Jim Chanos, Chanos & Company, at CNBC’s Delivering Alpha, Sept. 28, 2022.
Scott Mlyn | CNBC
Renown short seller Jim Chanos will be converting his hedge fund Chanos & Co., to a family office and advisory business, CNBC has learned.
The investor, best known for his bet against Enron before its bankruptcy in 2001, will no longer be running a limited partnership or an offshore fund and will be returning the external capital to investors, Chanos told CNBC’s Scott Wapner.
Assets managed by Chanos & Co. have come down significantly, declining to a level below $200 million, compared to $6 billion in 2008, according to The Wall Street Journal, which first reported on the short seller’s move.
Chanos is moving to the family office model as the stock market has rallied in 2023. The S&P 500 is up nearly 18%, and the broad-market index is on pace for a 7.6% gain in November.
Chanos is notable for shorting Enron a year before its collapse. As recently as January of this year, he also had short bets on Tesla, pointing to rising competition in the electric vehicle market. At the time, he noted that China is the weakest market for the EV maker.
“You have repatriation of capital risk. You have [Chinese automaker] BYD and others just taking massive market share,” Chanos said. “Tesla trades at a premium to those companies who are growing faster than they are in China. So if you want to play all these things, there are now lots of ways to do it.”
Indeed, throughout 2023, Tesla made price cuts on its S and X models in China, and it rolled out lower cost versions of the vehicles in the U.S. as competitors ramped up in the EV market.
Still, Tesla shares have rallied 90% this year as investors crowded into the so-called Magnificent 7 tech stocks.
Tesla, year-to-date
Stocks have rallied forcefully in November on the hope that the Federal Reserve will start cutting interest rates in 2024.
Chanos told CNBC last year that investors shouldn’t count on the Federal Reserve to always bail them out.
“The idea of a Fed put and that the Fed is always going to be there to bail out my bad investment decisions is really not cogent investment policy to hold onto for a long time,” Chanos told CNBC’s “Halftime Report” in January 2022.
–CNBC’s Yun Li contributed reporting.