Chanos up as many shorts stumble

In November, a small band of battered short sellers couldn't have been more excited about the opportunity to make money from what they saw as wildly overvalued stocks. One, John Fichthorn of Dialectic Capital Management, said it was the "best opportunity I will see in my life. "

Sure enough, the S&P 500 Index fell 3.56 percent in January, providing the hedge funds a chance at redemption from years of bull market losses, or at least a start. Did the killing they promised begin?

Not really.

A handful of short-biased funds performed decently, including the strategy's most prominent firm, Jim Chanos' Kynikos Associates, and smaller Gracian Capital. But others, such as Gotham Asset Management and Kingsford Capital Management, lost money despite the market correction.

In all, the average short-biased fund gained just 0.88 percent in January, according to alternative fund tracker eVestment, barely starting to make up for falling 19.76 percent last year.

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