Sohn Conference: Jim Chanos on Shorting Elon Musk, Valeant, and Alibaba

Mr. Chanos’ Bearish Views on China and Alibaba

The Kynikos Associates founder reiterated his bearish views on China at the 21^st Sohn Conference, saying that the world’s second-largest economy “is the gift that keeps on giving on the short side”. Mr. Chanos has previously voiced his bearish views on the Chinese economy and companies exposed to it.

To that end, Mr. Chanos and his team are still betting against Alibaba Group Holding Ltd (NYSE:BABA), saying that “we’re shorting it for accounting reasons”. The noted short-seller has “real questions” concerning some metrics of the Chinese e-commerce giant, particularly its cash flow. Kynikos Associates does not seem to comprehend how profitable or unprofitable the “fulfillment side of the business [which delivers packages to customers]” is, guessing the business is not profitable. Mr. Chanos believes “there’s no real free cash flows” at Alibaba Group Holding Ltd (NYSE:BABA). The shares of the online retailer are up by 28% in the past three months, but are still 2% in the red year-to-date. Fang Zheng’s Keywise Capital Management initiated a 194,200-share position in Alibaba Group Holding Ltd (NYSE:BABA) during the January-to-March quarter.

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