Famed short-seller Chanos can’t cash in on Valeant
Legendary short-seller Jim Chanos has failed to cash in substantially on the recent crash of one of his more notable calls — Canadian drugmaker Valeant Pharmaceuticals, The Post has learned.
In fact, he’s been posting negative overall returns during the past two months even though Valeant, his best-performing short during October, was crashing.
Chanos was the first, and most prominent, short-seller to call Valeant a short — back in March 2014, saying the company was an “ineffective rollup,” according to Activist Shorts Research, which tracks short-seller calls.
“We think [Valeant] is playing some very aggressive accounting games when they buy companies [and] write down the assets,” Chanos said on CNBC in 2014.
While Valeant didn’t go straight up after that, the stock did climb 37 percent in the first 12 months following his bet, Activist Shorts said.
Valeant shares began to tumble last September on political concerns over drug pricing and questions about the practices of Philidor, its specialty pharmacy. In October and November, Valeant shares fell about 50 percent.
During those two months, Chanos’ short fund, called Ursus, at his $3 billion Kynikos Associates, lost money — falling 0.34 percent in October and 0.87 percent in November, according to individuals knowledgeable about the fund’s reported results.
Chanos was short Valeant during that time, sources said, but it was only one of 50 positions, which meant its big gain didn’t move him into the black.
Despite the bad October and November, Chanos’ Ursus fund is having an unusually strong year, gaining almost 11 percent through Nov. 30.
Over time, however,it has been a loser. An investor who put $1 into Ursus in 1993, when it launched, would have just 40 cents now, for an annualized loss of about 4 percent, sources familiar with the numbers said.
Chanos, who once ran $7 billion, declined to comment.