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Larger-than-Life Kyle Bass - Top Yields

December 26, 2013 | About:
Sally Jones

Sally Jones

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Looking through a kaleidoscope of facts about J. Kyle Bass, this guru quickly takes on a colorful and larger-than-life mythos. Hailing from the big-thinking state of Texas, Bass is often described as a big dreamer with a studious and practical streak. His career blossomed almost overnight when he reportedly made around a half a billion dollars betting against subprime CDOs in 2007. Bass comes across as a visionary who asks why not instead of why. He told CNBC that he likes to reduce email time and cut out the noise by learning about world markets through symbiotic relationships with friends like Alan Fournier and other billionaires. Every year Bass invites his notable friends to his ranch in Larue, Texas, for a special event called The Barefoot Economic Summit, Texas (BEST). Bass said he learns more in two days of the summit than in two months of emails.

Kyle Bass is the managing member and principal of Hayman Advisors LP’s general partner formed in December 2005, with $10 million of his own money. Based in Dallas, Hayman Advisors serves as the investment manager to the Hayman Capital Master Fund LP and Japan Macro Opportunities Master Fund LP. According to GuruFocus research, Guru Kyle Bass shows a pattern of making bold bets based on his view of macroeconomics. He returned 340% in his firm’s first four years, establishing a worldwide reputation for Bass.

Kyle Bass is a unique super-investor. According to D Magazine, Bass is politically connected – Texas Governor Rick Perry has attended his summit. Bass reportedly does not vote or read the local newspaper. Well-known for his investment analysis of the subprime crisis that borders on prescience, Bass has also carved out opportunity in the Japanese market, and more recently, turned his sites towards Argentina, saying, “Argentina’s problems can be fixed in two years and now is the time to start investing.”

Kyle Bass has been called to high places to offer his authoritative opinion. In September 2007, Bass appeared as an expert witness before the House of Representatives Financial Services Capital Markets Subcommittee. Three years later, he appeared as a Financial Market Participant before the Financial Crisis Inquiry Commission, 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. (with $16 billion assets under management) and is a founding member of the Serengeti Asset Management Advisory Board.

The updated portfolio of Hayman Advisors lists 14 stocks, eight of them new, with a total value of $408 million, and a quarter-over-quarter turnover of 91%. The portfolio is heavily weighted with consumer cyclical at 26.6% and real estate at 19.8%. The stocks bought by Kyle Bass have averaged a 12-month return of 7.14%.

Here’s a review of the top-yield stocks in the Hayman Advisors portfolio. All of them were new buys as of Sept. 30, 2013.

PennyMac Mortgage Investment Trust (PMT)

Current Shares: 3,570,000

Value: $80,968,000

Weighting: 19.8%

Down 9% over 12 months, PennyMac Mortgage Investment Trust, a residential REIT, has a market cap of $1.61 billion; its shares were traded at around $22.94 with a P/E of 7.30. The dividend yield is 10%.

PMT is not ranked for business predictability.

Track historical data:

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Guru Action: As of Sept. 30, 2013, Kyle Bass made a new buy of 3,570,000 shares at an average price of $21.84 per share, for a gain of 4.3%.

The GuruFocus analysis of PMT shows five warning signs.

Vodafone Group PLC (VOD)

Current Shares: 1,349,200

Value: $47,465,000

Weighting: 11.6%

Up 55% over 12 months, Vodafone Group PLC has a market cap of $189.2 billion; its shares were traded at around $39.14 with a P/E of 273.80. The dividend yield is 4.00%.

Vodafone Group PLC is a provider of mobile communications services and products in Germany, Italy, Spain, UK, Europe, India and Africa, Middle East and Asia Pacific.

GuruFocus ranked VOD with one out of five stars for business predictability.

Track historical data:

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Guru Action: As of Sept. 30, 2013, Kyle Bass made a new buy of 1,349,200 shares at an average price of $31.01 per share, for a gain of 25.9%.

The GuruFocus analysis of VOD shows nine warning signs.

Microsoft Corporation (MSFT)

Current Shares: 1,500,000

Value: $49,920,000

Weighting: 12.2%

Up 38% over 12 months, Microsoft Corporation has a market cap of $309.54 billion; its shares were traded at around $37.45 with a P/E of 13.70. The dividend yield is 2.60%.

GuruFocus ranked MSFT with three out of five stars for business predictability.

Track historical data:

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Guru Action: As of Sept. 30, 2013, Kyle Bass made a new buy of 1,500,000 shares at an average price of $32.90 per share, for a gain of 12.7%.

The GuruFocus analysis of MSFT shows two good signs and five warning signs.

Here is the complete portfolio of Kyle Bass.

Prior to starting his own company, Kyle Bass worked as a Senior Managing Director at Bear, Stearns & Co., and as a Managing Director at Legg Mason Inc. Bass graduated with honors with a Bachelor of Business Administration from Texas Christian University.

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GuruFocus Real Time Picks reports the stock purchases and sales that Gurus have made within the prior 2 weeks. The report time lag can be as short as 2 days after the date of the transaction. This feature is for Premium Members only.

About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.3/5 (3 votes)

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