Jim Chanos' Kynikos Associates has gained legendary status as the world's biggest short seller, managing some $7-billion in assets this way. Chanos is renown for exposing the Enron 'irregularities' back in 2001. It was easy to get caught up in last year's blame game when the Wall Street CEOs were pointing the finger at short-sellers, which resulted in the ensuing short selling ban, however, as Chanos puts it, short sellers are the real-time detectives of the market, and regulators, the SEC, are archeologists.
Hugh Hendry, CIO, Eclectica points out that short sellers take on far more onerous risks than long-only asset managers, and they have to do far more homework to uncover problems that can potentially lead them into profitable short sales.
Here's noted short seller Jim Chanos' latest interview where he talks investment opportunities in the current market on the PBS Nightly Business Report, citing his distaste for the Healthcare and Defense sectors: Video
Click on the image to see the interview:
Short sellers may provide valuable insight, and guidance by serving as an indicator that problems exist in particular companies, and sectors, and short sellers provide an important element of support to the liquidity of the market, acting as bottom-fishers when they cover their positions, at weak spots in the market.
This is a worthwhile interview to listen to, as Chanos has a mild-mannered intellect that is both refreshing and honest.
Hat tip: MarketFolly.com
