Friday, December 19, 2008

Jim Chanos profile - New York Magazine

Noted short-seller and hedge fund manager Jim Chanos was the subject of a recent profile in New York Magazine.

Given the current spotlight of publicity shining on hedge funds and hedge fund managers, along with the fact that Chanos is one of the few fund managers actually making money this year, this piece should make for interesting reading.

Here's an excerpt from NY Mag's, "The Catastrophe Capitalist":

"It might be fun to share in a little Goldman-bashing with Chanos, until you realize that you and he are in very different circumstances. Your 401(k) has been plunging at the rate his fund is rising.

Chanos is arguably the most successful hedge-fund manager on Wall Street right now. As hedge-fund all-stars bleed red—SAC Capital’s Steve Cohen is said to be off 18 percent this year, Citadel’s Ken Griffin as much as 44 percent, and even David Einhorn, who presciently called Lehman’s implosion, has seen his fund, Greenlight Capital, slide a reported 26 percent—Chanos’s short positions have earned him a return of a reported 50 percent.

He now manages some $7 billion. Trader Monthly estimated his paycheck in 2007 at over $300 million, and he’s on track to earn a similar payout this December. While many Wall Street refugees are liquidating their art collections and listing their trophy houses on the market, Chanos is buying. This summer, he closed on a new $20 million triplex on 75th Street, off Fifth Avenue.

As a short-seller, Chanos earns a living by borrowing and then selling shares of a company he thinks will experience trouble. When the stock tumbles, he buys back the depressed shares and returns them to the lender, pocketing the difference. In other words, Chanos is a financial undertaker. He makes a profit when companies die. And when there’s an epidemic, he gets richer still."

Enjoy the article, and stop back in at the Finance Trends home page for our next hedgie profile (John Paulson) and more new posts.

Related articles and posts:

1. Hedge fund chief Chanos warns on wrongdoing - FT.com

2. Hedge funds: regulations and redemptions - Finance Trends.