James Chanos

James S. "Jim" Chanos[1] (born December 24, 1957) is an American investment manager. He is president and founder of Kynikos Associates, a New York City registered investment advisor focused on short selling. A noted art collector, he appeared on the BBC Four documentary The Banker's Guide to Art.

James Chanos
Born (1957-12-24) December 24, 1957
Milwaukee, Wisconsin, U.S.
NationalityAmerican
OccupationInvestor
Known forShort selling
Notable work
Founder of Kynikos Associates, LP

Early life and education

James Steven Chanos was born in 1957 into a Greek immigrant family living in Milwaukee, Wisconsin that operated a chain of dry-cleaning shops.[2] He graduated from Wylie E. Groves High School, and received a B.A. in Economics and Political Science from Yale University in 1980.[3][4]

Personal Life

Mr. Chanos lives in New York City with his four children. He is currently a lecturer in finance and a Becton Fellow at the Yale School of Management, where he teaches a class on the history of financial fraud.[5] He is also the president of the board of trustees of The Browning School, and serves as a trustee at The Nightingale-Bamford School and The New-York Historical Society.[6]

Career

Chanos began his career at brokerage firm Gilford Securities in 1982. While at Gilford, he performed a cash-flow analysis and made a sell recommendation that ultimately exposed Baldwin-United, which filed for bankruptcy in 1983.[7] Shortly thereafter, Chanos was recruited to Deutsche Bank, where he analyzed Michael Milken’s junk bonds and Drexel Burnham Lambert.[8]

After working as an analyst in several firms, Chanos founded Kynikos (Greek for "cynic") in 1985 with $16 million,[9] as a firm specializing in short selling. A critical position taken at Kynikos was his shorting of Enron.[10]

He describes his investment strategy as "intensive research into stocks",[11] looking for fundamental failures in market valuation, from underestimated or unreported failings in the business or the market of a particular stock, followed by a substantial short position which he is willing to hold for quite a long time — perhaps an opposite echo to Warren Buffett's reputed "fundamentals+long stay" investment strategy.[12] Some have said his commitment serves as more of a whistle-blower than most speculations, as in his heavy selling of such companies as Baldwin-United and Enron Corporation short.[8]

Investments

Correct bet on Enron collapse

Chanos was a short seller of Enron throughout 2001, increasing his short position as more information surfaced. Kynikos profited from the trade.[13] He gained notability as a short seller when he predicted the fall of Enron Corp. before it filed for bankruptcy in 2001.[9]

Prediction on Chinese real estate crash

Chanos is a long-time skeptic of the future of the Chinese economy. He became bearish after starting to study China in earnest in the summer of 2009.[14] In September 2009 he went public with his pessimistic outlook on China. On CNBC Chanos said the Chinese miracle economy was "getting harder and harder to believe", predicting the country would head the way of the "old Soviet Union".[15] In January 2010, the New York Times referenced Chanos making a prediction of an impending Chinese economic crash that would resemble "Dubai times 1,000 — or worse". Later on the Charlie Rose Show in April 2010 he maintained that China was on a "treadmill to hell" that would result in a crash caused by a "world class" property bubble.[16]

The Chinese real estate crash predicted in 2010 did not materialize and has caused financial media to question his investment wisdom. Bloomberg in a December 2017 article noted "Chanos has made wayward bets against U.S. stocks and China recently".[17] The Financial Times in an October 2017 article used his "Dubai times 1,000" quote an example of one of the "dire prophecies" about China’s real estate market that did not come true, demonstrating the subject was "tricky for foreign investors and experts to grasp".[18]

Chanos has pulled back on going short on China since his initial predictions. In an interview during a forum event hosted by Schechter Wealth in December 2017, he said "in the past few years we're actually now [have] reduced our China short and our global fund to the lowest it's been".[19]

Luckin Coffee

Chanos took and closed a short position on Luckin Coffee Inc. in 2020 on the advice of fellow short-seller Carson Block of Muddy Waters Research.[20] The stock dropped 70% in April 2020 after the company disclosed in a securities filing that its chief operating officer had fabricated 2019 sales by about 2.2 billion yuan ($310 million).[20] Chanos remarked on CNBC: “How many times do investors have to be burned in these companies that are just too good to be true? Growing 40% to 50% a year, with all kinds of odd transactions with affiliates.”[20]

References
  1. Porzecanski, Katia (October 13, 2017). "Jim Chanos's Short Hedge Funds Have Fallen This Year". Bloomberg L.P.
  2. "Jim Chanos Resource Page". ValueWalk. Retrieved November 10, 2016.
  3. "James Chanos Lecturer in the Practice of Finance". Yale School of Management. Retrieved November 10, 2016.
  4. "James Steven Chanos: Executive Profile & Biography - Bloomberg". www.bloomberg.com. Retrieved July 17, 2017.
  5. "James S. Chanos". Alliancebernstein. Retrieved April 28, 2020.
  6. "James Chanos". Yale School of Management.
  7. Lopez, Linette (December 12, 2011). "The Amazing Story Of Jim Chanos' First, Career-Making Short". BusinessInsider. Retrieved February 25, 2020.
  8. Sherman, Gabriel (December 15, 2008). "The Catastrophe Capitalist". New York Magazine. Retrieved September 24, 2011.
  9. Chung, Juliet (September 16, 2015). "China Bear James Chanos Roars After Years of Losses". Wall Street Journal. Retrieved November 10, 2016.
  10. James Chanos (2002). Anyone could have seen Enron coming: Prepared witness testimony given February 6, 2002 to the House Committee on Energy and Commerce. .
  11. Leder, Michelle (2003). Financial fine print: uncovering a company's true value. John Wiley and Sons. p. 35. ISBN 0-471-43347-0. ISBN 9780471433477.
  12. "The man who got China right".
  13. Petruno, Tom (January 20, 2002). "nts MARKET BEAT 'Short-Sellers' in Enron Finally Get Their Due". Los Angeles Times. Retrieved July 17, 2017.
  14. Barboza, David (January 8, 2010). "Contrarian Investor Sees Economic Crash in China". The New York Times. Retrieved May 5, 2010.
  15. Bacani, Cesar (November 16, 2009). "China's Economic Recovery: Miracle or Mirage?". Time.
  16. "James Chanos interviewed by Charlie Rose". Archived from the original on April 15, 2010.
  17. Welch, David (December 14, 2017). "Famed Short-Seller Jim Chanos Says Tesla Headed for 'Brick Wall'". Bloomberg L.P.
  18. Hancock, Tom; Wildau, Gabriel (October 19, 2017). "Chinese property boom props up Xi's hopes for the economy". Financial Times.
  19. "A Fireside Chat with Jim Chanos". ValueWalk. December 21, 2017.
  20. "Jim Chanos says he covered bet against China's Luckin Coffee amid 70% plunge Thursday". CNBC. April 2, 2020.
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