This is an updated post where we calculate how much Kyle Bass possibly made yesterday. We are in the process of obtaining exact numbers, if we do this post will be updated.

One fund manager was certainly glad to hear the news today that there would be a payout on Greek Credit-Default Swaps, a situation which had been in doubt until the ISDA announcement today. Kyle Bass has been an advocate of the forecast that Greece would have a disorderly unstructured default for some time and bought much of the swaps he hoped would pay out in such circumstances. That forecast was proven false, at least for now, when it was announced that Greece would undergo a guided default and debt restructuring. There had been speculation that under these circumstance the swaps would not pay out.

Today’s announcement killed that speculation and caused relief for many who had bet against Greece to large sums. Kyle Bass has been talking Greece for some months now predicting a default and going against the non-payment of Credit-Default Swaps in the case of a structured default. Reports from last October suggest that he stands to make $700,000 from the deal after an investment of $1100 a year to maintain the swaps which cover a chunk of debt worth around $1 million. This gives him a return of 650 times on his investment. He said of the sovereign debt crisis last year ‘It may not be the end of the world,’ Mr Bass added. ‘But a lot of people are going to lose a lot of money. Our goal is not to be one of them.’ The attention he has paid to the situation, being one of the most visible fund managers involved in the sovereign debt market, has paid off.

Bass is known for his unusual personality and interesting investment choices. He is highly invested in the gold market and has bought nickel coins in bulk last year. He reportedly keeps a gold bar in his desk drawer. Mr. Bass is the heads up Hedge Fund called Hayman Capital. He started the fund in 2006 and made his money gambling against sub-prime mortgage debt before the crisis hit full tilt. The revelation that his $1100 bet will net him $700,000 is amazing and shows how savvy of an investor he is. He is known for his often strongly expressed opinions on the direction of the world economy including a statement suggesting that Western Governments hid the extent of the 2008 financial crisis. His 650 times return on his investment will earn him a lot of accolades in the fund world. The true value of his holdings will be fully quantifiable when the payout rates are decided after an auction of old Greek debt.

We could not find exact numbers on how many CDSs, Kyle Bass bought, but the average CDS trade for sovereign bonds is approximately $15 million. If Bass bought $15 million of the CDSs, he would have made $10 billion. Bass might have bought more, in which case he might now be one of the richest people in the world.

Of course he might have bought a minimal amount, but considering that he has $726 million assets under management, it is likely he bought more.

UPDATE 3/10, 9:30PM EST: A person familiar with the matter has told us that the number is likely high since Kyle Bass sold some of the CDSs recently, but he could not determine an exact number.

Update 3/11 9:00am: We are still getting word on the exact profit but the source told us that Kyle Bass possibly made $3 billion on this trade.

Update 3/11 10:27am: to further support the thesis that Bass made in the billions see the following from John Mauldin:

Secondly, the number that keeps showing up in the press is that there are only $3 billion of credit default swaps on Greek debt. That is only half true. The reality is that there is a NET $3.2 billion of CDS on Greek debt. The total or GROSS amount of swaps written is estimated to be about $60-70 billion (Dan Greenhaus, Chief Global Strategist, BTIG). This is in the 4,323 contracts that are known about.

Of the net exposure, the loss is likely to be less than the $3.2 billion, unless Greek debt goes to absolute zero. But that does not tell the whole story. For instance, just one Austrian state-owned “bad bank,” KA Finanz, faces a hit of up to 1 billion euros ($1.31 billion) for the hole Greece’s debt restructuring punches in its balance sheet. That loss, which will be borne by Austrian taxpayers, is someone else’s gain. The net number means nothing to them – they lose it all, over a third of the expected total loss.

Every bank and hedge fund, insurance company, and pension fund has its own situation. Care to wager that the larger banks won’t win on this trade? My bet is that there will be $30 billion in losses, out of which maybe someone will make $27 billion in gains.

Will the counterparty that holds your offsetting CDS be able to pay? Will all taxpayers be so accommodating as Austria’s? Does anyone think that taxpayers will bail out a hedge fund that cannot pay its debt, if it sold protection and has to default?

Would that it was “only” a $3 billion loss spread among the largest losers. That would be trivial in the grand scheme of things. Will Greece really stress the system, as it was stressed in 2008? The answer is, not likely, since European taxpayers have found €100 billion to cover the debt and the ECB has printed over €1 trillion, which has postponed any debt crisis for the immediate future.