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Five years into his crusade against Tesla’s share price, Jim Chanos licks his wounds – and finally drops his hat to Elon Musk.
The 63-year-old short seller admitted on Thursday that he reduced the size of his bet against the electric carmaker towards the end of a year in which its stock jumped nearly 600%, making it made it the most valuable automaker in the world with a market cap of $ 562 billion.
August data compiled by S3 Partners showed Tesla’s short sellers lost more than $ 25 billion in combined bets against Musk and his cars in 2020. Tesla stock has risen nearly 20% since then. then.
“It’s been painful, clearly,” a low-key Chanos told Bloomberg on Thursday.
The news of Chanos’ long-awaited surrender shook Wall Street.
“It’s time!” exclaimed a rival hedge fund manager. “Bypassing something big will hurt you a lot. Shorting something up to 600 percent will fucking kill you.
Chanos, chairman and founder of New York hedge fund Kynikos Associates, is Musk’s loudest and longest-running critic, having called Tesla a “walking insolvency” as early as 2016. He has been a constant tease to Musk, throwing out beards in his investor letters, media appearances and thinly veiled Twitter character @WallStCynic.
Using that account, Chanos responded to a tweet from Musk updating the progress of Tesla’s notoriously delayed autonomous driving program by sarcastically responding, “As your lawyer, I advise you to stop talking immediately.”
Musk, meanwhile, has consistently taunted Tesla’s short sellers, telling his own young children in an interview with Rolling Stone in January 2019 that investors taking a short position in Tesla are “fools who want us to were dying ”.
Another major hedgie who was injured by bypassing Tesla is David Einhorn. Having predicted Musk’s downfall for years, he instead saw his Greenlight fund lose 34% in 2018, with Tesla causing much of the pain. Musk mailed Einhorn a pair of shorts during one of their online arguments in August of this year.
Nonetheless, it’s Chanos who has been Musk’s nemesis when it comes to short sellers. In November 2019, Musk tweeted, “So many reporters gave Chanos airtime when he called Tesla a worthless fraud. Now that he’s been proven wrong, silence… ”
While Chanos remains short on Tesla shares, according to his interview with Bloomberg, the position is well below 5% of his portfolio at Kynikos. And while he mockingly tweeted about the auto company’s still-delayed “full-service driving” program as recently as Wednesday, he has shown he’s ready to back down when the going.
Chanos reiterated his belief Thursday that Tesla is more of a personality cult built around Musk than a profitable long-term carmaker. But when Bloomberg asked him what he would say to Musk if the two met in person, Chanos replied curtly, “I would say, ‘Job well done so far.’
Tesla shares on Thursday rose 4.3% to close at $ 593.38.
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