Jim Chanos Shorted AMC—How Did He Accumulate His Billions?

Yet another prominent investment manager has taken a short position against AMC. Kynikos Associates founder Jim Chanos has made a name for short-selling stocks that he thinks are overvalued. Chanos isn't just betting against AMC. He added some sage advice for retail investors who capitalize by short squeezing investors bold enough to short a popular stock. So, how did Chanos make his money and how much does he have?

In an interview with CNBC on Aug. 10, Chanos said that despite a relatively positive earnings report from AMC, Kynikos Associates had taken a short position—less than 1 percent of its net assets—against its stock.

Citing deteriorating fundamentals, stagnant box office sales from the COVID-19 pandemic, and the overhead from debt and expensive facilities, Chanos is confident in his short position despite retail investors waiting in the wings to pounce on any opportunity that arises.

In the same interview with CNBS, Chanos cautioned retail investors who have previously scored big by short squeezing Wall Street investors. "The problem with meme-stock trading is that if it turns out you're wrong or the crowd moves onto something else, your downside can be dramatic," he said.

Chanos added that enthusiastic sentiments among Reddit groups like WallStreetBets could lead to poor timing when buying into the latest hot stock.

"That's why I think you see some of this sentiment from the apes [saying] 'the game is rigged against me.' Well, yeah, the game would appear to be rigged against you if you keep coming in and buying things at ten times what they're worth!" he said.

While some institutional and prominent investors have lauded retail investors’ boldness, Chanos hasn't minced words when it comes to the day-trader community. Last week, he tweeted that the new generation of investors are "entitled" and cry when they don't get their way and “blame ‘them.’”

Chanos has an estimated net worth of about $2 billion. He founded Kynikos Associates in 1985 with $16 million in initial capital. Self-described as specializing in short selling, one of his most infamous shorts came in the form of Enron. Chanos was a short seller of Enron throughout 2001 and even increased his short positions as more information surfaced. He gained credibility as a short seller by predicted the fall of Enron before it filed for bankruptcy.

The Enron bet paid off enormously for Chanos and Kynikos, but he has missed in the past. He's a long-time skeptic of the future of the Chinese economy and has bet against the Chinese real estate market. When the Chinese real estate crash never materialized in 2010, Chanos was forced to pull back his short positions in China. In a December 2017 interview, he said, "in the past few years, we're actually now [have] reduced our China short and our global fund to the lowest it's been.”