It is rare to have “Jim Chanos“, the legendary short seller, and “bullish” in the same sentence. Not anymore. Two months ago Insider Monkey broke the news of Jim Chanos’ long positions. Brian F. Nichols, CFO of Kynikos Associates LP, didn’t respond to a message we sent him at that time. So we speculated that Chanos might have started accepting money from investors who want him to be market neutral. Last month Chanos confirmed our speculations on Bloomberg TV:
“We have a hedge fund. We have a small, long short opportunity fund, which is a fraction of the size of our total holdings, and in that fund, we hedge off everything. We were short a bunch of developers, individual developers. We hedged it off on the long side with an ETF. We are not bullish. We’re just hedging in our hedge fund.”
“In our hedge fund, which is a small part of our assets, a couple hundred million, less than 5% of our assets, we have longs and shorts. To use the China example, not only are we hedging with the ETFs on the long side, but we own the debt of some of the developers against short positions in their stocks”
Chanos claims that he buys certain stocks to hedge his short bets. Hedging is not a “neutral” activity. When Chanos hedges his short positions using an index ETF or sector funds he admits that he has no idea which stocks are better in a given index or sector. However, when he hedges his short bets with long positions in other stocks this implies that he is relatively bullish about those stocks. Here are the stocks that Jim Chanos was relatively bullish at the end of March:
Chanos initiated a $4 Million position in General Motors (GM). It is well known that Chanos is short Ford and now it is clear that he thinks GM will outperform Ford. Using the same reasoning we can say that Chanos thinks China Real Estate Info Corp (CRIC) is a better Chinese real estate stock than the ones he is shorting. Another China related bet was VisionChina Media Inc (VISN). We specifically don’t know what Chanos is shorting but he thinks VISN is a good hedge to neutralize some of his exposure. VISN lost more than 40% of its value since the end of first quarter. This isn’t a John Paulson moment for Chanos though. We don’t think Chanos is upset that Chinese stocks are falling like a rock (See the details about Jim Chanos’ China short play).
Jim Chanos is one of our favorite hedge fund managers and he will be speaking at the Value Investing Congress in NYC in October. He joins an all-star faculty of investors including Bill Ackman of Pershing Square, Leon Cooperman of Omega Advisors and Joel Greenblatt of Gotham Capital, to mention a few.
We’ve been able to secure a special discount for Insider Monkey readers: register by June 29, 2011 and you’ll pay just $2,395. THAT’S A TOTAL SAVINGS OF $2,100 from the $4,495 others will pay later to attend! To benefit from this discount go to www.valueinvestingcongress.com/insidermonkey and use discount code N11IM1. We hope to see you there!