Bear Party: Short Seller Chanos Records “Best Month” Ever After Grubhub & PG&E Implode

Famous short-seller Jim Chanos’s Kynikos Capital Partners recorded the most profitable month ever in October, following large bearish bets against Grubhub and Pacific Gas and Electric (PG&E). 

The bears are back, well maybe just Chanos at the moment, as he posted returns of 5.3% in October and year-to-date gains of 20.4%, according to investors who spoke with the Financial Times (FT).

Chanos told FT that “October has been one of our best months, both absolutely and relatively, in a long time.” 

Grubhub shares plunged 43% last week following a pessimistic outlook by the company, who blamed most of its woes on competition, such as DoorDash and Uber Eats.

Chanos was recently on CNBC, making his bearish case against the food delivery business. 

PG&E shares during the month were nearly halved. 

Several of California’s most recent wildfires were blamed on the electric company after a windstorm blew down powerlines and sparked fires. To prevent further fires, PG&E conducted rolling blackouts across the Bay Area, plunging millions of people into the dark. 

Scary! #CaliforniaFires pic.twitter.com/TUAnaFkbXi

— Sam Wise 🏳️‍🌈 (@SamWiseSW) October 28, 2019

Chanos has been quoted in the past as saying PG&E’s equity will go to zero. “We also question whether PG&E will be able to exit bankruptcy-court protection in the foreseeable future,” he told investors. 

FT notes that Chanos rolled his shorts against both companies into November.

It’s likely that Chanos has already planned, or is planning, the next big short as an earnings recession is ahead, the economy is rapidly slowing, and what’s driving stock prices higher at the moment is President Trump’s tweeting — does this mean an epic blow-off top is underway?

In that last 25 years, Chanos, through Kynikos Capital Partners, returned investors a net annualized gain of 26.9% through September, and this is more than double the returns of the S&P500. He does admit to FT that the fund has underperformed in recent years, saying, “we have a long way to go to erase some of the pain from the past few years.”