Jim Chanos who is arguably the most famous short seller was on Bloomberg TV for a debate about China. Jim Chanos is skeptical about official Chinese growth numbers and thinks the country is experiencing an economic bubble. Chanos debated China with Stephen Roach, who took the opposing side (details on that debate).
Jim Chanos also commented on Herbalife Ltd. (NYSE:HLF). Herbalife has attracted many famous investors on both the long and short side. David Einhorn was short, Bill Ackman has a massive short, Dan Loeb is long but selling shares, and Carl Icahn is slightly behind Fidelity as the largest shareholder (we were the media outlet to first confirm that Icahn indeed had a long stake). Chanos is rumored to be short the MLM company. Ackman thinks the company is a pyramid scheme, while Icahn and Loeb see value in the shares (or are just trying to get back at Ackman over personal vendettas; including a lawsuit involving Icahn and a bike race where Ackman beat Loeb).
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Chanos was asked by Bloomberg TV’s Trish Regan whether he was short the MLM company. Chanos said “we do not have a stake in that dog right now, but let me just say I am a skeptic on the multi level marketing. But I think ultimately any business that is dependent on pulling the wool over its customers, whether its the distributors who are sold more product than they can sell, or the customers who are sold to at a rate for 2x-3x down the street, I think the business model that I would not want to invest in.”
Chanos continued “whether you are short or not is another issue, but I think that the business model is not sustainable.”
Trish commented to Chanos “you sound like you are on team Ackman”, to which Chanos just laughed.
The video of Jim Chanos can be found below: