Billionaire Jim Chanos’ Top 5 Stock Picks

Below we presented billionaire Jim Chanos’ top 5 stock picks. For a detailed discussion about Jim Chanos’ investment strategy as well as his latest views, please see Short Seller Jim Chanos’ Top 10 Stock Picks.

5. Tesla, Inc. (TSLA)

Chanos had a $2.5 million equivalent of put positions in Tesla shares at the end of September. Co-founded by the self-made billionaire and the newly proclaimed richest person on earth, Elon Musk, Tesla is an American electric vehicle and clean energy company that aims to accelerate the world’s transition to sustainable energy.

Aside from electric cars, Tesla also builds infinitely scalable clean energy generation and storage products. Tesla’s market capitalization is worth about as much as the other nine largest car companies in the world combined.

Tesla is the hottest stock in the U.S. markets right now, with a market cap of $834.17 billion and a P/E Ratio of 1,758.63, it is currently setting new highs as investors see positivity due to the world’s transition to non-toxic energy.

4. iRobot Corporation (IRBT)

Chanos had a $4.7 million in IRBT put options at the end of September. iRobot Corporation is a technology company that develops and engineers consumer robots that aim to make a better world by innovating technologies that help people do things in a more convenient way.

IRBT was known for its flagship, ‘Roomba’, a robotic vacuum cleaner that sold over a million units in 2004.

The Industrial Automation and Robotics industry, where IRBT belongs, is part of the Industrial Products sector. The company has a market cap of $2,360,446,205 and a P/E Ratio of 3.02. iRobot Corp had an annual average EBITDA growth of 18.00% over the past ten years. Chanos is probably shorting IRBT but other hedge funds are actually betting on the stock as IRBT made our list of the 10 best robotics and AI stocks to buy.

3. Beyond Meat, Inc. (BYND)

Chanos had a $6.5 million in BYND put positions at the end of September. Beyond Meat Inc., is a producer of ‘plant-based’ meat substitutes. The company produces edible plant-based meat, in their fight with the growing global issues such as to human health, animal welfare, constraints on natural resources, and climate change.

According to a research conducted by the University of Michigan, their product, ‘Beyond Burger’, only uses 99% less water, 93% less land, 90% fewer Green House Gas Emissions, and 46% less energy compared to a 1/4 pound American beef burger. This and a lot more of their products are essential thing to the world’s transition to a greener future.

The company has a current market cap value of $7.4 billion and a sales growth of 238.77% as of its current disclosure. We recently shared Jim Cramer’s views on BYND:

“Earlier this year, financial commentator Jim Cramer made several predictions about the company in an interview, calling BYND “one of the most dangerous shorts” in the market. He said that the company’s aggressive pricing would help it to win more customers in a market, where traditional beef prices are soaring due to the pandemic-related supply disruptions.

Cramer added that Beyond Meat has the potential to become a huge success like Amazon and Facebook, which were once small-cap companies like BYND. He also said that the pandemic could change the eating behavior of people during the pandemic and they may permanently switch to plant-based meat from traditional beef, pork, and chicken products.”

2. GSX Techedu Inc. (GSX)

Chanos had a $10 million put positions in GSX at the end of September. GSX is a China-based tutoring service company that offers K-12 courses through its state of the art technologies. The company can provide a massive online class event to deliver education-based materials to its aspiring students.

The company’s quality online learning system is very timely and is so much needed today, in the time of the pandemic, by a lot of schools and students for the key purpose of having the need to continuously acquire knowledge so as to not be delayed in the world’s growing modernization.

The company has a current market cap value of $11.6 billion and net assets amounting to $38.25 billion. According to a recent Insider Monkey article, GSX as of September 2020 was part of 18 hedge funds’ portfolios, its all-time high.

In the company’s newsletter, they’ve mentioned:

“GSX Techedu relentlessly pursues the highest quality in its course offerings. Its education excellence is backed by high-quality teachers and in-house curriculum development expertise. To create a disciplined, effective, and engaging learning environment under the large-class format, GSX Techedu has adopted a dual-teacher system, staffing each class with an instructor and multiple tutors well trained in the relevant subjects or curriculum. GSX Techedu prides itself on its rigorous and systematic teacher selection and coaching process.”

1. SPDR S&P 500 ETF Trust (SPY)

Chanos’ biggest position in its 13F portfolio is the S&P 500 Index fund (SPY). SPY strives to achieve successful investment results that correlate to the yield performance and price of the Standard & Poor’s 500 Index. According to SPDR, “The S&P 500® Index is composed of five hundred (500) selected stocks, all of which are listed on national stock exchanges and spans over approximately 24 separate industry groups.”.

The Trust is primarily composed of famous big-cap companies, with the Information Technology as its top 1 sector, which is composed of Apple Inc. (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), Facebook (NASDAQ: FB), and Tesla (NASDAQ: TSLA) as its Top 5 holdings. 

This tells us that Chanos is indeed getting most of his outperformance by shorting stocks and reinvesting the short sale proceeds into relatively lower volatility S&P 500 ETFs like SPY and IVV. We wonder why he doesn’t try to pick long positions as it is easier to find good long stocks than good short stocks. Insider Monkey’s monthly newsletter shares a list of 15-20 stock picks since March 2017 and our stock picks outperformed the S&P 500 Index ETF (SPY) by 88 percentage points. You can download a sample issue of our monthly newsletter here. 

Please also see 10 Best Stocks To Buy For 2021 According To Stan Druckenmiller and 15 Best Dividend Stocks With Upside Potential.

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