Back in the 1980's, Jim Chanos made a name for himself by shorting Baldwin United.
He now runs his own hedge fund, Kynikos Associates, where he famously shorted Enron before its collapse.
We've put together some of Chanos' most brilliant quotes on investing, being a short seller, China, the U.S. financial meltdown and the European debt crisis.
"In investing, you can be really right but temporarily quite wrong."
One of the first stocks Chanos looked at for Gilford Securities was Baldwin-United. He noticed that at a time when regulators of Baldwin's insurance subsidiaries were threatening to declare them insolvent, brokerages across the board were recommending the stock.
"I recommended a short position in Baldwin-United at $24 based on language in the 10-K and 10-Qs, uneconomic annuities, leverage issues and a host of other concerns. The stock promptly doubled on me. This was a good introduction to the fact that in investing, you can be really right but temporarily quite wrong.
I put another report out in early December of 1982 with the stock at $50 and reiterated my thesis while pointing to additional evidence that had come out in the interim. I went home to visit my parents for Christmas and received a phone call from Bob Holmes telling me that I was getting a great Christmas present – the state insurance regulator had seized Baldwin-United’s insurance subsidiaries. Baldwin filed for bankruptcy shortly thereafter.
Source: Graham & Doddsville
"There’s a big difference between a long-focused value investor and a good short-seller."
"I used to think that good short-sellers could be trained like long-focused value investors because it should be the same skill set; you’re tearing into the numbers, you’re valuing the businesses, you’re assigning a consolidated value, and hopefully you’re seeing something the market doesn’t see.
But now I’ve learned that there’s a big difference between a long-focused value investor and a good short-seller. That difference is psychological and I think it falls into the realm of behavioral finance."
Source: Graham & Doddsville
"'Mr. Chanos has never been to mainland China.' Well hell, I didn't work at Enron either."
Chanos' response to continued criticism that he has bearish views on China without ever having visited the country. He had famously shorted Enron before its collapse.
Source: Business Insider
See the rest of the story at Business Insider
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