Hedge Fund Manager Kyle Bass is Shorting Real Estate—Again

[Jon Q.]

See the recent article in Fortune.

Kyle Bass predicted the crash of 2008 and made big money shorting during this time.

What do you think?

[Charlie Fitzgerald]

@Jon S It also matters quite a bit that he shorted UDF due to the allegations and investigations of FRAUD against this particular company.  Not, because he believes there is a pending crash in the entire asset class.  To say he is "Shorting Real Estate Again" is somewhat of an over-statement in this instance.  Here are the snippets that are relevant:

Hedge fund manager Kyle Bass, who runs Dallas-based Hayman Capital, tanked the stock of a little-known real estate financier Friday by revealing that he is shorting the company. Shares of a real estate investment trust (REIT) operated by United Development Funding crashed more than 30% after Bass unleashed his campaign, which accused UDF of orchestrating a $1 billion “Ponzi-like scheme.” Bass alleged that UDF used money from one of the four funds to “bail out” another one that was struggling, “using new investor money to pay existing investors” in “a Ponzi-like real estate scheme.” Bass expects that the firm’s downfall will be bankruptcy, calling UDF “a billion dollar house of cards” that “is now on the verge of collapse.”

UDF has been under investigation by the Securities and Exchange Commission since April 2014, the company disclosed in December, responding to what it called "market rumors" and "misleading anonymous posts." In its response, UDF said that a hedge fund had built "a significant short position" of more than 4 million shares of its publicly traded REIT, and that it believed the fund was "trying to unlawfully profit by manipulating and depressing the price" of the shares—but it did not name the fund.

Shorting 4 million shares of one company held by a hedge fund the size of Hayman Capital is a bit different than, "Shorting Real Estate".