Guru watch

“Wall Street’s best-known bear is going into hibernation,” says The Wall Street Journal. Jim Chanos, the veteran short-seller, is shutting down his hedge funds after almost 40 years and will return investors’ cash by the end of this year.

Chanos’s long career spans both a successful bet against the energy trader Enron, which collapsed in 2001 amid vast fraud, and a multi-year, money-losing campaign against carmaker Tesla. In recent years he has struggled amid a recordbreaking bull market: his funds were down 4% between the start of the year and mid-November, against a total return of 19% for the S&P 500. Assets under management have gone from $6bn in 2008 to $200m today. “The marketplace for what I do has changed,” he tells The Wall Street Journal.

“The long/short equity business model has come under pressure and interest in fundamental stockpickers has waned,” Chanos says. Short-selling can cushion investors against downturns: his funds rose 7% in 2022 and 16% in 2021, but that didn’t prevent outflows. “A lot of people don’t care about insurance anymore.”

Recent short positions include data storage companies and real estate investment trusts, which may be hurt by continued high interest rates. However, he has turned bullish on US gambling firms, despite previously making a highprofile short bet against online bookmaker DraftKings, which he exited at a profit after a year.

The industry has grown faster than expected since the US Supreme Court liberalised gambling five years ago, Chanos tells the Financial Times, and is also consolidating, with DraftKings and FanDuel holding much of the market. Demand for bets with poorer odds, such as in-game betting and accumulators, is good for profitability. “The thing that we underestimated – that I think is going to be a benefit for all these companies for a while anyway – is what bad bettors the US gamblers are.”