market folly

Emailed in from a reader, today we're posting up Jim Chanos of Kynikos Associates' presentation entitled 'A Search For Global Value ... Traps!" 

He gave the presentation this past week at the VALUEx Vail conference, an event put on by Vitaliy Katsenelson, a CIO who made our list of top finance people to follow on Twitter.  You can follow Vitaliy on Twitter here.

In Chanos' presentation, the hedge fund manager outlines how investors can separate value stocks from value traps.  He specifies common characteristics of value traps as:

- Cyclical and/or overly dependent on one product

- Hindsight drives expectations

- Marquis management and/or famous investor(s)

- Appears cheap using management's metric

- Accounting issues

This is not the first time we've seen Chanos talk about his focus on value traps as we've posted up how he's been shorting Petrobras and Fortescue.  And in a separate interview he talked about his shorts of Coinstar and Dell.

In his latest presentation, Chanos outlines the bearish and "value trap" thesis associated with the following names:

U.S. shale explosion: Consol Energy (CNX), national oil company: Petrobras (PBR), computing revolution: Hewlett-Packard (HPQ), digital distribution: Coinstar (CSTR), troubled national balance sheet: Banco Santander (SAN SM), and  iron ore rush: Fortescue (ASX:FMG).


Embedded below is Chanos' entire presentation with his thesis on each name outlined:




For more on Chanos, yesterday we posted up his bearish China stance as well as an in-depth interview with Columbia Business School.