Unstructured Finance

Jim Chanos, bad news bear, urges market prudence

Prominent short-seller Jim Chanos is probably one of the last true “bad news bears” you will find on Wall Street these days, save for Jim Grant and Nouriel Roubini. Almost everywhere you turn, money managers still are bullish on U.S. equities going into 2014 even after the Standard & Poor’s 500’s 27 percent returns year-to-date and the Nasdaq is back to levels not seen since the height of the dot-com bubble in 1999.

“We’re back to a glass half-full environment as opposed to a glass half-empty environment,” Chanos told Reuters during a wide ranging hour-long discussion two weeks ago. “If you’re the typical investor, it’s probably time to be a little bit more cautious.”

Chanos, president and founder of Kynikos Associates, admittedly knows it has been a humbling year for his cohort, with some short only funds even closing up shop.

But he told Reuters that the market is primed for short-sellers like him and as a result has gone out to raise capital for his mission: “Markets mean-revert and performance mean-reverts and even alpha mean-reverts if at least my last 30 years are any indication. And the time to be doing this is when you feel like the village idiot and not an evil genius, to paraphrase my critics.”

Chanos’ bearish views are so well respected that the New York Federal Reserve has even included him as one of the money managers on its investment advisory counsel. By his own admission, Chanos said he tends to be the one most skeptical on the markets.

Sotheby’s and a tale of two hedge fund managers

Hedge fund manager Steve Cohen’s reported plan to sell a number of valuable artworks may not only deliver a nice chunk of change for the Wall Street mogul, it may also provide gains for another rival manager.

Cohen is selling several high-profile artworks from his art collection, according to a story Monday in the New York Times, and he has given the task of selling the works to Sotheby’s – the 269-year-old auction house currently in the firing line of activist Daniel Loeb.

Loeb’s hedge fund owns 9.3 percent of Sotheby’s, making his New York-based Third Point the majority shareholder. Loeb wants the company to revamp and overhaul many of its operations and has demanded the resignation of the current CEO William Ruprecht. Sotheby’s has called Loeb’s actions “incendiary and baseless.”

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