Jim Chanos of Kynikos Associates is shorting Hewlett-Packard (NYSE:HPQ). He claims it is a value-trap. The big complaint he has is much of the M&A activity really disguises the lack of R&D and therefore the numbers are skewed. A common enough problem as companies who have lost their way try to buy their way out.
Usually most short sellers just keep their thoughts to themselves relying on stealth to mask their trades. Jim Chanos has gone public. Now Meg Whitman will need to respond in some fashion. Officially Meg Whitman will need to walk a tight path on Reg FD. Officially Meg Whitman will need to clear the issue as a factor affecting Hewlett-Packard. She just has to.
Watch investor and corporate communications for tells from HP.
George Gutowski writes from a caveat emptor perspective.
- Jim Chanos’ Full Presentation on Value Traps (valuewalk.com)
- Jim Chanos Discusses Five Different Value Traps (valuewalk.com)
- Hewlett-Packard’s ‘$65 Billion Write Off’ (seekingalpha.com)
- Famed Short-Seller Jim Chanos on Stock Investment Traps (economicpolicyjournal.com)