Jim Chanos Bearish on Quick Service Industry, Pharmacy Benefit Management, Tesla

Short seller Jim Chanos of Kynikos Associates recently sat down with CNBC for an interview.  Here's a summary along with video and the transcript.

On healthcare:  He thinks the new tax bill will cause the healthcare industry to see deflation.  "We've been looking at the rent-seeking companies, companies that we think have existed on the periphery of the healthcare economy that basically have went after these pricing sort of gamesmanship models.  And we think that's over. We think as the pie shrinks, it's going to be tougher and tougher to justify the ability of companies to hike drug prices 1,000% or charge commercial insurers five times what you charge medicare and medicaid in the case of dialysis ... We're still very negative on the PBM (pharmacy benefit management) space, Express Scripts (ESRX) came out and reaffirmed guidance, raise it this morning.  There's not reason for independent PBMs to exist, for example."


On Tesla (TSLA):  He's still short.  He thinks the company's equity is worth zero and other competitors are ahead of them in terms of autonomy for self-driving cars (citing Waymo, Audi, and others).  Says the problem is that the company can just keep raising capital and if that train keeps going then it's an issue.  But he's still very bearish on the company and sees the CEO Elon Musk as a bit of a showman constantly using hype, press releases and product launches. 


On fast food:  "I'd be short pretty much anybody in the quick service industry besides McDonalds.  MCD still calls the tune.  They're the 6 billion pound gorilla, so to speak.  They just went to a new value menu a few weeks ago, which always impacts the industry.  It's a dog fight."

He points to the companies' transition to the asset light model in the space.  He singled out Restaurant Brands (QSR), the owner of Burger King and Tim Hortons, which has been a hedge fund favorite.  He says while these companies are getting higher multiples for running an asset light model, look at how the franchisee is doing because the restaurants themselves still have to perform.  These restaurants are being hit with higher royalty rates and rising costs, so they're starting to struggle. 


On retail:  Chanos said they had a lot of exposure to the "well known shorts" in the retail industry but has covered them so they only have small exposure in that sector right now.  They think it will be a decent Christmas holiday shopping season so he'll probably re-examine them as they bounce into 2018.

Embedded below is Jim Chanos' interview with CNBC:

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You can also read the full transcript here.

Jim Chanos Interview on Bloomberg

Jim Chanos, founder of hedge fund Kynikos Associates recently sat down with Bloomberg to share his thoughts on markets.

He talks about the macro landscape, how the recent political shift has changed things, and other topics.

Chanos is worried about China because it's a debt driven model.  He thinks they've added trillions to the system.

Turning to US healthcare, Chanos says it's a system designed to be gamed:  "It's a hybrid of socialized and free market healthcare."

He thinks the kidney dialysis business is "headed for difficulties."  DaVita (DVA) seems to be one play that Chanos is short.

Telsa (TSLA) is another company Chanos has been short.  He would cover the short if the company actually began to make money.  They were also short Solar City before it got folded into Tesla.  The company burns a lot of cash (he thinks up to as much as $1 billion a quarter).  The upcoming Model 3 is the big test.

Embedded below is the video of Jim Chanos' Bloomberg interview:



For more recent interviews with prominent investors, be sure to also check out Paul Singer's chat with David Rubenstein.

Jim Chanos Interview With Capitalize For Kids

Noted short seller Jim Chanos of Kynikos Associates recently sat down with Capitalize For Kids for an interview.  They touched on a myriad of topics, from how his firm has evolved over the years to areas he's focusing on now for short selling. 

Here's some key takeaways from the interview:

On how the rise of quants, machine learning, and A.I. can affect hedge funds:

"In our universe companies are actively trying to give you false inputs. They’re trying obscure the numbers. They’re trying to basically make it look better than it really is and so, if you are analysing reams of reams of stocks based on a P/E ratio, momentum, whatever factors are en vogue, you’d better be sure that you don’t have a Valeant that is puffing up their earnings in a bunch of one time ways because that algorithm will kill you. So4, I think it’s one area, where because you’re questioning the actual inputs and not how they interact with the market price, that you might still have an edge. Might. I’m always willing to consider the opposite. You have to."


