Latest news with #JimChanos
Yahoo
4 days ago
- Business
- Yahoo
Wall Street Legend Bets Against Strategy -- Says Bitcoin Investors Are Paying Double
Jim Chanos (Trades, Portfolio) is backwith a trade that's turning heads. The famed short-seller behind the Enron call is now targeting Strategy (NASDAQ:MSTR), not for its crypto exposure, but because of it. On a recent podcast, Chanos laid out what he believes is one of the cleanest arbitrage setups he's seen in years: short MSTR, long Bitcoin (BTC-USD). His reasoning? At current prices, buying the stock is like paying $220,000 for Bitcoin that trades near $110,000. That's because MicroStrategy's share price still reflects a steep premium over the company's actual Bitcoin holdings, even after the spread has started to narrow. Warning! GuruFocus has detected 8 Warning Signs with MSTR. It's not just Chanos. Hedge funds have been circling this trade since MicroStrategy transformed itself into a kind of Bitcoin-holding company. Fueled by Michael Saylor's capital-raising spree, the firm has used equity and convertible debt to amass billions in BTC. Retail investors followed, helping push the stock far beyond its net asset value. While some bulls argue that leverage and zero-fee exposure justify the premium, skeptics are betting that rising dilution and tighter spreads will eventually bring the valuation back to earth. According to Bloomberg data, when factoring in dilution and stripping out the firm's legacy software business, MSTR is still trading at nearly double the value of its underlying crypto assets. Not everyone is jumping in. Firms like Kerrisdale promoted the trade in early 2024 but have since stepped away, citing timing challenges. TD Cowen analyst Lance Vitanza, meanwhile, believes the premium might persistthanks to Bitcoin-per-share growth and MicroStrategy's unique structure. For now, the short side is cheap to maintain, with borrow costs still low and liquidity deep. But risks remain: unexpected corporate shifts, volatile BTC moves, or changes in short dynamics could all shake up the math. Chanos remains focused on the long game, saying the spread could compress meaningfully over timebut even he acknowledges this one's better suited for hedge funds than personal portfolios. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
5 days ago
- Automotive
- Forbes
Famed Short Seller Jim Chanos Is Betting Against Used Car Retailer Carvana And AI Losers Like IBM
Jim Chanos (left) speaks with Forbes editor Matt Schifrin on stage at the 2025 Forbes Iconoclast Summit. When legendary investor Jim Chanos entered the stage at the 2025 Forbes Iconoclast Summit Thursday, he had a big smile on his face thanks to the very public feud that had erupted behind President Donald Trump and the world's richest person, Tesla CEO Elon Musk. Chanos, who first shorted Tesla stock back in 2016, said of the spat: 'Most predictable breakup ever.' With a long and successful track record of betting against overpriced or fraudulent companies, Chanos' latest big short is used-car retailer Carvana. Just as intriguing, he's also looking to short companies that will lose out in the race for artificial intelligence. 'Carvana is a misunderstood story: The Street believes it is an epic turnaround, but in fact, the company is still losing money,' said Chanos. 'Although it is priced as a growth stock, the business is cyclical.' He pointed, for instance, to how, in mid-2023, its core business dropped by more than 30% year-over-year, when there was a slight slowdown in the economy. Chanos noted the Street's is focusing on the company's gross profit margins. But, he argued, those margins are a product of aggressive accounting that inflates both unit economics and corporate profitability while excluding many components that other auto dealers typically include. 'Carvana is making all this money in finance, not selling cars,' explained Chanos. 'They are a subprime lender.' Carvana has booked big gains on selling subprime loans to affiliates and non affiliates, which represent 122% of their income in the latest quarter. Carvana's stock has a history of wild swings. The company originally went public in 2017 at $15 per share, raising $225 million. A pandemic-era darling, the stock hit an all-time high of around $370 per share in early 2021 during the auto-supply chain crisis, but tanked shortly after and by 2022 had fallen to below $5 per share amid reports that the company was on the brink of bankruptcy following its $2.2 billion acquisition of auction business ADESA. The following year, with its stock still languishing in the single digits, the company announced a debt and equity raise in a move that S&P Global called, 'tantamount to default.' By mid-2024, the stock had rallied back above $100 per share and continued to rise, hitting roughly $250 by the end of the year. So far this year, Carvana is up 70% to $343 per share, rallying massively since a low point of $162 per share in early April when the market tanked following President Trump's tariff announcements. The bull case behind the most recent rally: Auto tariffs will hurt new car sales, giving Carvana more market share. Now, in June 2025, the company's enterprise value has hit $73 billion, near an all-time high. One good indicator of a looming correction, according to Chanos, is that the short interest on Carvana stock is back down to multi-year lows of below 10%, a marked turnaround from being one of the most heavily shorted stocks in the market during 2023. 'Perhaps more ominous is that insiders have begun to sell an absolute torrent of stock—pretty much the whole C-suite is getting out seemingly as fast as they can,' he said. 