Hedge fund manager Kyle Bass’ private equity firm is placing big bets on land. Bass is buying tens of thousands of acres of Texas dirt which appears out of the norm for the hedge manager, considering he has wagered complex macro trades in financial markets for over two decades.
Maybe Bass is getting down to the basics: Land is one of the most important assets. His thesis about purchasing largely undeveloped Texas land is partially based on demographics in the state during Covid, which led to a population jump after that.
“We’re on the front end of a population migration that will last for at least a decade or more,” Bass told Bloomberg.
“People from the Northeast, people from the West Coast — they are going to constantly move to Texas, Tennessee, and Florida,” he said.
Conservation Equity Management, an investment firm created by Bass last year, has acquired 37,000 acres of Texas ranch land.
“I’m taking all of my expertise developed over decades of analyzing global macro situations and geopolitical situations and developing a thesis on Texas land as an asset class,” Bass said.
Purchasing large swaths of land has been all the craze among ultra-wealthy and elites while average folks gamble their savings on worthless ‘meme stocks.’ We noted not too long ago that billionaire Bill Gates continues to buy massive amounts of farmland in the Midwest (now America’s largest farmland owner).
Gates isn’t alone. Other billionaires, including Amazon’s Jeff Bezos, have recently increased farmland holdings.
Back to Bass, who is concentrating on Texas land, said there are 142 million acres of privately owned ranches. The median price per acre was about $4,286 as of 2Q22, up 123% in the last decade, according to the Texas Real Estate Research Center at Texas A&M University.
Also supporting the boom are large companies shifting headquarters and/or operations to the state.
Elon Musk famously abandoned California for Texas last year and moved Tesla headquarters to Austin. Hewlett Packard Enterprise has shifted its headquarters to Houston, and Caterpillar plans to relocate to Dallas.
According to Decide Consulting, over 125 tech companies have announced plans to move to Texas since 4Q20 (here’s the most comprehensive list of tech companies relocating to Texas).
With the massive inflow of not just people but also businesses, Bass feels the pensions, endowments, and other institutions will deploy capital in the state as the boom is just getting underway.
Bass also said the state’s industrial expansion would be a boon for companies that can satisfy corporate ESG mandates.
Besides complex macro trades and now Texas land, Bass also took a position in nickel when he bought a million dollars worth of US nickels in 2011.
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