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Holly LaFon
Holly LaFon
Articles (10163)  | Author's Website |

Short-Seller Jim Chanos Buys Small-Cap, China ETFs and Tesla

Counterintuitively, the Tesla bear discloses long put options on company

A first-quarter filing showed that noted short-seller Jim Chanos (Trades, Portfolio)’ long purchases during the period comprised only exchange-traded funds, mostly those tracking small and mid-cap stocks and companies in China. The outspoken Tesla (NASDAQ:TSLA) bear also revealed a stake in the electric carmaker via put options.

Chanos is the founder and managing partner of Kynikos Associates, a firm focusing on short sales of companies he believes will crater. Since founding Kynikos in 1985, Chanos has sounded alarms leading up to some of the highest-profile business implosions, including Enron and Valeant.

Kynikos’ long portfolio is valued at only $187 million and lists 39 holdings. Because Chanos is primarily a short-seller, any long positions he discloses may be part of a larger short strategy or be meant to offset short sales. Investors are not required by the Securities and Exchange Commission to report their short positions to the public, as they are long positions.

In the first quarter, Chanos’ largest new long buys were: iShares S&P SmallCap 600 Value (IJS), Xtrackers Harvest CSI 300 China A-Shares (ASHR), iShares S&P Mid-Cap 400 Value (IJJ), iShares China Large-Cap (FXI) and WisdomTree Europe Hedged Equity Fund (EEM).

He also surprised many investors with a position in Elon Musk’s Tesla Inc. In media interviews, Chanos has compared Tesla to Valeant Pharmaceuticals, a drug company whose stock imploded due to accounting scandals in 2015, and accused Musk of misleading investors.

The holding was of 1,500 put options as of the end of the first quarter, valued around $420,000. It represented only 0.22% of Chanos’ long portfolio.

Chanos reportedly started his Tesla short in 2014, after the stock had rallied around 340% over the year. Shares soared another 117% from 2014 to the end of 2018, squeezing short-sellers. The first half of 2019 saw the stock plunge 40%, but the market turned more optimistic in June, sending shares up about 21% for the month so far.

Chanos’ new buys

iShares S&P SmallCap 600 Value (IJS)

Chanose bought 41,798 shares of the ETF, giving it 3.3% portfolio weight. The ETF’s first-quarter share price averaged $147.

iShares S&P SmallCap 600 Value has a market cap of $6.01 billion; its shares were traded around $145.58 Wednesday with a price-earnings ratio of 15.71. The trailing 12-month dividend yield of iShares S&P SmallCap 600 Value is 1.58%.

Xtrackers Harvest CSI 300 China A-Shares (ASHR)

Chanose purchased 144,229 shares of the ETF, giving it 2.22% portfolio weight. The ETF’s first-quarter share price averaged $26.

Xtrackers Harvest CSI 300 China A-shares has a market cap of $1.43 billion; its shares were traded around $27.33 Wednesday with a price-earnings ratio of 14.01. The trailing 12-month dividend yield of Xtrackers Harvest CSI 300 China A-shares is 1%.

iShares S&P Mid-Cap 400 Value (IJJ)

Chanose purchased 25,315 shares of the ETF, giving it 2.13% portfolio weight. The stock’s first-quarter share price averaged $154.

iShares S&P Mid-Cap 400 Value has a market cap of $6.3 billion; its shares were traded around $157.34 Wednesday with a price-earnings ratio of 15.65. The trailing 12-month dividend yield of iShares S&P Mid-Cap 400 Value is 1.70%.

iShares China Large-Cap (FXI)

Chanos purchased 83,096 shares of the ETF, giving it 1.97% portfolio weight. The stock’s first-quarter share price averaged $43.

iShares China Large-Cap has a market cap of $5.43 billion; its shares were traded around $41.92 Wednesday with a price-earnings ratio of 9.57. The trailing 12-month dividend yield of iShares China Large-Cap is 2.32%.

WisdomTree Europe Hedged Equity Fund (EEM)

Chanose purchased 43,970 shares of the ETF, giving it 1.5% portfolio weight. The stock’s first-quarter share price averaged $61.

iShares MSCI Emerging Index Fund has a market cap of $31.82 billion; its shares were traded around $42.29 Wednesday with a price-earnings ratio of 12.82. The trailing 12-month dividend yield of iShares MSCI Emerging Index Fund is 1.86%.

See Jim Chanos (Trades, Portfolio)’ long portfolio here.

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About the author:

Holly LaFon
I'm a financial journalist with a Master of Science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


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