Bloomberg News

Chanos Says He’s Shorting Vale, Other Companies With China Ties

October 11, 2011

(Updates with comment in third paragraph.)

Oct. 11 (Bloomberg) -- Jim Chanos, founder of New York- based hedge fund Kynikos Associates, said he’s betting against Vale SA and other commodity-related companies with ties to China.

Vale, the world’s biggest iron ore producer and a major China exporter, is building “a fleet that is larger than the U.S. Navy,” Chanos said today at the GAIM/GMA conference in New York. Rio de Janeiro-based Vale shipped about 41 percent of its total iron ore and pellet sales to China in the first quarter.

“Vale is one of the more aggressive miners that has capital expenditure closely tied to China,” Chanos said in an interview.

Chanos said he’s also betting against cement producers, without naming them, and reiterated that he’s shorting Chinese banks and property developers.

In short sales, investors sell shares they don’t own, hoping the price will fall. If it does, the investors buy shares at the cheaper price, return them to their owners and pocket the difference.

--Editors: Steven Crabill, Larry Edelman

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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