Japan has the fifth largest economy in the world, and according to hedge fund manager Kyle Bass, Japan needs to use unconventional tactics to get their economy moving again. The Japanese economy has been in a slump for at least the last ten years. The Bank of Japan has tried to stimulate the economy using quantitative easing, which lowered the value of the yen. There are several issues that have created an economic downturn in Japan, according to Bass. The first issue is Japanese companies are moving production offshore to lower cost countries, or they are moving manufacturing facilities to markets that sell their products like Toyota and Nissan did in the United States. Bass also said Japanese electronics are not as competitive on the world market as they have been in the past, plus Japan’s agriculture industry is outdated and must be modernized.
Kyle Bass bet that the Japanese yen would lose its value against the dollar, and he won that bet. He believes the Bank of Japan will have to try some radical, unconventional methods to get the economy moving again. But what those radical, unconventional methods are is not clear. Being clear is something that gets lost in a conversation with Kyle Bass. Bass has a tendency to talk in numbers that can be confusing to people that don’t invest on a daily basis. Bass is also having a difficult time producing the kind of returns his Hayman Capital Management hedge fund produced before 2014. The last two years have been disappointing years for Hayman Capital partners, and Bass is trying to pull out of his self-created nosedive by betting on risky ventures.
When Kyle Bass and Hayman Capital’s investment record is analyzed by UsefulStooges, it’s safe to say that Bass has made some enemies over the last eight years. The General Motors ignition and steering mechanism debacles created some ill will when Kyle Bass defended the GM rather than the victims. Pharmaceutical companies are mumbling his name in a not so nice way for shorting drug stocks using inside information. And Chris Kyles widow isn’t happy with her relationship with Hayman Capital either.