On today's market environment: 

"Since ‘08, ‘09 I think we’re going to look back and say that it was the advent of central banking, ‘the central bank saves the world and makes you all rich’. So, QE and zero interest rates, I suspect we’re going to look back and say well 8 years of that policy kind of got us to where we are now, so how is that going to change if it does, and how does that change manifest itself? Are we going to see companies that just can’t possibly do well if interest rates go up by 400 bases points or 300 bases points? That’s certainly one thought. On a macro basis, I mean, I’m not positioning the portfolio because that’s what I think but on the other hand I’m keeping an eye out for companies who might get into additional trouble should that regime be ending. And whether it’s in the auto cycle or companies with really, really low returns on capital that have been using financial engineering to bolster their results, those are sort of the things that we’re interested in right now."


On the auto industry:

"Cars are usually the first thing out of the cycle and so now we’ve been at this sort of 17 million SAAR now for a while and what we’re seeing is what you would classical see. You see more incentives. You’re seeing car manufacturers beginning to cut plant production on the margin. We see more aggressive use of credit, lengthening lease terms, lowering residuals. All the sort of stuff that you typically see to keep moving the iron off the lots. I think this will be one area in particular that a run up in rates would probably hit hard, because everybody buying cars is doing so on monthly payments. These applied loan rates really affect the current industry quickly, faster than I think housing.  Well, I’m not going to disclose (the specific security). However, at the peak of the cycle the company was earning about 6% on their capital. It’s a giant company in the industry. It’s not one of the OEM’s and has a finance arm. It earned below its cost of capital when things were good.  What's going to happen when things are bad?  Today, it is trading at its highs right now."



There's much more from Chanos in the full talk and you can read the rest of the interview here.

Jim Chanos Still Short Tesla & Caterpillar

Noted short seller Jim Chanos of hedge fund Kynikos Associates just spoke with CNBC about

Chanos confirmed he's still short Tesla (TSLA) amid rumors that the Model 3 is delayed with production/deliveries.  "Never a dull moment in Tesla land," Chanos said.

"I'm dumbfounded that the board would go ahead with this deal (with SolarCity (SCTY)).  They're growing into a business they don't need to grow into. They're going to pretty much double their cash burn by taking it on, it just makes no sense." Chanos's firm believes SolarCity is an insolvency ex-the deal. 

He also mentioned how Caterpillar's (CAT) CEO was departing.  When asked if he's still short, Chanos said, "Yeah, the fundamentals in our view have not yet changed, we haven't seen any evidence of it."

Chanos also pointed out that the China real estate bubble still hasn't happened yet (popped) so that's still ahead of us, he says. 

We'll post up the video of the interview once it's released.  Be sure to also check out CNBC's interview with David Tepper from yesterday, as well as their conversation with Carl Icahn.

Jim Chanos Still Short Valeant, Alibaba, Tesla, SolarCity

At the Sohn Conference in New York today, Kynikos Associates' founder Jim Chanos appeared on CNBC to talk about what he's seeing in the markets lately (stay tuned for our full Sohn Conference notes later on).   Here are some takeaways:


- Still short Alibaba Group (BABA) with his bearish China bet

- Notes that some hedge funds charging 2/20 that generate 8% return will only give their investors a 4-5% return - is that worth paying for?

-  Still short Valeant (VRX) after originally shorting in 2014; thinks it's still not cheap and argues people are using valuation metrics that aren't right.  Doesn't think the company is trading at 3x earnings like Bill Ackman suggested recently.  Chanos: "Valeant was genius at gaming the system. That game is over."

- Cheniere Energy (LNG): Says he agrees that the contracts are money good, but the company's cost estimates are too low.  "You're paying a ridiculous price for 2020 cashflows compared to any other energy play you can buy today."  Asks how profitable can the plants operate and at what capital cost?

- Short Elon Musk: betting against Tesla (TSLA) and SolarCity (SCTY) still.  Sees flood of executives leaving TSLA as a negative sign.  Since the company can't really make money selling a $100,000 car, how are they going to do so selling a $35000 car (upcoming Model 3)?  Feels TSLA will need to raise money eventually.  Thinks SCTY gets in financial trouble in 2016.

We'll post video of his appearance if/when it becomes available.

