Jim Chanos on the Importance of Doing Your Own Work: Latest Interview; we should be looking at fundamentals, and not the personalities involved because it’s easy to stop doing fundamental work when you say ‘oh, Mr. XYZ is in it so if he sees something in it, who am I to argue?’

Jim Chanos on Dell, Herbalife & Importance of Doing Your Own Work: Latest Interview

Posted: 07 Mar 2013 11:10 AM PST

Kynikos Associates founder and notorious short-seller Jim Chanos appeared on CNBC this morning to share his latest thoughts on the market:

On China: He says to avoid the Chinese property bubble.  While he’s been short various plays on this in China, he says he’s “broadening out” to plays like construction equipment, etc.On Dell (DELL):  Chanos notes that he’s been short Dell on heels of the buyout proposal.  He was originally short a while ago and covered his position in the single-digits but ended up re-shorting the company recently on the heels of the deal.  We’ve highlighted how Chanos has been short PC’s before.

He points out that the company’s cashflow is plummeting and he thinks it’s going to drop more.  “The problem with the Dell model is you get paid upfront.  That’s a great model when your business is growing… but as your business shrinks, it works the other way.”

On Herbalife (HLF):  He was short last year, but is not anymore.  He says, “We were short, at a price.  I’m not crazy on these multi-level marketing businesses.” It sounds like he covered as shares were cut in half.

On ‘smart guy syndrome’ and importance of doing your own work:  “One thing we teach our analysts is when they look at the company, they should be looking at fundamentals, and not the personalities involved because it’s easy to stop doing fundamental work when you say ‘oh, Mr. XYZ is in it so if he sees something in it, who am I to argue?’  In every corporate disaster over the last 30 years, there’s been a handful of smart guys in everyone of them.  We’re not all right all the time.”

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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