets are seized and these notes along with them...or if Japan someday needs to strategically default in a more general way. They'll be the first to go, and nobody will see it as a sovereign default. It will probably be applauded. The bond makers will get a windfall, and this will ultimately be the Japanese banks.

Then the Government began permitting larger quantities of foreign rice into the Japan market. Why? Of course, to punish the Liberal Democratic Party and its farmer allies, weaken their parliamentary presence, and again, push down the yen while "bing!" cooling inflation across the board. Japan's domestic rice is 6 times the world price, so this policy really kills several birds with one stone. If one peels back the layers, I bet one will find that these purchases are on credit too, likely involving NorinChukin Bank, for reasons analogous to the oil deal above. Offerings of windfall profit to this bank also helps smother LDP support in the hinterlands...pulling their support from the LDP would be quite to Noda's purpose.

This is merely a small sampling of how pervasive and far-reaching the planning and strategy of the Japanese government has been. It is pushing off Japan's Kyle Bass moment and ratcheting up the cost of keeping those shorts in place. Mind you, its still going to happen someday. But who knows when.

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