Jim Chanos Interview: Glencore, Tesla, Volkswagen & More

Short seller Jim Chanos of Kynikos Associates appeared on Bloomberg TV and talked about some of his latest short positions.  Here are some of the highlights:

On Glencore:  "We're not going to comment on our position on Glencore. But I will say is we know the company pretty well.  Let's just say I'm a potential purchaser ... to close out a short you have to buy stock."

On Volkswagen:  "No, we don't want to be short.  If anything I think we'd be looking at Volkswagen on the long side. But we have not invested in Volkswagen.  I think they'll survive"

On Tesla:  "We haven't disclosed our position officially in Tesla. Let's just say I'm not very positive on the company and we'll leave it at that."

He also ended by saying his favorite short right now is US E&P companies.

Embedded below are the videos of Chanos' appearance on Bloomberg TV:

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Video 2


Video 3


Video 4


Video 5



We've also posted up Chanos' thoughts on some of his other shorts as well.

Jim Chanos Short Cheniere Energy, Caterpillar, Solar City & More: Interview

Noted short seller Jim Chanos, founder of Kynikos Associates recently appeared on CNBC to share his thoughts.

During the interview, he revealed a new short position: Cheniere Energy (LNG).  We've highlighted how Carl Icahn went long LNG recently.  There are also numerous other prominent hedge funds long.

Chanos, on the other hand, has been negative on the liquefied natural gas space over the past six months, thinking it's a "looming disaster" because it's tied into Asia and that LNG demand isn't growing anymore.

He went on to say, "LNG has been seen as a unique animal because it's going to be U.S. based, they're opening its Sabine Pass later this year.  With the stock at 30 times 2020 earnings, with the upside coming from a glutted market, we think the risk/reward in this, given where other LNG plays are in Australia and elsewhere, is just completely out of whack."

Chanos noted he's still short Caterpillar (CAT) but has covered his Joy Global (JOYG) short.  He argues CAT is trading at a rich multiple relative to its peers and that the company isn't letting on just how bad things are out there.

Chanos is also negative on pretty much everything in the PC chain.  He argues that "the value in the hardware chain gets competed away" as the products are commoditized.  He's short Hewlett Packard (HPQ) and some PC manufacturers in Asia.  He's hedged this by being long Apple (AAPL) with better growth and products.

He called Tesla (TSLA) "silly" as it trades on 2025 earnings that's become a momentum and concept stock. Regarding other Elon Musk companies, he thinks Solar City (SCTY) is the most problematic.

On China, Chanos continues to be concerned.  He says that "one of the worries we've always had was they were going to lose control of their currency ... that's why I think the markets took a real shudder in August."  That said, he argued that the US is the country "least affected by what's happening in China."

Lastly, Chanos also said cybersecurity is one of the few areas of growth.

Embedded below are videos from Chanos' interview:

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Video 5:




For more from this short seller, be sure to also check out another recent Jim Chanos interview.

Jim Chanos Says China 'Worse Than You Think;' Reveals SolarCity Short

Noted short seller and founder of Kynikos Associates Jim Chanos recently appeared on CNBC to share his thoughts on the markets.

He mentioned that he feels that China is "worse than you think" and that "the biggest lesson over the last three months, for me anyways, is people are beginning to realize that the Chinese government is not omnipotent and omniscient."

Chanos, of course, has been a long time vocal skeptic on China's growth and property market.

Turning to the US, Chanos feels that people have gotten a bit 'complacent,' noting that markets have gone basically straight up and that's not how markets work.  He also mentioned that he's short Hewlett Packard (HPQ), Caterpillar (CAT), Shell, Chevron (CVX) and also unveiled a newly disclosed short: SolarCity (SCTY).

He called HPQ a "challenged business" and thinks it's in secular decline.  He says "in technology if you're not growing, you're in effect dying."

On CAT, he said it's a commodities supercycle problem.

On SCTY: Chanos argues the problem is that they have a residential model and it's really "a subprime financing company in effect" since they lease out solar panels.

Embedded below are clips from Chanos' interview:

On China:



On Hewlett Packard:



On SolarCity:



On Caterpillar:



For more from this short seller, be sure to also check out Jim Chanos' interview on Wall Street Week.

Jim Chanos on Wall Street Week: Short Selling, Sotheby's, Energy, China & More

Anthony Scaramucci's rebooted version of Wall Street Week continues its streak of impressive guests.  This week, Kynikos Associates founder and noted short seller Jim Chanos appeared on the program.

