When Jim Chanos Talks - People Should Listen

Greetings from Zurich!  I will be here in Switzerland for the better part of the next two weeks.  Always a little strange for me to be six hours ahead of the east coast.

I have commented several times that one of my approaches to investing is to listen to smart investors.  The important part about this approach is to decide who is smart and focus on them and try to shut out everyone else.  Otherwise there is too much noise.

Jim Chanos is high on my list.  He is as smart as they get and when he is shorting a stock or a sector, I would advise people to think hard about it.  He was on CNBC last week.  Unfortunately, I was very busy and did not see his interview.  But here are some highlights thanks to MF (5 Short Ideas from Jim Chanos).

• He is short PC makers, specifically Dell and HPQ. Opposite that, he has smaller long positions on AAPL and Samsung.
• He is short Natural Gas company Chesapeake.  It seems he did not mention them by name, but commented on companies that name arenas often fall into trouble (the OKC Thunder play in Chesapeake Arena).  He commented about their debt load and how NG prices are relatively low.  These are comments for me to think very hard about.  Sandridge is similar in a lot of ways to CHK.
• He suggested he is short Netflix as he has doubts they can continue to grow consumer base robustly, and that is priced in.  I am not a believer in NFLX either.
• He is not a fan of HLF.  He basically says that having a MLM scheme depends on ripping off your customers and says it is not viable in long term.

If we are keeping score on JC (interesting initials), let us see what he said in September (MFI Diary: Turn Up the Volume).

He was long C and JPM and short SAN.  Since then, C is up from 33.65 to 46.92.  JPM is up from 40.05 to 48.88.  Meanwhile SAN is down from 7.34 to 7.14.  Good call JC.

He was still short HPQ (I have a feeling that has not worked out thus far). 17.31 to 19.97.  But he paired that with being long MSFT. That has gone from 30.68 to 31.79.  I think he lost a few sheckels there in that time.

He had earlier in the summer mentioned shorts on PBR, CSTR and CNX.  Hmm, not sure he did great on those. Anyhoo, I will keep at least listening to what he says and thinking about it.