Jim Chanos, head of the world's largest short-selling hedge fund, told CNBC on Friday he's been short major oil companies for a couple years because the North American shale explosion has been "uneconomic for drillers."
"The fracking and shale revolution was propelling us to be the largest oil producer in a way that I thought was uneconomic and still is uneconomic for the drillers. But it was going to be enough supply to really disrupt the markets," he said.
Big oil companies like Exxon Mobil and Royal Dutch Shell are finding their business models challenged, he added, "because the days of finding cheap oil is over."
The founder of Kynikos Associates, with $3 billion in assets under management, has been betting against the economic situation in China for some time now. "We came across China because of our work in the mining sector in 2009."
Chanos has also been short Caterpillar—saying the company is finding two out of its three business streams severely challenged: mining and now energy. Last year, he said mining was the sole troublemaker, but now with oil prices falling the heavy equipment marker is coming under even more pressure. He first disclosed his short position in Caterpillar at the CNBC and Institutional Investor Delivering Alpha conference in July 2013.
Last month, Chanos told CNBC that 2014 was a better year for short sellers than 2013. But he said Friday that calling Kynikos the biggest short seller is damning with faint praise. "It's sort of like being called the toughest guy in France. It's been tough for five years."
"We've been saying for a year now to clients," he added, "the risks are certainly rising and have been rising."