'This is really a company at the end of the whip for retail consumers.' Some $1.7 billion worth of stock was sold by company executives in May, filings show. Chanos famously predicted energy company Enron's collapse in 2001, shorting the company months before a large accounting scandal destroyed investor confidence and led to bankruptcy. He also gained fame with profitable bets against payments company Wirecard, which in 2020 admitted to billions of euros on its books that 'did not exist' and resulted in insolvency. Not all of his bets have had such success, however. Chanos famously took a short position against electric vehicle maker Tesla in 2016, but reduced the position in 2020 before the company was added to the S&P 500 index. In the following years, his other short positions included Live Nation, International Business Machines, Block and General Electric, among others. None matched his Enron and Wirecard successes. In late 2023, Chanos closed down the hedge funds he managed that shorted overpriced or fraudulent companies, citing dwindling assets and a long/short equity business model that was increasingly coming under pressure. Converting it into a family office, he now no longer manages capital but continues to advise clients at Chanos & Co., the firm he founded in 1985 as Kynikos Associates. Chanos also told the Iconoclast audience that he is shorting several companies that have benefitted from the hype around AI but will lose out in the future, such as 'IT body shops' like IBM. He likened this investing theme to the dot-com bubble, which burst in 2000. Back then, he successfully shorted companies he believed wouldn't survive the technological transition, such as Blockbuster Video (the pre-Netflix movie rental chain) and Kodak (the film and camera pioneer that went bankrupt after the transition to digital photography). 'We were short almost all those types of companies back then,' Chanos said. 'We're doing our work now but we think there are a number of companies that similarly pop up and are going to be roadkill on the AI highway.' IT consultants and body shops will see their businesses melt away, he predicted. 'We're puzzled by some of them because they are getting valuations similar to AI type companies when even a cursory look at their business model shows they might be in a lot of trouble,'' he added. One of Chanos' older names within that group is IBM, which he has been short on and off since 2020. 'The company is not growing but trading at all-time high valuations,' he said, noting that the 'antiquated software' it maintains for its clients will likely become obsolete.
Yahoo
5 days ago
- Business
- Yahoo
Wall Street Legend Bets Against Strategy -- Says Bitcoin Investors Are Paying Double
Jim Chanos (Trades, Portfolio) is backwith a trade that's turning heads. The famed short-seller behind the Enron call is now targeting Strategy (NASDAQ:MSTR), not for its crypto exposure, but because of it. On a recent podcast, Chanos laid out what he believes is one of the cleanest arbitrage setups he's seen in years: short MSTR, long Bitcoin (BTC-USD). His reasoning? At current prices, buying the stock is like paying $220,000 for Bitcoin that trades near $110,000. That's because MicroStrategy's share price still reflects a steep premium over the company's actual Bitcoin holdings, even after the spread has started to narrow. Warning! GuruFocus has detected 8 Warning Signs with MSTR. It's not just Chanos. Hedge funds have been circling this trade since MicroStrategy transformed itself into a kind of Bitcoin-holding company. Fueled by Michael Saylor's capital-raising spree, the firm has used equity and convertible debt to amass billions in BTC. Retail investors followed, helping push the stock far beyond its net asset value. While some bulls argue that leverage and zero-fee exposure justify the premium, skeptics are betting that rising dilution and tighter spreads will eventually bring the valuation back to earth. According to Bloomberg data, when factoring in dilution and stripping out the firm's legacy software business, MSTR is still trading at nearly double the value of its underlying crypto assets. Not everyone is jumping in. Firms like Kerrisdale promoted the trade in early 2024 but have since stepped away, citing timing challenges. TD Cowen analyst Lance Vitanza, meanwhile, believes the premium might persistthanks to Bitcoin-per-share growth and MicroStrategy's unique structure. For now, the short side is cheap to maintain, with borrow costs still low and liquidity deep. But risks remain: unexpected corporate shifts, volatile BTC moves, or changes in short dynamics could all shake up the math. Chanos remains focused on the long game, saying the spread could compress meaningfully over timebut even he acknowledges this one's better suited for hedge funds than personal portfolios. This article first appeared on GuruFocus. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Bloomberg
5 days ago
- Business
- Bloomberg
Jim Chanos Sees Big Short in Saylor's Strategy, But Others Aren't So Sure
Buy Bitcoin, short Michael Saylor's Strategy. That's the latest call from legendary short-seller Jim Chanos, who sees the arbitrage play as a no-brainer. Others aren't so sure. The trade has long been on the radar of Wall Street hedge funds, drawn to the premium Strategy's shares enjoy relative to the value of the company's Bitcoin holdings — a gap that topped 200% last year. The discrepancy stems from Saylor's self-styled Bitcoin treasury strategy, through which he has tapped capital markets to buy more and more of the world's biggest cryptocurrency, in turn attracting billions of dollars from retail investors.
