Veteran short-seller Jim Chanos has a clear message on today’s market climate. “This bull market is going to go until it doesn’t. And I keep telling people we’re going to need to fill every last bull and Wall Street will do it.”
Reflecting on the past few years, Chanos says, “Wall Street has been a center for this kind of activity in terms of stuff that I think crosses the line, i.e. the golden age of fraud.” He warns, “Issuance is already starting to increase dramatically. We’re seeing a big pickup in insider sales, particularly in the companies we cover.”
On regulators? “The SEC and regulators and others have taken generally a very—to be charitable—laissez faire approach to the markets where people can say almost anything they want. There’s no downside to it.”
Tesla’s valuation is another sore spot. “Almost everyone at this point agrees that the company is not being valued for just its auto operations. It would be trading at 30 or $40 a share, not 300 and something.” As for autonomy promises? “They’ve been promising it for ten years now, but for it, there’s still a level two. Just like everybody else.”
Chanos is also revisiting a familiar target: Carvana. “We were short the stock successfully in 2022 and 2023 and covered and now it’s back.” The core issue? “This is a company that is now generating over the latest 12 months, about 70% of their operating profit is coming from gain on sale of the subprime loans.”
He adds, “The short interest has collapsed… The bears—the other bears—have given up.” And: “We’ve seen a dramatic increase in insider selling… So the last time we saw this type of selling, the stock also was getting ready to go down dramatically.”
Then there’s MicroStrategy. “Michael Saylor is a wonderful salesman, but that’s what he is. He’s a salesman.” Chanos explains, “What he’s selling investors is the concept that you give me your money and I’m just going to go buy Bitcoin… I called it financial gibberish.”
He’s even long Bitcoin—but not in the way you’d think. “Let me just interject really importantly here, I’m actually doing what he is advocating… I am selling MicroStrategy securities to buy Bitcoin.”
As for whether this premium can hold? “It should be at one. I mean, I just think because for all the advantages he claims you have what we call agency risk in finance.”
Zooming out, Chanos concludes, “Everything looks good. I think that the valuations are back up to their high levels… Wall Street has a printing press, too, and the printing press is starting to gear up.”
You can watch the entire interview here:
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