Short-Seller Jim Chanos on Finding an Investing Edge

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(Bloomberg) -- Jim Chanos, this week’s guest on Masters in Business, has identified — and sold short — many of the best-known corporate disasters of the past few decades. He says the underlying philosophy of his investment strategy came from the debates he used to participate in with the legendary Julian Robertson of investment firm Tiger Management LLC. Chanos used to get invited to Tiger’s lunchs, where he often held investment positions and views at odds with some of Tiger’s fund managers and analysts. The debate over different stocks would rage on.

Megaphone.fm: James Chanos Discusses Investment-Dri...

Robertson was always interested in the advantage anyone held: “What is your edge?” he would ask. Most of those making investment decisions turned out to lack a sustainable edge; they were undone by the powerful force of reversion to mean.

Whatever Chanos’s edge is, he has used it to make some of the most celebrated short-sales, betting against — among others — Enron, Baldwin-United, Commodore International, Coleco, Integrated Resources, Boston Chicken, Sunbeam, Conseco, Tyco International, and, most recently, Valeant Pharmaceuticals.

His latest short: Elon Musk’s electric-car company, Tesla, which he thinks will fail.

His favorite books are cited here; our conversation transcript is published here.

The show is broadcast on Bloomberg radio all weekend; you can stream/download the full conversation, including the podcast extras on iTunesBloomberg and Overcast. Our earlier podcasts can all be found on iTunesSoundcloudOvercast and Bloomberg.

Next week, we speak Ed Yardeni, founder and chief investment strategist of Yardeni Research, and former chief investment strategist at Deutsche Bank.

©2018 Bloomberg L.P.

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