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PR Newswire
27-01-2014, 07:18 PM
http://www.businessinsider.com/jim-chano...cks-2014-1
JULIA LA ROCHE
JAN. 23, 2014, 9:50 AM
Jim Chanos, who runs Kynikos Associates, has developed a new strategy for shorting stocks, the famed short-seller told the Wall Street Journal's Dennis K. Berman.
Chanos' new investment thesis focuses on companies with stock buybacks.
Basically, Chanos believes that when companies engage in big stock buybacks they're actually displaying a sign of weakness as opposed to strength, the report said.
It's a sign that the companies think that their stock can return more than the their actual businesses.
The Journal's article listed off a few examples of companies (IBM, Oracle, Honeywell) that had returns on stock buybacks that were significantly lower than the return on each company's business assets.
"Corporate CEOs, with their massive share-buyback programs are in effect investing in the stock market rather than in expanding business opportunities at their companies. Either they expect higher returns from the market, or lower returns in their business, or some combination of both. Given their questionable track record in timing the market, this may be a cause for concern," Chanos told the Journal.
Chanos didn't name specific stocks that he's shorting in the Journal's article.
http://online.wsj.com/news/articles/SB10...1,641,1009
JULIA LA ROCHE
JAN. 23, 2014, 9:50 AM
Jim Chanos, who runs Kynikos Associates, has developed a new strategy for shorting stocks, the famed short-seller told the Wall Street Journal's Dennis K. Berman.
Chanos' new investment thesis focuses on companies with stock buybacks.
Basically, Chanos believes that when companies engage in big stock buybacks they're actually displaying a sign of weakness as opposed to strength, the report said.
It's a sign that the companies think that their stock can return more than the their actual businesses.
The Journal's article listed off a few examples of companies (IBM, Oracle, Honeywell) that had returns on stock buybacks that were significantly lower than the return on each company's business assets.
"Corporate CEOs, with their massive share-buyback programs are in effect investing in the stock market rather than in expanding business opportunities at their companies. Either they expect higher returns from the market, or lower returns in their business, or some combination of both. Given their questionable track record in timing the market, this may be a cause for concern," Chanos told the Journal.
Chanos didn't name specific stocks that he's shorting in the Journal's article.
http://online.wsj.com/news/articles/SB10...1,641,1009