Today is a very good to be famed short-seller Jim Chanos, the
founder and president of Kynikos Associates, a $6 billion hedge
fund. Shares of Dow component Hewlett-Packard (NYSE:
), one of Chanos's short positions, are off 12 percent on news
that the company is writing down $8.8 billion of the $9.7 billion
it paid for Autonomy last year due to what HP is deeming
accounting fraud by that company.
The Hewlett-Packard short is just the latest in a long line of
successes for Chanos and Kynikos and the trade underscores an
important fact about Chanos. He is adept at spotting accounting
issues. After all, he famously shorted Enron before the company
spectacularly fell to pieces in what was, at the time, the
largest corporate bankruptcy in U.S. history.
However, directly shorting stocks is not for everyone. There
is unlimited risk and margin costs. Fortunately, there are
that investors can use to mimic some of Chanos's current
Direxion Daily Technology Bear 3X Shares (
Since the Direxion Daily Technology Bear 3X Shares is a
triple-leveraged fund, this is not the type of ETF that should be
turned into a long-term investment. Costs associated with rolling
swaps, options and other derivatives that give these types of
ETFs their leverage eventually eat away at investors'
However, triple-leveraged ETFs, when properly used, make for
excellent short-term trades. TECS seeks to deliver three times
the daily inverse performance of the S&P Technology Select
Sector Index. That is the index tracked by the Technology Select
Sector SPDR (NYSE:
). That ETF just happens to be home to Hewlett-Packard and Dell
), two Chanos shorts.
ProShares UltraShort MSCI Brazil (NYSE:
This double-leveraged equivalent of the iShares MSCI Brazil Index
) helps investors kill two Chanos birds with one stone. Simply
put, Chanos is not a fan of Petrobras (NYSE:
) and Vale (NYSE:
). He said as much
at the Ira Sohn Conference on Monday
Chanos called Petrobras, Brazil's state-controlled oil firm,
and Vale, the world's largest iron producer, two of his favorite
shorts. Various securities issued by those two companies combine
for 26 percent of EWZ's weight. Said another way, being long BZQ
is arguably more efficient and less risky than directly shorting
Petrobras and Vale.
ProShares UltraShort FTSE China 25 (NYSE:
The ProShares UltraShort FTSE China 25 is the China equivalent of
BZQ and the double-leveraged inverse answer to the popular
iShares FTSE China 25 Index Fund (NYSE:
). Chanos has long been bearish on China and while that view is
expressed through individual names, any broader bearishness in
Chinese equities should be good news for FXP.
, China-related bets made up about 20 percent of the positions in
Chanos's global short fund, according to Bloomberg.
iShares MSCI Spain Index Fund (NYSE:
If Chanos is correct in his bear call on Banco Santander (NYSE:
), the iShares MSCI Spain Index Fund is probably in for more
downside. The ETF devotes nearly 22 percent of its weight to the
embattled Spanish banking giant.
Additionally, problems for Banco Santander will be perceived
as problems for the Spanish financial services sector at large.
That sector accounts for 41 percent of EWP's weight. The issue
here is that EWP is a traditional long ETF, meaning investors
will either need to short the fund or purchase put options to
mirror Chanos in this example.
For more on Chanos's shorts,
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