In recent years, the sparkle has disappeared from the once shining star known at Kyle Bass. As the founder of Hayman Capital Management Fund, he saw the subprime mortgage collapse and subsequent financial crisis in the country. In a completely different pursuit, he was the writer for the highly acclaimed and widely popular movie, the Sixth Sense.
The rapid achievements created instant notoriety and demand on the talk show circuit, both in entertainment and business arenas. But early and sudden success often brings later failures, especially when the individual insists on taking the maverick role as a matter of course.
In Kyle Bass’ case, the recent dulling of his luster seems to be more to do with his own actions, rather than forces beyond his control.
The Argentine Alliance
While Argentina remains immersed in a financial crisis that may bankrupt the country, Kyle Bass continues to defend its leaders and its policies. Despite defaulting on its governmental debt, it is Bass who has become a cheerleader for Argentina’s polices and blaming others for its woes. Though being a maverick sometimes requires backing unpopular causes, it can also deteriorate objectiveness
The GM Airbag Statement
As a major investor in GM, he wouldn’t be expected to bad mouth the company, but going overboard in their defense can do irreparable damage to one’s credibility. GM, along with other companies, have been the subject of a massive recall of the defective Takata air bag. To date, more than 34 million cars are subject to recall.
But rather than merely taking the lumps associated with a recall, Bass chose to blame drivers for injuries or deaths. Without data to prove his charges, he alleged that most of the drivers killed in collisions involving defective airbags were either drunk or failed to use seat belts.
The Drug Patent Challenges
In one of the more egregious investment ploys, Bass and his alliances have chosen to attack the patents of various pharmaceutical companies. But before the patent is challenged, Bass makes sure to set up short sales of their stock, banking that the price of the stock will decrease.
After a short sale is arranged, Bass utilizes companies created by or for him to challenge the patents of the targeted company. The challenge will inevitably cause the value of the stock to decrease, whether or not the challenge is successful. The short sale then acts as the profit from the scheme.
On the other hand, the value of the pharmaceutical company decreases, and money that could be used for drug research and production is needed to defend the challenge. Recently, the first two patent challenged created by Bass have been turned down.