The Daily Ticker’s Lauren Lyster sat down with Chanos, also president and managing partner of Kynikos Associates, at the 2013 Wine Country Conference in support of Les Turner ALS Foundation last week. Of course we asked him: “What are your biggest shorts?”His response? U.S. technology.
“I’ve been a big bear for the last year and a half, two years, in the P.C. space,” Chanos says. “I think that we are seeing a secular headwind in that business as more and more people go to mobility and tablets and the cloud. The P.C.-centric space is going to increasingly see negative surprises.”
Chanos cites Hewlett-Packard (HPQ) and Dell (DELL) for problems with their accounting practices.
“They spend very little on R&D and yet the companies that everyone wants to compare them to spend dramatically more on R&D thus, hurting their profitability,” he notes.
Even though Dell and HP have been starting to make huge acquisitions to gain a competitive advantage, they’re doing a “very bad job” at it, Chanos argues.
“I am completely mystified as to what the buyout groups at Dell are seeing here because the business from a cash flow point of view, from an accounting point of view, is deteriorating right before your eyes and yet there seems to be a number of players who think this is the greatest thing since sliced bread,” Chanos says.
Chanos offers a few pointers for the average retail investor including: don’t try to trade like a hedge fund.
“The deck is stacked against retail investors selling short on their own. I don’t think it is generally a good policy,” he says. “Just sell down your stocks to sleep at night.”
Click on the link at the top to see the complete video interview with Chanos.
Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Jim Chanos on Daily Ticker: Stay Away From U.S. Tech Firms