He talks about how he got involved in the stock market and why short selling is important.

Chanos also touched on why it's important to set capital limits (position sizes) on shorts.  While a short can only go to zero, it can move against you and technically go up infinity.  When a short position moves against you, it actually gets larger in size.  So you have to ask yourself: how much am I willing to bet on this position?  He mentioned 2% to 3% as a typical sized short and never more than 5%.  "Never let one idea carry you out."

As to where he looks for shorts, he likes: flawed accounting, structurally unsound businesses, and businesses on the wrong side of a deep cycle.

Specifically, Chanos noted he is short Sotheby's (BID) as the company has benefited from the easy money generated by quantitative easing worldwide.  While he sees the company as a proxy for measuring how the ultra wealthy are faring (are they buying more art and fine goods or not?), he argues that BID is not a good way to play that because their business model is deteriorating as they compete with Christie's and super dealers.

Chanos also notes he's bearish on the energy space as the integrated oil space has problems.  We've detailed Chanos' presentation at the SALT conference. 

Lastly, he also shared his views on China.


Embedded below is the video of Jim Chanos' appearance on Wall Street Week:



If you missed them, be sure to check out Barry Rosenstein's appearance on Wall Street Week, as well as Carl Icahn's interview and Jeff Smith's appearance as well.  Jeff Gundlach also appeared too.

Jim Chanos at SALT Conference: Royal Dutch Shell, Chevron, Petrobras, NuSkin, Tesla

At the Skybridge Alternatives (SALT) Conference in Las Vegas, short seller Jim Chanos of Kynikos Associates sat down with Bloomberg's Stephanie Ruhle to talk about markets as well as some of his past and current short positions.  He mentioned NuSkin, Tesla, Petrobras and talked about other oil plays in general.

*Update: He's now delivering his presentation at SALT: short oil integrators.  One of his slides entitled "Brazil: risk masquerading as opportunity."  Sums up Petrobras as: "lying, cheating, and stealing."  He says he's short Royal Dutch Shell.  He's also short Chevron (CVX) due to LNG problems, among other things.

Embedded below is the video of Chanos' interview at SALT:

Jim Chanos Short Intel

Short seller Jim Chanos, founder of Kynikos Associates, is short Intel (INTC).  He appeared on CNBC this morning to talk about his outlook on the PC industry.  He also mentions he's long Apple (AAPL).

Embedded below is the video of Jim Chanos' appearance on CNBC:

The New House of Money: Jim Chanos' Interview With Steven Drobny

Steven Drobny has released a chapter from his new book, The New House of Money. Chapter 2, The Biggest Short, features an interview with short seller Jim Chanos of hedge fund Kynikos Associates.

Embedded below is the chapter from The New House of Money:



You can find out more about the book here.

Jim Chanos Talks Short Positions at Reuters Summit

At the Reuters Investment Summit, Kynikos Associates founder Jim Chanos talked about his short positions and market outlook.

The hedge fund manager and prominent short seller noted he's betting against coal miners as a proxy for his bet against China.  He thinks we're at the end of a commodities supercycle.  This is not a new view as we've highlighted Chanos' negative view on China before.

Chanos is also short Exxon Mobil (XOM), which he labels a value trap.  He believes the business of integrated oil companies has deteriorated over time.  Chanos also points out that return on capital has dropped from 30% down to 20% at the company.

Turning to technology, the Kynikos founder says that a lot of these companies are in slow decline but are masking it via financial engineering and buybacks.  Last year, Chanos highlighted he was short Hewlett Packard (HPQ).

In general, he feels now is a time for investors to be more cautious as the market's have become more "ebullient."

In terms of best new ideas, Chanos said that in the US he's shorting "conceptual companies, companies playing accounting games." He also said to focus on how the internet's changing business models from payment processors to retailers.


Embedded below is the video of Chanos' interview:

Jim Chanos & Jim O'Neill on China At Bloomberg Markets 50 Summit (Video)

Kynikos Associates' hedge fund founder Jim Chanos sat down with Jim O'Neill, former Chairman of Goldman Sachs Asset Management at the Bloomberg Markets 50 Summit to chat about China, real estate, and markets.  Here are some of the highlights:

Chanos & O'Neill on China

O'Neill says that most of the reason why China's slowed is because they've deliberately slowed.

