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Comment by kapurs151 | Hacker News Reader

The full profile of Jim Chanos (that the article is quoting) is available here: https://www.institutionalinvestor.com/article/b1b00ynrgtn05r...

The part that I thought was most interesting was that he structures his fund as 190% passive long and 90% active short. This way, his short fund (which has average annualized returns of -0.7%) can still allow him to make a lot of money.

I like the idea that a short fund can make money if they can beat the negative of the passive index - so if the S&P returns 10%, and I can have a short fund that returns -5%, I can use his strategy to outperform the S&P.

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You can only use his strategy if you do the work on the short side and come up with good ideas. That's what his actual edge is. He doesn't have to disclose short positions like he does long positions in 13-F filings, so you only know what he's short if he's willing to talk about it publicly.

Being a short seller is like playing a game on hard mode. The bias of most market participants, sell-side analysts, self-promoting CEOs, and frauds are to the long side. Being net long is the only way to stay in the game over decades like Chanos has.

Chanos has been short TSLA for 4 years, and that's only been possible because the fund is net long [1]. The only reason he probably hasn't shut the short-only fund is because clients who allocate to it are probably hedging other long exposure they have allocated to other managers.

[1] https://www.youtube.com/watch?v=Zv3YhMzS0z4

I have Chanos' returns since inception in the 1980's. I have talked to Chanos a bunch. The guy is the biggest enduring fraud, figuratively speaking, in the investing world. His returns are dreadful. There is no money manager in the history of the world in which his own personal enrichment has diverged so much from his clients'. The worshipping of him is nothing short of shameful. I thought we despise the notion of getting rich at other peoples' expense?

Btw, losing less than the S&P is not a strategy but if you think it adds alpha I won't bother debating. Have fun spending alpha.

> His returns are dreadful

Ursus loses money in up markets. That is almost by design—it’s a catastrophic hedge inspired by 1987. His headline fund has been profitable for almost every vintage older than a few years.

The hedge fund? Wrong. I have those returns too. Ever wonder why neither he nor anyone talks about his returns? It’s not a conspiracy...

It is insane to me. We detest more than anything the notion of the high fee hedge fund manager who gets rich while his clients lose money, but the world gives Chanos the biggest pass of all time. This is a guy who has made something like $1 billion pre-tax and pre-divorce while his fund has just lost copious amounts of money over any relevant time frame.

> The hedge fund? Wrong. I have those returns too.

Chanos has multiple funds. Some of them are designed as catastrophic hedges, and work accordingly. His other funds are intercyclically up, doing better in the crisis and early recovery phases and less well in late recovery. If you’re seeing different numbers, you’re being fed garbage.

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