Rankings   Forums   Features   Help    

GordonGekko's picture
THE ART OF SHORT-SELLING - James Chanos


In the post about Whitney Tilson I found this name James Chanos.

James Chanos  is the founder of Kynikos Associates, investment company that is focused on short selling. Kynikos is one of the few firms specializing in short selling that survived the bull market of the 1990s.Fund accounts for 90% of institutional short funds in the US.Chanos himself became somewhat of a mini-celebrity as a consequence of his early probe into Enron's problems. 

Historically Kynikos’s best trades have been value stocks. They looked cheap….all the way down.Surprised


Recommended book: ‘Accounting for Growth’. he gives it to all his new analysts.


Why aren’t there more institutional shorts?

* It’s no fun. Months of pain punctuated by a few hrs of pleasure.
* Wrong psychological makeup. Many smart investors are very poor short investors. We’ve had some very capable people come into Kynikos and be unsuccessful, because they just have the wrong makeup to be pure shorts.


"My biggest mistakes have generally been because I stayed
in things just because they were expensive," he admits,
"…valuations can be crazy and stay crazy."James Chanos

I always wondered what is the logic behind short selling finally I found out it's betting on the
inevitable, NOT simply plays on excessive valuation reverting to some more normal number.

James Chanos Link

By GordonGekko at 2007-05-25 03:33 | Stocks | GordonGekko's blog


A while ago, Chanos

A while ago, Chanos admitted, that it is pretty darn tough to actually MAKE money shorting stocks. He therefore changed his benchmark to the "inverse S&P500" as opposed to an absolute number, like 10% per annum. I guess that speaks for itself and shorts should be seen as a smart hedge strategy...


Jan
By JanHendrik at Fri, 2007-05-25 03:59 | login or register to post comments

Interview with Chanos in Value Investor Insight


I forgot to post this article:

http://www.dailyreckoning.com/RudeAwake/Articles/RA080905.html
By GordonGekko at Fri, 2007-05-25 05:33 | login or register to post comments

Wasn't he short FFH?

That's not turning out well for short sellers.
By schin at Sat, 2007-05-26 00:36 | login or register to post comments

Yes he was quite negative on

Yes he was quite negative on FFH. It has been a small position for him though. Limiting your position size seems to be the only tool against devastating losses, in case a short goes wrong.

I like the way Bill Miller put it: "when you make a mistake on the long side, the problem gets smaller and smaller. When you mess up something on the short side, your problem gets bigger."

Jan

By JanHendrik at Sat, 2007-05-26 04:53 | login or register to post comments