Chanos' caution in regards to China stems from credit.  He prefers to bet against China by playing miners, steel companies, construction companies, the building blocks that have boosted the expansion.

O'Neill asked Chanos if he would be against European luxury goods companies that have benefited from a wealthier Chinese consumer and Chanos said he doesn't need to play "third derivative" plays as he's more covered by betting against "first derivatives" such as the miners.

Chanos is bearish on iron ore because he says demand can rise or fall, but there's a ton of supply coming to the market late this year and next year.  Greenlight Capital's David Einhorn has also bet against iron ore.

O'Neill argues that the "old China" is dead and that's what Chanos is betting against.  He thinks it's a great stockpicker's market there as you can bet against old China and bet on new China.

Chanos also recommended a book about China: Red Capitalism.

For other coverage of the Bloomberg Markets 50 Summit, we also posted up video from the hedge fund panel featuring Glenn Dubin, Marc Lasry & Bruce Richards.


Embedded below is the video of Chanos' interview from the Bloomberg Markets 50 Summit:



For more coverage of the various conferences lately, head to:

- Notes from the Value Investing Congress (Ubben, Roepers, McGuire & more)

- Notes from the Alpha Hedge West Conference (Bass, Burbank, Richards & more)

Jim Chanos Short Caterpillar (CAT): Delivering Alpha Conference

At the Delivering Alpha Conference today, Kynikos Associates' Jim Chanos laid out the chase to short Caterpillar (CAT).  Basically, he sees CAT as a loser in a commodities super cycle (on the heels of a Chinese construction boom) is coming to an end.

This notion isn't really new from Chanos, as he has repeatedly talked about his bearishness on China property/development.

Chanos says Caterpillar is a great company, but they're essentially levered to the wrong products at the wrong time (the worst part of a cycle).  While it's cheap at 12-13x earnings, he points out that earnings aren't really expected to grow in the next few years (meaningfully above historical levels).

Embedded below is the video of Chanos' idea explained in full:



For more on this short seller, head to Jim Chanos' Sohn Conference presentation on shorting hard disk drive makers.

Jim Chanos' Sohn Conference Presentation: Short Hard Disk Drive Makers STX & WDC

We're posting up notes from the Ira Sohn Conference 2013 in New York.  Next up is a summary of the presentation from Jim Chanos of Kynikos Associates.  He presented "Mobile Computing Revolution: Collateral Damage in Hard Disk Drives."  He focused on hard disk drive makers Seagate Technology (STX) and Western Digital (WDC), calling them value traps.


Hard Disk Drive Decline: Short STX / WDC

Losers and winners. "Death of the PC” Units are actually just beginning to decline. Tablets increased 142% yoy in Q113. Only had one quarter of declining units so far. Hard drive decline even more slowing, began rolling over earlier than PC, but big snap back after the floods in Thailand.

Western Digital (WDC) & Seagate Technologies (STX) both look "cheap" and he says they are a value trap. 5-6x p/e, 4x EV/EBITDA. Industry consolidation has resulted in better pricing, and stronger margins.

Bulls say proliferation of user-generated data (photos, etc.) will outweigh the effects of PC unit declines.  Short Idea: WDC, STX stocks are soaring, while Dell (DELL) and Hewlett Packard (HPQ) are in decline. But pricing is up from 8% of PC BOM, to 10%.

He says cloud efficiency actually reduces Hard Disk Drive demand. STX short. Says margins will collapse from the 25-30% guidance. Says they have accounting issues, because of acquisition they put $1B in goodwill on the books, this may have goosed their profitability.

STX: Lots of insider selling of the stock. Top 4 officers have sold half their stock in the last 2 years. #3 guy quit last night abruptly. Says it's the PC business with about a year lag. End of 2013 they get hit. (For the converse argument, note he doesn't mention the huge FCF generation, and lack of significant debt).


We've recently also posted up Jim Chanos presentation on China as well as a recent interview about his longs and shorts.

Check out the rest of the hedge fund presentations from the event: notes from Ira Sohn Conference 2013.

Video of Jim Chanos' Presentation on China From Wine Country Conference

Earlier, we posted up Jim Chanos' slideshow presentation on China from the Wine Country Conference.  Now the conference has uploaded video of his presentation so you can hear his thoughts in his own words.  The video is embedded below and his talk lasts a little over a half hour:



For more resources on this short seller, head to Jim Chanos' recent interview.

