Jim Chanos

[winston]

Chanos: Whitney May Be Right on Munis By Greg Brown

Banking analyst Meredith Whitney’s much-maligned call on municipal bonds is not so far off the mark, suggests Jim Chanos, chief of Kynikos Associates, a fund that focuses on short-selling.

Whitney, the former Oppenheimer & Co. analyst who called the financial crisis early and rode the wave of that call to form her own firm, now says to expect hundreds of billions in municipal defaults. She has since taken it on the chin from other bond experts for muni call, notably from chief investment officer of Pimco, Bill Gross.

Kynikos compared municipals to rotten mortgage bonds that investors believed would never fail them.

“You think people are reading the financials of that water plant? I doubt it. They're depending on ratings agencies just like they did in the good old days of mortgage financing,” Chanos told CNBC.

The central concern for municipal bond investors, if Whitney is right, is how much if any backstop to expect from an overstretched federal government. A dicey vote on raising the federal debt ceiling is still ahead, and Treasury Secretary Tim Geithner has delivered to the politicians a plan to get the government out of backstopping the mortgage market.

"Even Warren Buffett said to be long the muni-bond industry in effect you have to bet on a federal bailout, and I'm not so sure that with the politics in Washington now that that's the smartest bet in the world, given you'll only be earning 3 or 4 percent," Chanos said.

Whitney was called to testify on municipal bond risk before Congress but demurred, citing scheduling conflicts.

Rep. Patrick McHenry (R-NC) said he will examine Whitney’s argument with her or without her.

“This isn’t a gotcha thing, but she’s going to be part of the hearing, whether or not she participates,” McHenry told The New York Times. “If she doesn’t want to come forward in a venue like this, that makes a statement.”

http://www.moneynews.com/StreetTalk/mun ... /id/385902

[winston]

Legendary Short Seller Chanos Goes Long By Insider Monkey

NEW YORK (Insider Monkey) -- Legendary short seller Jim Chanos recently started going long on certain shares.

For the first time Chanos' Kynikos Associates LP filed a 13F form that showed several long positions in common stocks such as Citigroup(C), NYSE Euronext(NYX), NASDAQ OMX(NDAQ), Focus Media Holding Ltd(FMCN), Rackspace Hosting(RAX), Terremark Worldwide(TMRK).

It's well known that Chanos thinks there is a real estate bubble in China and he has been shorting it for the past year and a half. Yet, he had 159,000 shares of China Real Estate Info(CRIC) Corp in his portfolio. Did Jim Chanos give up shorting? Why did he suddenly start going long?

Brian F. Nichols, CFO of Kynikos Associates LP, didn't respond to a message we sent him. We have three theories though. Short selling is a tough business. It is sometimes very costly in terms of time and money to locate and borrow shares.

In certain circumstances it is more convenient to buy index funds to reduce the size of a short position. Chanos' largest holdings were S&P 500 ETF(SPY) and Russell 2000 ETF(IWM). He was also long China ETF and Vanguard's emerging markets ETF.

Our second theory is more radical. Chanos might have started accepting money from investors who want him to be market neutral. Chanos had only $83 Million in long stocks. Considering he manages about $5 Billion (not all of it invested in US securities), this may make some sense.

Our third theory is even more radical. Chanos may have started experimenting with a long strategy. Most long/short hedge funds are more talented on the long side of their portfolios because it is easier to pick winners. Chanos might have finally decided to do the easy thing and make billions instead of millions.


http://www.thestreet.com/story/11080016 ... ooyah_html

[winston]

How can one be shorting something that one does not understand ?

Why Jim Chanos is Wrong on China

Hedge fund titan, Jim Chanos, is well known for his extremely bearish views on China. He says that the cracks are spreading on the façade, real estate sales are falling, and that the economic engine is starting to sputter.

This will be bad news for the rest of us, as China imports 50%-80% of the world’s commodities. Commodity exporting countries will be especially hard hit, like Canada, Australia, and parts of the US. Modern China has only seen a bull market, and he doubts their ability to manage a true crisis.

