Hayman Capital’s Kyle Bass believes Wall Street’s recent selloff has shown cracks in the Japanese economy.
Kyle Bass: Japanese bonds look ‘terrible’
where are we on japan? in abe nom knicks you saw the hike 3% hike. we’re seeing goods prices move more than 3%. when you have inflation of 1.4 to 1.7 through monetary policy and then you have a tax hike, i think the next inflation prints you see out of japan, the cpi numbers, are to be north of 2, to 2.5, which if you own a ten-year bond that pays you 58 basis points in nominal yield, and you see a 2% inflation print, what are you going to do? the interesting thing in this sell-off in the marketplace in tech and biotech in the u.s. and now the market, and this huge sell-off in japanese equities, the japanese bond market hasn’t gone anywhere. yields haven’t collapsed which is fascinating. their bonds are actually acting pretty terrible given the environment of their equity market. so we’ll see what happens. again the question is, will they lose control of rates or they escape via the currency and we believe the currency will move before the bonds do and we’ll see when the bonds move.
Kyle Bass: Investment case for General Motors
Kyle Bass, Hayman Capital Management managing partner, makes his investment case for General Motors Company (NYSE:GM) despite the litigation the automaker is facing. “GM is taking the right steps to invest properly in the crisis,” says Bass.
it’s our biggest position. and i think that the investment case is unbelievable with gm. they have almost $30 billion of cash on balance sheet, $20 billion of unrestricted cash. when you look at their enterprise value, net of pension liabilities cash and everything i’m talking about, their enterprise value today only about $37 billion. we think they’re going to do $15.5 billion in ebitda this year. it’s trading at almost two times ebitda. it pays a 3.7% dividend deal, when the rest of the s&p pays about a 2, somewhere around there. learn its market cap and ebitda in two years. incredibly low valvation. still the spector of extraordinary litigation regardless of whether they may be protected by bankruptcy, she has to ken feinberg to do something that would involve giving out a lot of money. yes. they’ve set aside between $600 million and a $1.3 billion. think about it in context. they will do right by their customer, invest in the brand, do right by the people wronged by engineering mishaps, whatever they can do. you don’t believe consumers at home will be impacted in their decisions about buying a gm car. i think it would be naive to believe no one would be impacted by their decision to buy a gm vehicle. gm is taking the right steps to invest properly in the crisis and move themselves forward into the new gm and we’re talking about the new gm here where it is a much — i think it’s better operated, better capitalized in a better position for the next ten years than it was in the last ten. and i think they’re addressing these issues and six months from now the issues will be behind them. they’ll have done right by customers, their employees, and historically the automakers trade 4.5, 5 times ebitda. today trading just over 2 and everything looks better and not worse. everything looks better in
Pro defends General Motors: Two sides to every story
CNBC’s David Faber speaks with Kyle Bass, Hayman Capital Management managing partner, about his stake in General Motors Company (NYSE:GM) and why he is still bullish on the beleaguered automaker. The public policy aspect is so difficult to contextualize and understand, Bass says.