Yahoo
20-05-2025
- Business
- Yahoo
Famous Wall Street Short Seller Is Taking Aim At MicroStrategy: Should You Worry?
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Jim Chanos has said he is actively shorting MicroStrategy. Chanos poked at MicroStrategy's NAV premium. Presto Research has weighed in on whether investors should worry. Long-time investors in MicroStrategy (NASDAQ:MSTR) have probably weathered it all, from early concerns over the risks of the firm's Bitcoin accumulation strategy to harsh mockery in bear markets and questions over whether the firm can sustain demand with the emergence of spot exchange-traded funds and copycat firms. But even for these investors with nerves of steel forged through many fires, it is hard not to get unnerved hearing that one of the most famous short sellers in history, Jim Chanos, has taken aim at the business. Should you worry? Don't Miss: — no wallets, just price speculation and free paper trading to practice different strategies. Grow your IRA or 401(k) with Crypto – . Chanos told CNBC in an interview on Wednesday that he was shorting MicroStrategy while longing Bitcoin. The investor most famous for finding cracks in Enron's business and successfully shorting it ahead of its eventual collapse slammed MicroStrategy's valuation at a premium to Bitcoin as 'ridiculous' even as other firms are copying its playbook of using leverage to accumulate the digital asset. Chanos told CNBC he was 'short the spread' because it was 'so levered to the price.' 'We're doing exactly what MicroStrategy and [executive chairman] Michael Saylor are doing,' he added. 'We're selling MicroStrategy stock and buying bitcoin and basically buying something for $1, selling it for two and a half dollars.' Meanwhile, this trade does not mean Chanos is bullish on Bitcoin or sees value in it. 'I don't know where bitcoin is going. A hundred thousand, a million, 10,000? I don't know, I don't think anybody else knows,' he told CNBC. 'But what I do know is it's generally profitable to short $1 for two and a half dollars or $3.' To Chanos, it is simply an arbitrage opportunity betting on MicroStrategy's premium to net asset value shrinking. The firm currently trades at 1.8 times the premium to its Bitcoin holdings, boasting a market cap of $108 billion against $59 billion worth of Bitcoin. This premium hit a high of 2.5 times the NAV in October. Trending: New to crypto? on Coinbase. In a Friday note, cryptocurrency research firm Presto Research said there was 'no reason for panic' among MicroStrategy investors over Chanos' trade. 'MSTR's periodic BTC accumulation resembles a growing balance sheet fueled by recurring income. This allows investors who view BTC as an eventual store of value to assign an earnings multiple to MSTR's BTC acquisitions,' the firm said, justifying MicroStrategy's premium. In simple terms, the argument is that if investors believe that Bitcoin will be worth more in the future, they can value MicroStrategy not just by the current price of its Bitcoin holdings but also by the expected growth of its holdings and earnings from those holdings as the price appreciates. But Presto Research noted that this valuation model may not hold in a bear market, making Chanos' trade a complex bet on a BTC downturn. 'Whether Chanos understands Bitcoin enough to make that call remains questionable,' the firm said. Chanos wound down his hedge fund in November 2023 as years-long losing shorts against Tesla and AOL weighed on his profitability. 'The marketplace for what I do has changed,' Chanos told The Wall Street Journal at the time. Read Next: A must-have for all crypto enthusiasts: . 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Image: Shutterstock Send To MSN: 0 This article Famous Wall Street Short Seller Is Taking Aim At MicroStrategy: Should You Worry? originally appeared on