However, I think that Jim, who confesses to having never visited China, is missing the broader long term picture here. China has literally been building a Rome a day, the ancient kind, and the modern size every two weeks. In a year, it builds the equivalent of the entire housing stock of Spain, and in 15 years the equivalent for all of Europe.

http://www.resourceinvestor.com/News/20 ... China.aspx

[winston]

Does it include factories etc ? Do you know the quality of your statistics ?

================================

Jim Chanos, the famed short seller, says China is currently building 30 billion square feet of commercial real estate.

That is enough to provide every person in China with a five-square-foot cubicle.

Source: S&A Digest

[winston]

I'm still amazed that this Jim Chanos has not even been to China and he's supposedly the "expert" on China.

And once in a while, he will show those pictures of an empty city in Mongolia, to frighten people as if every Chinese city is empty.

Sometimes perception is more important than reality, especially when you are frighten ..


China heads for a huge bust
Saturday, September 24, 2011

Hedge-fund legend and famed short-seller Jim Chanos recently offered his latest bearish take on the coming chaos he sees ahead for China.

Chanos, the brilliant "forensic accountant" who nailed the Enron and WorldCom frauds, believes the country is headed for a huge real estate bust… one that will send the prices of Chinese banks, real estate developers, and commodity producers much lower.

Chanos told Bloomberg…

The property market is hitting the wall right now and things are decelerating.

The CEO of Komatsu said last week that he is having trouble getting paid for his excavator sales in China.

Developers are being squeezed. They're turning to the black market for lending, this shadow banking system that is growing by leaps and bounds like everything in China.

Regulators over there are really trying to get their hands around the problem. In the meantime, local governments have every incentive to just keep the game going.

So they will continue with these projects, continuing to borrow as the central government tries to rein it in.

In 2008, Americans learned the hard way what happens when a mania in rampant lending, real estate speculation, and shady banking practices hits a wall. When Chanos is proven right on China, it's going to be ugly.

Source: Growth Stock Wire

[winston]

Jim Chanos thinks that Chinese property counters have only just started it's decline.

Source: Bloomberg

[winston]

Beware of Cheap Stocks: Chanos

Jim Chanos -- founder of Kynikos Associates -- warned that cheap-looking stocks aren't necessarily so.

The famed short seller known for his early warnings on Enron says that while dud stocks can be camouflaged as cheap, there are ways for smart investors to uncover land mines.

Currently Chanos sees value traps in integrated oil, for profit education, national commodity producers and Chinese banks.

http://www.thestreet.com/story/11280671 ... ooyah_html

[winston]

Jim Chanos: Beware the Global Value-Trap (Presentation From Value Investing Congress)

At the Value Investing Congress today, Jim Chanos of hedge fund Kynikos Associates talked about various companies to short in a presentation entitled "Beware the Global Value-Trap!"

Classic Short Selling Themes

1. Booms that go bust, debt-driven asset inflation; real estate in US, telecom overbuild, far east real estate now.

Cyclical: Sometimes cycles become secular. Autos, airlines. Overly dependent on one product. Coleco, renewable energy.

Illegal does not equal value. Be careful- they often look deceptively cheap. Online Poker.

2. Consumer fads

3. Technological obsolescence: Probably killed more value investors in last 20 years than any other. Examples: Minicomputers, Eastman Kodak, Video Rental. The cash flows drop off faster than you think they do. At some point, cash flows hit a tipping point, and drop precipitously.

4. Structurally flawed accounting: Free cash flow/Run by accountants. Tyco example. Be “Triply careful” whenever management pulls out some metric that they define- such as cash flow. Be careful when they keep pointing to a metric they like. Accounting issues. Confusing disclosure. BFT. Nonsensical GAAP. Sub prime lenders example.

5. Selling $1.00 for $2.00

6. Rapid Prior Growth: “Law of large numbers” Telecom build out example. When tech shift occurs, old metrics that value investors use are totally irrelevant.

7. Value Traps

http://www.marketfolly.com/2011/10/jim- ... -trap.html

[winston]

Would you short something without looking at it ?

