Jim Chanos Says He's Been Shorting Casino Stocks Since Summer

Notable short seller Jim Chanos, the founder and President of Kynikos Associates, told CNBC's Sara Eisen in an interview Thursday he has been short casino operators Las Vegas Sands Corp. LVS and Wynn Resorts, Limited WYNN since the summer.

What Happened

Speaking to CNBC's Eisen from the sidelines of the Yale CEO Summit, Chanos, a longtime bear on China, said he identified a short opportunity in American casino operators with operations in Macau.

U.S. operators with exposure to the region trade at a premium valuation compared to Chinese operators, Chaos said. Due to the ongoing trade war and geopolitical tension between the U.S. and China, this premium valuation "doesn't make a lot of sense right now," he said. 

Why It's Important

American operators need to renew their gaming licenses with Chinese authorities as early as next year, as licenses expire in 2020 and 2021, Chanos said. Unfortunately for American operators, the Chinese government "holds all of the cards" in negotiations and has the power to "put these guys out of business if they want with no recourse," he said. 

This may be especially concerning for Las Vegas Sands, which is run by Sheldon Adelson, a close ally and large donor to  President Donald Trump, Chanos said. 

What's Next

Looking forward, Chanos said he doesn't know how much more downside casino stocks have, but he will continue following the news.

Related Links:

Wynn Shares Are Folding After A Mixed Q3 Print

'Distinctly Positioned' Las Vegas Sands Is Morgan Stanley's Top Gaming Pick

Photo by John Hill/Wikimedia.