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Jim Chanos' Favorite Shorts

Hedge-fund heavyweight Jim Chanos, head of $6.7 billion Kynikos Associates, the world's largest short-selling fund, gave his current list of favorite shorts to investors at the seventh annual Value Investing Congress in New York.

Chanos's top shorts:

Exxon Mobil

(AP Photo/Donna McWilliam)
Donna Mcwilliam
(AP Photo/Donna McWilliam)

Chanos calls it a "slow value leak in an era of rising production costs."

Exxon has "very quickly gone from net cash to net debt," says Chanos.

He predicts industry production costs will rise from $5 to $15 per barrel on average, and more for the national oil companies.

Gamestop

A popular stock with value investors, Gamestop is a good short, says Chanos. He says the industry business model is being destroyed by digital distribution, as the cost of transmitting and storing information drops to zero.

For-Profit Education Sector

The business model is under increasing pressure and is 90 percent subsidized by federal loans, says Chanos. He called it "a national shame" where degrees are not earned, but "sold and marketed."

Agricultural Bank of China

It's China's biggest lender. Chinese state banks' lending sprees are now three years strong and off-balance sheet lending by the banks is "only adding fuel to the fire," according to Chanos. "I can't overstate how leveraged Chinese banks are," he said.

Chanos shared his general rule that if he couldn't understand what a company does after three readings of its 10K, he opens a file on it.

"But you guys should run the other way," he joked to the roomful of value investors.

Banks

  • An HSBC bank branch is shown in London, Feb. 9, 2015.

    HSBC was ordered to face three U.S. lawsuits accusing it of breaching its duties as a trustee overseeing residential mortgage-backed securities.

  • A pedestrian passes the entrance to Royal Bank of Scotland's headquarters in London.

    The British Chancellor is expected to lay out plans for privatizing Royal Bank of Scotland next week, people familiar with the situation told the FT.

  • Stifel

    Stifel Financial is in advanced negotiations to acquire Barclays' U.S wealth management unit, according to three people familiar with the situation.