James Chanos

From Wikipedia, the free encyclopedia

James Chanos (born 1958 in Milwaukee) is an American billionaire and hedge fund manager, and is president and founder of Kynikos Associates, a New York City investment company that is focused on short selling.

Contents 1 Biography 2 Career 3 Personal Life 4 References 5 External links

[edit] Biography

He was schooled at Wylie E. Groves High School and Yale, where he graduated in 1980. In business, he developed an investment strategy based on intensive research into stocks (as long as months), searching for fundamental and large market failures in valuation: typically under-estimated or previously un-reported failings in the business or market of a stock. followed by committing to a (usually large) short-position which he is willing to hold for long period of time - almost the mirror image of Warren Buffet's "fundamentals+long stay" investment strategy^{[citation needed]}. Because of this model, his investments function more like those of a whistle-blower than most typical investments. Examples of this include short-selling companies such as Baldwin-United, Drexel Burnham, and more recently, the notorious Enron Corporation.

He rose to fame in the 1980s as a "short" - a short seller who had a knack of spotting stocks that he thought to be overvalued. After working as an analyst in several firms, he founded Kynikos (Greek for "cynic") as a firm specializing in short selling. A critical position taken a Kynikos was his shorting of Enron ^[1].

In October 2000, Chanos started research into the valuation of Enron Corporation. He examined their use of mark to model (cousin to mark-to-market) accounting, which, in Chanos' experience, results in management overstating earnings, as well as what appeared to be a worryingly low (6-7%) return on capital investment. Enron stock declined from $90 in August 2000 to a low of $1 in January 2001 ^[2]. Over this period, Chanos was a short seller of Enron during 2001, increasing his short position as more information surfaced. Kynikos profited greatly and Chanos himself became somewhat of a celebrity as a consequence of his early awareness of Enron's problems.^[3].

[edit] Career

Analyst with Blyth Eastman Webber^{[citation needed]}

Analyst with Gilford Securities - where he exposed Baldwin-United, which filed for bankruptcy thereafter.^{[citation needed]}

Analyst and Vice President at Deutsche Bank Capital Corp.^{[citation needed]}

Founder and President of Kynikos Associates Ltd (current).^{[citation needed]}

[edit] Personal Life

His sons —Nick, Mike, and Andrew— attend The Browning School in New York,^{[citation needed]} where Mr. Chanos himself is the president of the Board of Trustees.

[edit] References

1. ^ James Chanos (2002). Anyone could have seen Enron coming: Prepared witness testimony given Feb. 6, 2002 to the House Committee on Energy and Commerce.[1].
2. ^ Encarta (2009). The Fall of Enron Stock, [2]
3. ^ Enron: The Smartest Guys in the Room by Bethany McLean and Peter Elkind

[edit] External links

• Kynikos Associates Home Page
• Chanos' statement to the SEC regarding hedge funds
• Chanos' Wall Street Journal article on the financial crisis and short selling
• James Chanos at the Internet Movie Database