James Chanos

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James Chanos (born 1958 in Milwaukee) is the president and founder of Kynikos Associates, a New York City investment company that is focused on short selling. He graduated from Yale in 1980. Kynikos is one of the few firms specializing in short selling that survived the bull market of the 1990s.

He rose to fame in the 1980s as a "short" - a short seller who had a knack of spotting stocks that he thought to be overvalued. Chanos focussed on the fundamentals before betting if a stock would tumble in value. He had the ability and willingness to do the in-depth research needed to expose slippery accounting - research that most Wall Street analysts had neither the training nor the motivation to do then.

Chanos stood out by the quality of his research and also choosing his targets carefully. He spent months researching a stock, and then took a large position for a long period of time. His work turned out to function like a whistle-blower's, exposing companies like Baldwin-United, Drexel Burnham, and more recently, the much famed Enron Corporation.

In October 2000, Chanos started investigating Enron Corporation. He examined their use of mark-to-market accounting, which in Chanos' experience results in management overstating earnings, as well as their low 7% return on capital investment.

Chanos became an early short seller of Enron as 2001 progressed, increased his short position as more information surfaced. When the Enron scandal was out in the open, Kynikos profited greatly and Chanos himself became somewhat of a mini-celebrity as a consequence of his early probe into Enron's problems. Had the thousands of investors listened to his information on Enron, they could probably have saved the millions they lost after the collapse of Enron.

All of his sons—Nick, Mike, and Andrew—attend The Browning School in New York where Mr. Chanos himself is the president of the Board of Trustees.

[edit] Career (in descending order of chronology)

Founder and President of Kynikos Associates Ltd.

Analyst and Vice President at Deutsche Bank Capital Corp.

Analyst with Gilford Securities - where he exposed Baldwin-United, which filed for bankruptcy thereafter

Analyst with Blyth Eastman Webber

[edit] References

  • Enron: The Smartest Guys in the Room by Bethany McLean and Peter Elkind
  • BULL! by Maggie Mahar

[edit] External links

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