During his recent interview at the iConnections Global Alts Conference, Jim Chanos discussed a major problem is ‘positioning’ now matters more to investors than fundamentals. Here’s an excerpt from the interview:
Q4 2022 hedge fund letters, conferences and more
Chanos: Well we were talking before this panel in the Green Room about how the fact that nobody looks at balance sheets anymore when they’re looking at companies.
And you know there’s so much obsession now, and so much trading volume that is picked up in velocity, whether it’s option trading, overall trading, and everyone’s time frame has shortened dramatically. And I’ve talked about this, and the concept of positioning matters more than fundamentals.
I hear it all the time from people who tell me well you know they’re buying some worthless piece of paper, a worthless equity because the debt’s trading at 20 cents on the dollar, 25 cents on the dollar.
And I think yeah but there’s a short position in it. Yeah there’s a short position in it because it’s a worthless piece of paper, but it doesn’t matter over the short run. That worthless piece of paper can double.
And I’ve made the observation since the peak in speculative behavior which was I think the first quarter of 2021, which I’ve said has been the most speculative short period in my 40-year career, and that goes back to the dotcom era and the roaring 80s.
Every time the so-called meme stocks and high short interest stocks, and basically the garbage has taken off that’s been the end of the rally not the beginning of the rally.
You can watch the entire discussion here:
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Article by The Acquirer’s Multiple.
