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Kyle Bass is the founder and principal of Hayman Advisors LP, which was formed in December 2005. Prior to founding Hayman Advisors, Mr. Bass worked as a Senior Managing Director at Bear Stearns and a Managing Director at Legg Mason. Mr. Bass graduated from Texas Christian University in 1992 with a Bachelor of Business Administration in Finance and Real Estate Finance.

According to the latest 13F, Hayman Advisors had a total of 20 securities in its portfolio, which was valued at $588 million on March 31, 2011. The value of Hayman’s portfolio rose dramatically since the previous quarter (4Q2010), when it held a total of 14 stocks valued at approximately $340 million on December 31, 2010. Hayman has sold out on 8 positions and added 14 new positions to its portfolio during the first quarter of 2011. A summary table of Hayman’s recent activities is below:

CompanyName

Ticker

Value

Activity

Return

ARIAD PHARMACEUTICALS INC

ARIA

Sold Out

5.2%

BANK OF AMERICA CORP

BAC

Sold Out

-18.7%

ELECTRONIC ARTS INC

ERTS

Sold Out

21.9%

H F F INC

HF

Sold Out

-2.5%

K K R & CO L P

KKR

Sold Out

1.0%

MACYS INC

M

Sold Out

11.1%

PHILLIPS VAN HEUSEN CORP

PVH

Sold Out

-2.4%

SPDR S & P 500 ETF PUTS

SPY

Sold Out

-2.7%

SIX FLAGS ENTERTAINMENT

SIX

21557

0

5.2%

ROYAL BANK SCOTLAND CL4

RBS

7868

14.76%

4.4%

GRUBB & ELLIS CO

GBE

1600

33.33%

-31.3%

ROYAL BANK SCOTLAND CL1

RBS

3894

50.45%

4.4%

ROYAL BANK SCOTLAND CL2

RBS

13252

265.84%

4.4%

ROYAL BANK SCOTLAND CL3

RBS

7894

348.30%

4.4%

APACHE CORP

APA

12372

New

-10.4%

BARNES & NOBLE INC

BKS

5514

New

99.1%

BRIDGEPOINT EDUCATION INC

BPI

7131

New

44.9%

C V R ENERGY

CVI

8106

New

-13.3%

CHEMTURA CORP

CHMT

11180

New

4.6%

DRUGSTORE COM INC

DSCM

7290

New

-1.6%

EARTHLINK INC

ELNK

9788

New

-2.8%

IMMERSION CORP

IMMR

10436

New

4.1%

ISHARES TRUST RUSS 2000 PUTS

IWM

437684

New

-5.5%

ROYAL BANK SCOTLAND CL5

RBS

4378

New

4.4%

ROYAL BANK SCOTLAND CL6

RBS

1837

New

4.4%

VERA BRADLEY INC

VRA

10477

New

-4.8%

DIANA SHIPPING INC

DSX

4736

New

-8.4%

DIANA CONTAINERSHIPS, INC.

DCIX

779

New

-26.1%

Among the securities it sold, Hayman’s biggest regret was probably Electronic Arts Inc. (ERTS). It held 450,000 shares in the previous quarter valued at $7.3 million. The stock has returned almost 22% since the end of March 2011. The stocks that Bass sold actually outperformed the market since the end of first quarter.

Hayman has been bullish for Royal Bank of Scotland (NYSE:RBS) in the first quarter of 2011, when it increased its long positions in the stock considerably. Luckily, the stock proved Hayman to be right and gained over 4% in value since March's end. RBS was recently trading at $13.26 a share.

Among its new positions, Hayman bought a put option of iShares TR Russell 2000 (NYSEARCA:IWM) and the value of this put option was nearly 75% of Hayman’s aggregate portfolio value at the end of the first quarter. Hayman made a good bet as the ETF lost 5.5% in value since March 31.

The greatest returns Hayman generated on its long positions were in Barnes & Noble (NYSE:BKS) and BridgePoint Education (NYSE:BPI), which have generated 99% and 45% returns since the end of March 2011, respectively. Peter Eichler’s Aletheia Research and Management and Patrick McCormack’s Tiger Consumer Management were among the bullish funds for BKS in the first quarter of 2011. On BPI’s side, we see position enhancements in Edward Mule’s Silver Point Capital and Geoffrey McCuskey’s Riverside Advisors.

While Hayman made good returns on a couple of new positions, it also incurred losses of above 10% on some of its new purchases. Hayman lost 13.3% on CVR Energy (NYSE:CVI) and 10.4% on Apache Corp (NYSE:APA) since March 31, 2011. Both stocks collectively comprised approximately 3.5% of Hayman’s portfolio as of March 31. While Hayman was bullish on APA during the first quarter of 2011, we saw some slight trim offs in other funds. First Eagle Investment Management, Harris Associates, and Diamond Hill Capital were among the funds that trimmed their APA assets in the first quarter of 2011. On CPI’s side, Dan Loeb’s Third Point was another fund that was disappointed with the performance of the stock. Third Point had increased its position on CPI by 3.5% in the first quarter.

Overall, Hayman performed better than the market because of its huge put option on IWM. Hayman also performed well on a number of stocks where it held considerable long positions. We believe that investors can beat the S&P 500 (NYSEARCA:SPY) index by imitating Hayman’s stock picks.

Source: Kyle Bass' Favorite Stock Picks