Monday, May 27, 2024

Short-seller Jim Chanos closes hedge funds

Jim Chanos, the short-selling veteran who made millions betting against Enron and others, is to return money to clients after decades in hedge fund management.

He will continue to advise clients via Chanos & Co, the firm he founded as Kynikos Associates in1985, but no longer manage capital, the WSJ reported.

It signals the end of an era for the short-selling pioneer, who racked up many successful short trades, including Wirecard, in almost four decades combing through company footnotes, though his bet against carmaker Tesla in recent years was less successful.

Earlier this year he was in Europe fundraising for a new Ucits product, but he told the WSJ “the marketplace for what I do has changed”.

He had been bullish on the short-selling outlook, reflecting to AFI in an interview earlier this year that the environment ahead could resemble the post dot-com bubble years.

“Fundamental short-selling had a great period after 2000, for the better part of ten years, because of the companies that came public in 1999 and 2000. No matter where the market goes, you are going to see a large cohort of businesses that are challenged from a business model point of view.”

Chanos said Wirecard was one of the few major success stories which had validated the strategy since the financial crisis.

“What was remarkable was that the stock still levitated for another nine months, until the company admitted the fraud itself.”

It was symptomatic of a financial climate which made life hard for shorts. “It has been a difficult environment because everyone was getting capital and time-frames were extended for money-losing companies to become profitable.”