| NEW YORK
NEW YORK Jan 16 Jim Chanos, a short-seller who
gained a measure of fame for anticipating the collapse of Enron,
said in an interview with Reuters TV that he is still betting
against the shares of Hewlett Packard and also sees problems in
the retail sector.
Chanos, president and founder of the roughly $6 billion
hedge fund Kynikos Associates, said that HP still
suffers from past acquisitions and lack of leadership, while
online consumption is stealing profits from major retailers.
"Hewlett has its own baggage due to previous management's
mistakes, particularly in the acquisition front," Chanos said in
an interview for the Impact Players show on Reuters.com ().
Chanos, who started shorting HP in 2011, said the company
has failed to lead in key areas such as mobile technology and
cloud computing, and that he is skeptical of its plan to recover
by cutting costs.
HP said last September that it would eliminate 29,000 jobs
through the end of its 2014 fiscal year. The company has also
relied heavily on acquisitions that turned out to be troubled.
HP took an $8 billion writedown last year in connection with
its acquisition of Electronic Data Systems Corp in 2008.
Several months later, it recorded an $8.8
billion writedown related to Autonomy, alleging a massive
accounting fraud at the British software company, which it
acquired in late 2011.
Chanos identified Autonomy as a shorting opportunity as
early as 2009, according to a source familiar with his views.
His HP bet has proven prescient as the company's stock price has
fallen 22.5 percent since the Autonomy deal.
Chanos told Reuters that he is betting against the entire
personal computer space, which he views as a "value trap," since
the stocks appear to be bargains but are headed downward.
The short-seller also said the retail sector is troubled,
since more people are buying products online instead of in
"I think that retail is going to be probably an area with a
lot of road kill on it," Chanos said. "You don't want to be the
showroom of Amazon," he said in reference to retail stores.
Chanos, whose firm, Kynikos, is named after the Greek word
for "cynic," said he continues to bet against the shares of
various Chinese companies, which he started doing in late 2009.
"Not a lot has changed," Chanos said. "They've got a bubble
Chanos said he is betting against companies tied to Chinese
construction, because the country is putting up buildings such
as condominiums much faster than it can sell them, and that its
debt ratios remain "staggering."
Chanos also said that the outcome of investor calls on
Herbalife, a direct seller of weight-loss products that
has drawn opposing bets on its shares from activist hedge fund
managers Bill Ackman and Dan Loeb, will depend on whether the
company's business model is valid.
"At the end of the day, the Herbalife bull-bear battle will
result on who can prove in fact whether or not the business
proposition is good," Chanos said ().
A person familiar with Chanos's hedge fund, however, said he
is believed to have been shorting Herbalife shares for a while.