The Nickel-Hoarding Billionaire - by Al Doyle ......... posted by James G. Berline

[CSJournals-migration]

When the Fed asked Bass why he wanted a cool million in Jeffersons, he calmly replied "I like nickels."

 

Al Doyle put this out a couple years ago and it's still a interesting story to those who haven't read it yet.

 

The Nickel-Hoarding Billionaire

 

Imagine being very wealthy -- possibly a billionaire according to some accounts. If a person had that kind of capital, what coins would they buy?

 

At a minimum, some rolls of $20 Libertys and Saint-Gaudens would make a nice stash for a high roller. If rare coins are sought, anything from U.S. Mint issues of the 1790s to condition census rare dates in various series are definitely a possibility.

 

What if the wealthy numismatist was interested in nickels? The 1913 Liberty 5-cent piece that recently sold at auction for $3,172,500 is definitely the kind of trophy that attracts big bidders. Dallas-based hedge fund manager Kyle Bass has a serious interest in nickels, but he takes a dramatically different approach than what might be expected.

 

Bass could easily afford coins in the six-figure and up range, but (for now) he is targeting much more mundane pieces. The contrarian investor sunk exactly $1 million into U.S. coins, but his purchase didn't require numismatic expertise or third-party grading. Thats because Bass purchsed 20 million common-date Jeffersons at face value.

 

Why would a guy who deals in big numbers and sophisticated investing strategies bother with lowly nickels?

 

At the time of the mega-purchase of 20 million circulated nickels in 2011, the coins contained 6.8 cents apiece in metallic value per planchet. Nickel and copper have dropped since that time, and the current melt price is just under face value according to the Coinflation web site. Since Bass paid face value for his nickel hoard, there was no downside risk.

 

Obtaining such a vast amount of 5-cent pieces obviously requires more than ordering the coins through normal channels such as armored car companies. This multi-ton request had to be filled by the Federal Reserve. When the Fed asked Bass why he wanted a cool million in Jeffersons, he calmly replied "I like nickels."

 

The purchase involved deeper motives than what might be perceived as an eccentric act. Bass made his reputation on successfully betting against heavily indebted nations such as Greece and Ireland as well as the large pool of subprime mortgages in America. That naturally led Bass to invest in gold and platinum through his Hayman Capital hedge fund as well as with his own money. Since Bass has no fear in going against conventional thinking, the world's largest nickel hoard wasn't a huge stretch for him.

 

When famed author Michael Lewis interviewed Bass for his best-selling book Boomerang, Bass pulled a large gold bar out of his desk.

 

We've bought a lot of this stuff, Bass told a startled Lewis. In Bass' case, he was talking about the real thing. No futures, no contracts, no "paper gold".

 

Not gold futures. You need physical gold," Bass declared to Lewis. When the author asked Bass what investment advice he would offer to his mother, the reply was a blunt "Guns and gold."

 

Want to invest like one of the most successful hedge fund managers of the 21st century? You might not be able to afford gold, but anyone who buys firearms, ammo and nickels at face value will be doing a dead-on Kyle Bass impersonation.

 

http://www.coinweek.com/bullion-report/the-nickel-hoarding-billionaire/#comments

 

See more journals by James G. Berline

[RWB]

They didn't get to be a billionaire by buying nickels and hoarding them.

 

The entire story smacks of fiction - or gross/grass exaggeration.

 

Maybe "Bass" bought bologna.....?

[brg5658]

Maybe this whack-job will be on the next episode of "Hoarders"...

 

 

[coinman_23885]

They didn't get to be a billionaire by buying nickels and hoarding them.

 

The entire story smacks of fiction - or gross/grass exaggeration.

 

Maybe "Bass" bought bologna.....?

 

I agree. Adjusting for inflation would mean that the coins would be worth less year after year. Was this billionaire a trust fund baby?

[KMAG100]

Q1 2015

 

Kyle Bass’ Heyman Advisors had a very poor quarter that was characterized by its selloff of General Motors Company (NYSE:GM), a company in which Bass had previously declared bullish sentiment towards. Bass’ five reported long positions in companies with market-caps of at least $1 billion lost 18.9% during the first quarter according to our metric of weighted average returns based on the equity portfolio of the fund at the start of quarter in question. That performance landed Bass the dubious distinction of being the worst performing fund in our database of nearly 700 actively reporting funds during the first quarter, and also dropped his one-year returns to -37.3%.

 

Read more at http://www.insidermonkey.com/blog/slashing-general-motors-company-gm-proves-unwise-as-kyle-bass-stock-picks-did-terribly-in-q1-tanking-by-18-9-342810/#UCKbV8GpABg4saHt.99

 

Not sure I'm buying what he is selling???

[RWB]

Hmmm... -37.3%. There must be a reason this fund is still active...?

[coinman_23885]

But then again, Lehman Brothers stock holders would be green with envy.

[KMAG100]

Hmmm... -37.3%. There must be a reason this fund is still active...?

 

Kyle Bass founded Dallas-based hedge fund Hayman Advisors in 2005. Kyle Bass gained prominence after his bets against the subprime market. Hayman Advisors returned 20.3% in 2006 and 216.6% in 2007. The hedge fund also gained 6.1% in 2008 and around 9% in 2009. Current portfolio value is $325 million. Most of the Hedge funds have been getting it handed to them over the last couple of years. They lose their effectiveness when low volatility environments exist in the markets. They will perk up as bond prices continue to tank globally. They will aggressively play the short side of the bond markets.

[RWB]

OK -- it's a "hedge hog." $325mm is tiny in the world of mutual funds. How does it compare with other rodent funds?

[KMAG100]

Large rodents are in the billions......with Buffet's over a $100 Billion