Jim Chanos on His Tech Longs/Shorts, China & the Art of Short Selling: CNBC Interview

Kynikos Associates founder Jim Chanos was on CNBC today talking his short positions, China, and even some of his longs.  Here's the key takeaways from his talk:


Chanos' Technology Longs & Shorts

One of the main takeaways here is that he's long leading players in the mobile smartphone/tablet arena: Apple (AAPL) and Samsung (KRX:005930).  At the same time, he's short the slowly dying PC makers like Dell (DELL) and Hewlett Packard (HPQ).  While the trade hasn't been working well as of late, he still thinks the fundamentals will win out over time.  He thinks printers, ink and PCS all face secular declines.


On China

A few days ago, we posted up Jim Chanos' presentation on China from the Wine Country Conference.  On CNBC today, he talked about why he feels China's economic situation has actually gotten worse.  He points to the rapid credit expansion over there and sees a potential bubble. He likes to be short companies related to real estate and construction in China and also pointed out steelmakers and iron ore players.  Greenlight Capital's David Einhorn has also said to short iron ore.


On What He Looks For in Shorts

The Kynikos manager says that "timing is not my forte" and the ever-rising markets of today can be difficult for a short-seller.  He says, "It's problematic because it's more frustrating, but on the other hand you're given more opportunities."  He feels that ultimately, the fundamentals will win out because these rallies have also propped up the 'leaky boats'.  He also somewhat joked that they like to look at companies that put their names on sports team arenas.

Chanos looks for an edge in something that everyone's not focused on.  Two simple indicators he likes: wholesale executive departures and large amounts of insider selling from multiple individuals.  He says, "Those two indicators together are about as big of red flag as you can get."


Embedded below are the videos of Chanos' interview on CNBC:

Video 1 on China

Video 2 on tech stocks

Video 3 on natural gas and coal

Video 4 on what he looks for in short selling


For more from this hedge fund manager, head to Chanos' recent China presentation.

Jim Chanos' Presentation on China From The Wine Country Conference

Jim Chanos' of hedge fund Kynikos Associates recently gave a presentation entitled "China: The Edifice Complex" at the Wine Country Conference which benefits the Les Turner ALS Foundation.

Chanos has held a negative view on China for a while now, largely focused on the property market.  His presentation this time of course focuses on that as well but also highlights rising wages and a wealth gap.

Embedded below is Jim Chanos' China presentation from the Wine Country Conference:




We've previously summarized the hedge fund bear thesis on China as well.  And for more from the well-known short-seller, check out Jim Chanos' recent interview.

Jim Chanos on Dell, Herbalife & Importance of Doing Your Own Work: Latest Interview

Kynikos Associates founder and notorious short-seller Jim Chanos appeared on CNBC this morning to share his latest thoughts on the market:


On China: He says to avoid the Chinese property bubble.  While he's been short various plays on this in China, he says he's "broadening out" to plays like construction equipment, etc.


On Dell (DELL):  Chanos notes that he's been short Dell on heels of the buyout proposal.  He was originally short a while ago and covered his position in the single-digits but ended up re-shorting the company recently on the heels of the deal.  We've highlighted how Chanos has been short PC's before.

He points out that the company's cashflow is plummeting and he thinks it's going to drop more.  "The problem with the Dell model is you get paid upfront.  That's a great model when your business is growing... but as your business shrinks, it works the other way."


On Herbalife (HLF):  He was short last year, but is not anymore.  He says, "We were short, at a price.  I'm not crazy on these multi-level marketing businesses." It sounds like he covered as shares were cut in half.


On 'smart guy syndrome' and importance of doing your own work:  "One thing we teach our analysts is when they look at the company, they should be looking at fundamentals, and not the personalities involved because it's easy to stop doing fundamental work when you say 'oh, Mr. XYZ is in it so if he sees something in it, who am I to argue?'  In every corporate disaster over the last 30 years, there's been a handful of smart guys in everyone of them.  We're not all right all the time."


Embedded below are the videos of Chanos' interview with CNBC:


Video 1



Video 2



For more from this investor, head to Jim Chanos on short selling: the power of negative thinking.