Chanos Says China Property Is Slowing, Still Shorting Banks

China is on “a bigger and faster treadmill” than ever as property sales slow, said Jim Chanos, the hedge-fund manager who’s shorting banking stocks on a bet the market will crash.

“The Chinese are beginning to realize that property prices can go down as well as up and this is going to be a very, very troubling development for the Chinese property market,” Chanos, president and founder of $6 billion hedge fund Kynikos Associates Ltd., said in a Bloomberg Television interview from Singapore with Susan Li today.

The hedge-fund manager’s views are at odds with those of Stephen Roach, non-executive chairman of Morgan Stanley Asia, who said in New York yesterday that the government has had some success in deflating a housing bubble and concerns of a hard landing are ``overblown.''

China’s “hard landing” has begun, said Chanos, adding that consumption as a percentage of gross domestic product is dropping and that fixed-asset investment is the driver of the Chinese economy.

“Most China observers were not talking about any landing three months ago and now they are confidently talking about a soft landing.”

Chanos said he takes the accounting of the Chinese banks “with a large grain of salt.”

“Western banks reported record profits in 2007 before collapsing,” he said. “It’s all about credit. The last two banking crisis in 1999 and 2004, China banks had 40 percent non- performing loans to total loans and there were no recessions in those periods.”

“All the way down, there were 30 percent and 40 percent rallies from new lows, yet things kept deteriorating,” Chanos said, adding that he’s nowhere near covering his short positions in China as “the property slowdown has just started in the third quarter.

Stocks are going to go up and down like yoyos. But we are keeping an eye on the fundamentals and they have just started to deteriorate.”

Real estate transactions in the past two months, in the so- called tier-one, two and three cities the firm tracks are down 40 percent to 60 percent year on year, said Chanos.

Chanos is on a trip to Asia, including Hong Kong and Singapore. He said trips to visit Shanghai and Beijing are “probably some ways away” because he has analysts going to China all the time.

http://www.bloomberg.com/news/2011-10-2 ... slows.html

[winston]

Chanos Says China Bank System `Extremely Fragile’ By Barry Ritholtz

Chanos on his recent trip to Hong Kong and Australia:

“I think we probably came back a little bit more bearish….Our concerns about what we saw in Australia: an economy clearly tied to China has hitched its wagon to the tail of the tiger.

In terms of the general complacency, what we heard over and over from investors and clients and potential clients is, ‘yes, yes, there are some excesses, but the government will figure out a way. That the government is this all-knowing, omniscient basic entity that will not prevent me from losing money.”


Jim Chanos whether the Chinese government has money:

“[The Chinese government] doesn’t [have money], and that’s the problem. The banking system in China is extremely fragile, and that’s one of the messages we wanted to get to people.”

“In fact, because what happened the last two crises, in ’99 and ’04, when non-performing loans went crazy in China without even a recession, the Chinese banking system was not re-capitalized like ours was, it was papered over.

Going into this credit expansion, Chinese banks are sitting on lots of bonds from the so-called asset management companies set up in 1999 and 2004, and they are keeping them on the books at par, at full value.

In the case of Agricultural Bank of China, which we’re short, those restructuring receivables are equal to over 100% of their tangible book. The Chinese banking system is built on quicksand, and that’s the one thing a lot of people don’t realize.

When they talk about the foreign reserves of $3 trillion, what everybody forgets is there’s liabilities against that.”

“Everybody seems to think it is a free and clear open checkbook. It’s not. That is what we have been trying to tell people. Focus on the lending system over there, because everything occurs through the banking system.”


On the Chinese economy:

“Property prices and transactions are really beginning to decelerate. We saw that starting in August, that’s continued into November. Transactions are down 40% to 50% year over year in the tier 1 through 3 cities. Prices are down.

In some cases, we’ve seen riots in sales offices, where people are amazed that prices could actually go down. There’s lots of indicators on the side.

There’s a growing sense that the Chinese government will ease. We point out that credit this year will grow between 30% and 40% of Chinese GDP. If that’s tight, I’d hate to see it ease.”

http://www.ritholtz.com/blog/2011/11/ch ... y-fragile/