00:00 - Intro
00:21 - The start of Jim Chanos and growth toad the Kynikos short selling mandate
01:47 - Psychology of short sellers is completely different than long-only investors.
How short sellers have to “cut out the positive reinforcement noise” on Wall Street.
06:19 - The statistics on why the construction boom in China can lead to a bearish view of Chinese companies.
10:53 - Short-selling bans are devastating to financing markets.
Where a pure net short mandate fits in an institutional portfolio.
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Jim Chanos is a legendary short seller and Founder of Kynikos Associates, the hedge fund management company he started in 1985. Sitting down with Opalesque.TV, he talks about his background and first great short idea in Baldwin United, which led him to believe he could successfully start Kynikos utilizing a short selling mandate.
Chanos gives insights from his 27 years in the business into the asymmetries between the long and short side of investing and talks about the drastic difference in psychology between successful short sellers and long only investors. While the actual skill-set (to analyze companies etc.) is identical, good short sellers must be capable to withstand the "giant positive reinforcement machine" that Wall Street has become. This is something most investors cannot do and why most of them, even hedge fund managers, fail on the short side.
In this Opalesque.TV BACKSTAGE video, Chanos also tells the story of how he developed his bearish view on China, beginning with the analysis of Chinese mining stocks in 2009 where his deeper analysis led him to the view that China is in a dire state due to bad credit and credit extension, which "makes Greece and Spain and the U.S. look like child's play". He also shares valuable insights about the issues around Chinese listed companies, and what people should be aware of when investing in Hong Kong's H-share market.
In addition, Chanos speaks about why short selling bans are in the end devastating to financial markets, and how pure net short mandates fit into institutional portfolios.
Jim Chanos is the founder and Managing Parntner of Kynikos Associates LP, the world's largest exclusive short selling investment firm. Mr. Chanos opened Kynikos Associates LP in 1985 to implement investment strategies he had uncovered while beginning his Wall Street career as a financial analyst with Paine Webber, Gilford Securities, and Deutsche Bank. Throughout his investment career, Mr. Chanos has identified and sold short shares of numerous well-known corporate financial disasters; among them, Baldwin-United, Commodore International, Coleco, Integrated Resources, Boston Chicken, Sunbeam, Conseco, and Tyco International. Mr. Chanos is chairman of the Coalition of Private Investment Companies, whose members are diverse in their size and investment strategies. The members' clients include pension funds, asset managers, foundations, other institutional investors, and qualified wealthy individuals. In that role, Mr. Chanos has testified before Congress and provided comments to regulations proposed by the U.S. Securities and Exchange Commission and the Financial Services Authority in the United Kingdom.
Mr. Chanos is currently a Lecturer and Becton Fellow at the Yale School of Management, teaching a class on the history of financial fraud. Born and raised in Milwaulkee, Wisconsin, Mr. Chanos received his BA in economics and political science in 1980 from Yale University.
