Famed short seller Jim Chanos is offering European investors access to his bearish bets.
Chanos, who put successful short bets on companies such as Enron and Wirecard AG, has joined up with London-based Green Ash Partners to launch an equity long/short hedge fund. The fund began trading this month with about $20 million of internal capital, according to a statement.
The launch comes amid the most ferocious market selloff in more than a decade as central banks reverse years of quantitative easing to contain soaring inflation. Chanos aims to outperform by primarily betting on decline in shares, a tactic that he has followed for more than three decades.
“The opportunity set for a strategy such as this is overwhelming, supported by our rigorous and methodical approach for finding overvaluation wherever the market excesses are,” Chanos, the founder of Chanos & Co., the hedge fund firm formerly known as Kynikos Associates Ltd., said in the statement.
Chanos is famous for helping expose Enron’s accounting scandal and profiting from it. He rode the firm’s decline from an average $79.14 per share in 2000 through December 2001, when it collapsed to 60 cents.
“There are many trade opportunities that are percolating around the Enrons of today,” the two firms wrote in their presentation for the new fund. Frauds that were $2 billion to $3 billion in size in the 1990s are 10 times that size today, they wrote.
The fund complies with the European Union’s UCITS Directive. That allows clients flexibility to get in and out of the fund on a daily basis. While more restrictive for the manager, authorized UCITS funds can be offered to both institutional and retail investors in EU member countries and will attract a new class of investor.
Chanos’s long/short US offshore hedge fund was up about 0.6% through September this year, according to an investor presentation seen by Bloomberg.
Many equity hedge funds have struggled with their long-biased portfolios. The funds lost 15.4% on average this year, according to data compiled by Bloomberg. They have been hit by the most investor outflows of any strategy in 2022.
The market volatility will uncover opportunities for short sellers, Chanos said in a recent interview with Bloomberg’s Odd Lots podcast.