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Why You Should Keep an Eye on Jim Chanos’ Recent Short Bets

Energy is another sector in which Jim Chanos has identified some interesting targets for short-selling. During his presentation at the Robin Hood Conference in 2014, Chanos pointed out Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR), which has been in the middle of a corruption scandal tied to Brazil’s president Dilma Rousseff. The conference was in the middle of Brazil presidential elections and Chanos in an interview said that Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR)’s stock looked more like a scheme rather than a stock. The investor added that even if Rousseff were to lose the election, a new president wouldn’t have been able to sort all Petroleo Brasileiro SA Petrobras (ADR) (NYSE:PBR)’s problems. Even though Rousseff won the elections, the consequent problems led to a drop in her approval rating and yesterday the lower house of Congress voted for her impeachment. Next month, the Senate will vote to open a trial against Rousseff, who is accused by opposition that she manipulated budget accounts to favor her reelection in 2014.

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Another energy stock that is one of Chanos’ more recent bets is Cheniere Energy, Inc. (NYSEMKT:LNG). In September 2015, Chanos called Chenier and the whole LNG segment a “looming disaster” since the company was investing in building LNG plants amid a drop in demand for liquefied natural gas. In this way, Cheniere Energy, Inc. (NYSEMKT:LNG) and other LNG companies are growing their capacity and are about to double it in the next four years, while the demand is not growing. It’s interesting to point out that Chanos disclosed its short position in Cheniere Energy, Inc. (NYSEMKT:LNG) a month after activist billionaire Carl Icahn announced an 8.2% stake in the company. Icahn further raised its stake to 13.83% and in December pushed for the removal of Chairman and CEO Charif Souki. Another energy company that Chanos is short is Royal Dutch Shell plc (ADR) (NYSE:RDS.A).

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Disclosure: none