Tuesday, 30 September 2014
Last updated 9 min ago
Jun 17 2008 | 2:00am ET
Shorting is a lot harder than it looks and there is no middle ground, according to the head of the world’s largest short-selling hedge fund.
James Chanos, founder of Kynikos Associates, speaking to a gathering of hedge fund managers yesterday at a Securities Industry and Financial Markets Association conference, said, “we’re either the omnipotent evil genius manipulating everything, or we’re the village idiots simply handing out dollar bills to everybody on the path to prosperity.”
Neither assumption is entirely accurate, he added, noting that most large firms engaged in short selling actually oppose the now-defunct Uptick Rule, which requires that every short sale be entered at a price higher than the price of the previous trade to prevent short-sellers from adding to the downward momentum when the price of a security is already experiencing sharp declines. The Securities and Exchange Commission eliminated the rule on last year.
According to Chanos, the financial press and bloggers are contributing to heightened market anxiety by spreading rumors on specific firms.
“We live in a time in which the financial press has a compressed time frame and everyone is looking for a scoop,” he said.
In light of the Bear Stearns meltdown and bailout, Chanos said recent rumors spread by a television network about a certain brokerage firm’s stock price taking a nose-dive was just an attempt by the network to make the news as opposed to reporting it.
“I run the world’s largest short-selling firm and we have a trading desk in New York second to none, and we hear everything. But we didn’t hear anything about that day’s rumor about the firm’s stock taking a nosedive. They’re taking obscure blogs where someone is saying something with no responsibility or evidence whatsoever and reporting it as news, which does nothing more than inflame other traders.”
Chanos is urging regulators to crack down and throw the book at traders trading on information they know to be false.
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…
Sep 30 2014 | 9:29am ET
The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…
High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...