Jim Chanos and His Big China Short
Legendary short seller Jim Chanos was on SquawkBox Thursday morning, talking markets and some of his individual positions.
Here are some highlights:
Will the Market Uptrend Continue?
- Doesn’t have a direct view on the markets
- Corporate profits as a part of GDP are all heading in one direction, and thats a concern.
On Herbalife (NYSE: HLF):
- Chanos stated that his company no longer has a stake in the company, although he has shorted it in the past -Not crazy about multi level marketing
- Thinks Bill Ackman is correct that when your customers are your distributors, you have a flawed business. -Scientifically the product provides no value
- If you don’t sell a product that has value, you will
- Covered when share prices cut in half in November to take profits
On Dell (NASDAQ: DELL):
- Was short on Dell, covered on single digits last year
- Shorted the stock again on the deal -Revenue dropped from 4.7B to 2.3B last year
- The problem with Dell model is that you get paid up front, so it has tons of payables, therefore it only actually has a few billion in cash, not a giant pile.
The Last Word:
- Avoid anything having to do with Chinese property markets: Steel, Iron Ore, etc
- Australia will feel the effects soon -Property bubble is growing bigger and bigger
- Anything dependent on the Chinese economic miracle you should be careful of
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