Share price of Alibaba Group Holdings (NYSE: BABA) dropped more than 4% last Friday afternoon right after Jim Chanos suggested shorting Alibaba at a conference. Jim Chanos is a hedge fund manager famous for his early awareness of Enron’s Problems.
According to an unnamed source, Chanos recommended shorting Alibaba due to “accounting concerns,” at a conference in Miami hosted by Morgan Stanley on Friday. The sources also said that Chanos “pitched” the short-position as an idea, not necessarily that he’s acting on shorting the stock himself.
In September, Barron’s noted that Alibaba’s accounting firm PriceWaterhouseCoopers (PWC), Hong Kong is not audited by US regulators since the Chinese government bars such oversight on Chinese companies that are listed on US exchanges.
Chanos is also known for his negative outlook on Chinese stocks and the overall economy. In Late August, He said that the China’s macro situation is "worse than you think." In fact, he suggested that "whatever you might think, it's worse." What’s more, during an interview with New York Times 2010, Chanos predicts the Chinese economy would crash, resembling “Dubai times 1,000 — or worse”. He reasoned that historically analogous evidence points especially to a property bubble, particularly in commercial real estate.
"People are beginning to realize the Chinese government is not omnipotent and omniscient," Chanos also told CNBC. "In fact, like many of us, sometimes they don't have a clue."
At the conference, Jim Chanos also suggested to long JD.Com (NYSE:JD) and short Tesla Motors, Inc. (NYSE:TSLA) and SolarCity Corporation (NYSE:SCTY).