Market Overview

Jim Chanos and His Big China Short

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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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