Short-seller Jim Chanos identifies areas in the U.S. where he is 'more bearish'
Wall Street short seller Jim Chanos, the founder of hedge fund Kynikos Associates, sees opportunities to short stocks in the U.S. right now.
Speaking at the Bloomberg Invest Summit on Tuesday evening, Chanos told attendees he’s less short China right now — one of his well-publicized short bets — but he’s “not less bearish” on the country.
“It’s because we’ve become more bearish on opportunities in the states,” he said.
Chanos, famous for his short bets against Enron and other once high-flying stocks like Tyco and WorldCom, sees opportunities thanks to a debt-driven bubble in the U.S.
He noted that there are some eerie similarities in certain sectors to previous bubbles.
For one, he said there are some issues in auto credit, pointing that there’s now auto equity cash-out financing in used cars.
“I’ve never seen that before, and I’ve been following credit since the early 80s,” Chanos said. “And all kinds of questionable behavior in the auto finance area. This makes me harken back to 06/07.”
He’s also seeing “dot-com 2.0’s” referring to 1999 and early 2000 when valuations were based on what’s to come.
“There’s a number of them out there, but tech sector obviously is where most of those companies come from where all kinds of companies have come up with sort of old business models that have been revamped 15 years later to sell to investors that the Internet will revolutionize the way in which they sell things or do things,” Chanos said.
In the current environment, businesses are getting disrupted, and that also creates opportunities.
“Probably the biggest impact is going to be in finance, or it’s already in finance, you know, where you have big data and artificial learning and passive versus active investing. I mean, all these things are hitting every single business,” Chanos said.
He continued: “And in the bull side of the cycle, everybody sees the opportunities, but what we found out after 2000 was that when you have lots of capital going toward disruptive business models, you have lots of businesses that get decimated too because of new ways of doing business and old business models that are destroyed by the advent of big data or online retailing, whatever.”
So for every winner, there’s usually a loser, he noted.
“That’s the dark side of the disruptive capitalism, which I think is a good thing, by the way, generally speaking. But it’s one of the reasons why we have business.”
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Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.
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