James S. Chanos is an American investment manager. He is president and founder of Kynikos Associates, a New York Cityregistered investment advisor focused on short selling. A noted art collector, he appeared on the BBC Four documentary The Banker's Guide to Art.
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. Shortly thereafter, Chanos was recruited to Deutsche Bank, where he analyzed Michael Milken’sjunk bonds and Drexel Burnham Lambert. After working as an analyst in several firms, Chanos founded Kynikos in 1985 with $16 million, as a firm specializing in shortselling. A critical position taken at Kynikos was his shorting of Enron. He describes his investment strategy as "intensive research into stocks", 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. 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.
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. He gained notability as a short seller when he predicted the fall of Enron Corp. before it filed for bankruptcy in 2001.
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. 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". 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. 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". 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". 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 reduced our China short and our global fund to the lowest it's been".
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. 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. 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.”
Wirecard AG
Chanos took and closed a short position on Wirecard AG. The stock dropped about 96% in June 2020 after the company's auditor EY has disclosed that the company was missing about $2.1 Billion. Chanos stated that he believes that Wirecard was never profitable.
Chanos took and closed a short position on The Hertz Corporation. Chanos covered his short position prior to the Hertz bankruptcy. Chanos stated that he didn't believe that Hertz was able to survive the next recession.
