Jim Chanos Interview
Jim Chanos, the best short-seller of our time, was interviewed for his current thoughts by FT.
-Very bearish on infrastructure buildout in the world. China, Middle East. Long way to go on the down-side
-Bad news for steel and cement companies
-They look to where they can analyze long lead times, plant construction, etc. They see some real problems
-3 areas of downside in the coming years: healthcare, defense, and pro-profit education business. All these areas will be under intense pressure by new government for better cost-benefit analysis
-Defense: government asking for more rationalization of defense budget
-Education: up till now we got Federal loans. People had to get private student loans, but now they are defaulting at huge amounts. The value proposition is coming under big question. $30-60K in debt. Kids don’t find themselves anymore employable. Congress will take a look at this
-Short sale ban was a complete disaster. A lot of unintended consequences
-Lag effect on realized losses in private equity. It’s not the panacea investors thought it was. In fact it’s leveraged long capital
-Getting redemptions now, an ATM for other funds. Everybody is shrinking
-Hedge-fund industry probably lost 20% and another 20-25% in redemptions in 2008, bringing assets to $1 trillion
-Chanos went from $7B to $6B assets
-Long/Short: Oil – long, U.S. Dollar – short, GE – hedge, Citigroup – long, Ford – we are short, Google – long, Blackstone – short, John Thain – long, HSBC – long, John McCain – long