Archives of “james chanos” tag

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Jim Chanos on Taking Risks Early

  
  Education
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I took the biggest risk of my life at age 33 and I was terrified.

With a wife and two kids, a mortgage and almost nothing in the bank, I left my management position at a broker-dealer and dropped my Series 7. I essentially bolted from the business I had been in for a decade, giving up my license and my livelihood on a bet that I could be doing better for my clients as their advisor and make a lot more money once I was happy and the pit in my stomach dissolved.

And thank god it worked. I’m not sure what I would have done if it hadn’t.

In hindsight, I wouldn’t change much about my timing and all of what I had gone through to get things things right in the end – it was the real-world education of a lifetime. However, if I could change one thing, maybe it would be not waiting so long and staying with a profession that I truly hated. It probably would have been a lot less stressful had I pulled the ripcord in my twenties, before the babies and the bills.

Oh well.

Jim Chanos, one of the most successful investors of all time, began his career on The Street as a banker and then a brokerage firm analyst. The conflicts inherent in those roles drove him to seek out something more and that’s when he became a hedge fund manager. You see, Chanos was interested in the pursuit of truth and, what’s more, a way to make money from the discovery of truth before others could find it. The name of his firm, Kynikos Associates comes from the Greek word for cynic (and it can also mean ‘dog-like’, another apt metaphor for a fund that relentlessly hunts down meaning in the public information that others cannot see).

Here the legendary manager offers some advice to young professionals about timing their risk-taking: (more…)

The Alpha Masters-Maneet Ahuja :Book Review

  
  Education
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Maneet Ahuja’s 2012 book The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Fundsis now available in paperback. Somehow I missed the book when it first appeared, so in the spirit of “better late than never” I decided to write a few words about it here.

Most of the characters in this book are familiar: Ray Dalio of Bridgewater Associates, Tim Wong and Pierre Lagrange of Man Group/AHL, John Paulson of Paulson & Co., Marc Lasry and Sonia Gardner of Avenue Capital Group, David Tepper of Appaloosa Management, William A. Ackman of Pershing Square Capital Management, Daniel Loeb of Third Point, James Chanos of Kynikos Associates, and Boaz Weinstein of Saba Capital Management. Adding to the luminaries, Mohammed El-Erian wrote the foreword and Myron Scholes the afterword.

Many of their stories are familiar as well. So why does this book remain a compelling read?

It introduces us to a very bright, hardworking, resilient group of people. We see how their research leads them to formulate hypotheses, how they translate these hypotheses into market positions, how they push their advantage, and how they bounce back when their hypotheses don’t pan out.

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China on ‘Treadmill to Hell’ Amid Bubble, Chanos Says

  
Analysis, Economy, Education, Politics
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April 8 (Bloomberg) — China’s property market is a bubble that may burst by as early as this year, according to hedge fund manager James Chanos.

The world’s third-biggest economy may need to keep up the pace of property investment because up to 60 percent of its gross domestic product relies on construction, said Chanos. The bubble may begin to “run its course” in late-2010 or 2011, he said in an interview on “The Charlie Rose Show” that will air on PBS and Bloomberg TV.

China is “on a treadmill to hell,” said Chanos, who said in January the nation is Dubai times a thousand. “They can’t afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing.”

Property prices in China rose at the fastest pace in almost two years in February even after officials this year re-imposed a tax on homes sold within five years of their purchase to curb speculation and ordered banks to set aside more funds as reserves to cool lending. The boom in China’s real estate has fueled concern that China may face a collapse seen in Dubai that has hurt the ability of some of its companies to repay debt.

Since his January prediction, Chanos, the founder of Kynikos Associates Ltd, has been joined by Gloom, Doom & Boom publisher Marc Faber and Harvard University professor Kenneth Rogoff in warning of a potential crash in China’s property market. (more…)

The Most Dangerous Trade -Book Review

  
  Education
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Of all the ways to make money in the financial markets, being a short seller is one of the toughest. The short seller is fighting the upward bias of the equity markets as well as the wrath of deep-pocketed, litigious individuals with vested interests in the stocks he is targeting. He has to be both a sleuth and a promoter; after all, what good is all his detective work if other investors don’t know what he uncovered and don’t join him in putting downward pressure on the stock?
In The Most Dangerous Trade: How Short Sellers Uncover Fraud, Keep Markets Honest, and Make and Lose Billions (Wiley, 2015), Richard Teitelbaum, a financial journalist, has written illuminating profiles of ten top short sellers, complete with their investing strategies. Combining interviews with well-researched back stories, he explores the highs and lows (and there are a lot of lows) of short selling.
Bill Ackman, Manuel Asensio, Jim Chanos, David Einhorn, Carson Block, Bill Fleckenstein, Doug Kass, David Tice, Paolo Pellegrini, and Marc Cohodes are the featured investors. We learn about their early years, how they ended up being short sellers, even the significance of their fund names. Why Muddy Waters, for instance? Block, trying to find a good name for his nascent firm, recalled a Chinese proverb: “Muddy waters make it easy to catch fish.”
We read about positions that worked and those that didn’t—and what these investors learned from the latter. We learn how they construct their portfolios (including long positions) and how they try to mitigate risk (sometimes with options).

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