Thursday, 23 October 2014
Last updated 1 hour ago
Dec 6 2013 | 12:16pm ET
Legendary short seller Jim Chanos has Canada's CGI Group, the firm behind the glitch-plagued rollout of the Affordable Care Act Exchanges, squarely in his sights.
In a 10-page memo obtained by Reuters, the Kynikos Associates founder gave his reasons for counting the stock (parent company of CGI Federal, the main contractor behind the Healthcare.gov rollout) among his “largest short positions.” Among them, concern that the PR mess surrounding the rollout “could reduce the likelihood of future government contracts” for CGI and his belief that the company's “growing through acquisitions hides deteriorating fundamentals.”
Chanos also expressed concern about CGI's cashflows, new business bookings and “accounting conventions” that have improved the firm's earnings at least partly by recognizing revenues already counted by Logica, a company CGI acquired in 2012.
The Kynikos founder is also worried that U.S. federal government spending accounts for roughly 14% of CGIs total revenue and that spending may be curtailed by the coming round of budget sequester.
According to the data firm Markit, about 50.8 million shares of CGI's 277.47 million outstanding shares were being shorted as of Tuesday.
CGI Group’s U.S.-listed stock dropped as much as 5.9% after Newsweek first reported Chanos' short early Wednesday.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
Most traders agree that proper risk management is the key to successful trading. However, many traders depend on the deeply flawed measure of standard deviation as a benchmark of risk. Here we put it ...