Renowned short seller Jim Chanos is making a significant change to his investment business by converting his hedge fund, Chanos & Co., into a family office and advisory business. This decision involves no longer running a limited partnership or offshore fund and returning external capital to investors, according to information obtained by CNBC.
Chanos, famously known for his successful bet against Enron prior to its 2001 collapse, has seen a decline in the assets managed by Chanos & Co. The current level is reportedly below $200 million, significantly lower than the $6 billion figure in 2008, as reported by The Wall Street Journal.
The shift to the family office model comes at a time when the stock market has experienced a strong rally. The S&P 500 has recorded a nearly 18% increase year-to-date, and the broad-market index is on track for a gain of 7.6% in November.
Chanos has made notable short bets in the past, including his skepticism towards Tesla’s prospects due to increased competition in the electric vehicle market. He highlighted the growing market share of Chinese automaker BYD and other emerging competitors, as well as Tesla’s premium valuation compared to faster-growing rivals in China.
Throughout 2023, Tesla responded to competitive pressures with price cuts on certain models in China and the introduction of more affordable versions in the United States. Despite these challenges, Tesla’s stock has surged by 90% this year, buoyed by investor enthusiasm toward the broader technology sector.
Investors have been particularly optimistic in November due to hopes that the Federal Reserve would initiate interest rate cuts in 2024. However, Chanos cautioned against relying on the central bank to always rescue investors from poor investment decisions.
In summary, Jim Chanos’ decision to convert his hedge fund into a family office and advisory business marks a significant transition in his investment business. This move comes as the stock market continues its strong performance, and Chanos has played a prominent role in shorting notable companies like Enron and Tesla.