market folly

At the Sohn Conference in New York today, Kynikos Associates' founder Jim Chanos appeared on CNBC to talk about what he's seeing in the markets lately (stay tuned for our full Sohn Conference notes later on).   Here are some takeaways:


- Still short Alibaba Group (BABA) with his bearish China bet

- Notes that some hedge funds charging 2/20 that generate 8% return will only give their investors a 4-5% return - is that worth paying for?

-  Still short Valeant (VRX) after originally shorting in 2014; thinks it's still not cheap and argues people are using valuation metrics that aren't right.  Doesn't think the company is trading at 3x earnings like Bill Ackman suggested recently.  Chanos: "Valeant was genius at gaming the system. That game is over."

- Cheniere Energy (LNG): Says he agrees that the contracts are money good, but the company's cost estimates are too low.  "You're paying a ridiculous price for 2020 cashflows compared to any other energy play you can buy today."  Asks how profitable can the plants operate and at what capital cost?

- Short Elon Musk: betting against Tesla (TSLA) and SolarCity (SCTY) still.  Sees flood of executives leaving TSLA as a negative sign.  Since the company can't really make money selling a $100,000 car, how are they going to do so selling a $35000 car (upcoming Model 3)?  Feels TSLA will need to raise money eventually.  Thinks SCTY gets in financial trouble in 2016.

We'll post video of his appearance if/when it becomes available.