September 10, 2008 / 6:16 PM / 11 years ago

Hedge fund's Chanos: financials have seen the worst

Jim Chanos, founder and CEO of Kynikos Associates, speaks at the Reuters Global Hedge Fund and Private Equity Summit in New York April 11, 2007. REUTERS/Eric Thayer

BOSTON (Reuters) - Hedge fund manager Jim Chanos, who makes money betting that companies’ stock prices will fall, said financial stocks have probably seen the worst and his fund has fewer short positions now than it did in the past.

“We have probably seen the worst in the financials,” Chanos said on cable television channel CNBC. He also said that he has fewer short positions on financials now than he has had in the past, largely because much of the bad news is known about financial sector stocks.

Instead, Chanos, whose roughly $5 billion hedge fund Kynikos Associates often has between 40 and 60 short positions, said he is concentrating more on shorting some companies involved in the commodities area. “We would short companies that might depend on cement prices or steel prices going up,” Chanos said, declining to reveal the companies he has shorted.

When a fund manager shorts a stock, he borrows it in the hope that it will drop in price so he can repay the loan for less later, and pocket the difference.

Reporting by Svea Herbst-Bayliss, editing by Gerald E. McCormick

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