Kynikos Associates | James Chanos | Hedge Fund Notes

Kynikos Associates

Kynikos Associates | Hedge Fund Notes

Below is our Hedge Fund Tracker Profile for Kynikos Associates and James Chanos.

Resource #1: (2.2.09) Famed short-seller James Chanos told Reuters on Thursday his hedge fund firm, Kynikos Associates, performed well in 2008, but clients still withdrew about 20 percent of his funds' assets.

Chanos, who profits by betting against companies he expects will fall in value, thrived in a year when a broad range of financial markets tanked. He declined to reveal his fund's annual performance, but said the firm "had a good year."

The average hedge fund specializing in short selling returned 25 percent last year, according to data from hedge fund tracking firm Hennessee Group. source

Resource #2: Goldman Sachs MD Marc Spilker wanted to widen his path to the beach at his house in the Hamptons. Unfortunately, his neighbor, Kynikos founder Jim Chanos had a problem with this, since his row of hedges would have to be taken out in order for Spilker’s family to be able to “maximize their beach enjoyment.” Spilker cited a deed that said he could have 15 feet, Chanos produced one that said otherwise. Then this week they went to court to negotiate; Spilker claimed to only want a few feet (i.e. 6-7), Chanos gave it to him and asked for it to be put in writing.

Resource #3: His hedge fund, Kynikos Associates, had put a large slice of its $3bn in assets on a bold punt that shares in the internet gambling sector were about to go into free-fall.
And on October 2, shares in the companies did precisely that as about $5bn was wiped off their value in just a few hours of trading in response to a US Senate decision to introduce tough new laws cracking down on gambling on the web.

It took the industry and the markets, in fact almost everyone except Mr Chanos and his team of traders, by surprise. The consensus view had been that the sector was about to ride higher on a wave of consolidation.

Resource #4: Good afternoon. My name is James Chanos. I would like to take this opportunity to thank the House Committee on Energy and Commerce for allowing me to offer my perspective on the tragic Enron story.

I am the President of Kynikos Associates, a New York private investment management company that I founded in 1985. Kynikos Associates specializes in short-selling, an investment technique that profits in finding fundamentally overvalued securities that are poised to fall in price. Kynikos Associates employs seven investment professionals and is considered the largest organization of its type in the world, managing over $1 billion for its clients.

Resource #5: Kynikos Associates announced today that Jeffrey R. Perry has joined the firm as a Managing Director. Perry will also co-manage the new Kynikos Opportunity Fund along with Kynikos President, James Chanos. Chanos said, "We are very excited to have Jeff join us. Besides augmenting our research capabilities within the existing Kynikos funds, Jeff's presence, and many years of high level hedge fund experience, will allow us to launch the Kynikos Opportunity Fund, which he and I will co-manage." The Kynikos Opportunity Fund will have a broad mandate to invest in long and short equities, risk arbitrage, capital selective arbitrage, activist positions, as well as other investment disciplines where the firm believes it has a significant research advantage.

Resource #6: Jim Chanos of New York’s Kynikos Associates was bearish on internet gambling sights long before Senate majority leader Bill Frist “ambushed” the industry with a bill making most internet gambling illegal. Contrary to claims detailed on a website [= Midas Oracle] yesterday, it didn’t take an elaborate scheme of inside information about the Senate’s legislative schedule to tip Chanos off on the dangers to internet gambling. For Chanos, the writing was on the wall, in the online gaming companies’ prospectuses and already built into various state laws.

Resource #7: People keep pointing to the fact that capital spending is great. But they pointed to the same thing in 2000, when the market was tanking even as telecom was booming. We pointed out then that the telecommunications build-out was almost over--and was increasingly focused on projects that didn't make any sense. Today, whether it's the 48th planned community in Dubai or the marginal factory in rural China, you're going to find out that the capital projects in the works don't make a whole lot of sense either. But there's a huge lag effect on that. Financial firms are the canaries in the mineshaft, and the laggards are the capital-goods companies.

Resource #8: A deluxious story on Jim Chanos, the short-seller who originally told Bethany McLean to look at Enron (resulting in the Fortune article, “Is Enron Overpriced?” and later the travesty, The Smartest Guys In The Room). It seems he knows the hooker that brought down Eliot Spitzer. While stopping short of accusing Chanos of using Ms. Dupre’s services, the article makes it clear they knew each other.

Resource #9: Jim Chanos, the world’s biggest short-seller, today made an appearance in the enemy camp. Chanos, the president of Kynikos Associates, which has $6 billion invested in bearish bets on the stock market, gave a talk this morning at the Stanford Directors’ College, an annual symposium at Stanford Law School for the directors of public companies.

Chanos provided some insights on what he does, areas of the market where he sees opportunity to short stocks, and how directors ought to react when the find short interest in their stocks rising. Here are a few bullet points from the talk...

Resource #10: Jim Chanos - a top short-selling hedge fund manager and the big man at Kynikos Associates - has been speaking of the evil ones. He told me, 'There is a great evil in the financial markets. Some of the firms that have failed did not tell the truth about the risks they were facing. They misled everyone. Why did they do it? Oh, they had darkness in their hearts! Evil-doers do evil things. We all know this. We all know that the serpent is waiting for us. We've seen the rune stones. Things can only get worse. There will come a time when fire will fill the sky, and Satan's dark angels, diabolical demons, will rise from the bowels of the earth and devour us! O people, repent! It's not too late. I will change as well. I won't short any more. O Jesus, please believe me. Have mercy on me. I SHALL SHORT NO MORE!!!'

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