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Chanos: Why I’m shorting Hewlett-Packard

Talking Numbers

Famed short-seller Jim Chanos, manager of a $6 billion fund, continues to short Hewlett-Packard. Is he making the right bet?

Jim Chanos thinks Hewlett-Packard investors are kidding themselves. That’s why he’s shorting the tech giant.

Appearing on CNBC’s Squawk Box today from the Delivering Alpha conference, the $6 billion fund manager known for shorting Enron, once more gave his reason for shorting Hewlett-Packard:

“The stock has had a huge run, as a lot of value stocks have had this year, on the perception that it’s a turnaround. And we’re just not convinced that’s the case. No company just goes straight down the line and on the other hand, they have some real issues. Their revenues are declining at about 10% annually, and it’s across the board—it’s not just PCs and printers.”

This time last year, Chanos was short Hewlett-Packard, a successful trade by November 2012, when the company took an $8.8 billion write-down on its Autonomy acquisition. From July 2012 to that point, the company lost more than a third of its value. Since November 2012, though, shares have doubled and since last year, they are up about 40%.

Chanos is considered one of the smartest guys in the business but is his bet against the long-term health of Hewlett-Packard right?

We ask Talking Numbers contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, and CNBC contributor Steve Cortes, Founder of Veracruz TJM, to look at the charts and fundamentals on the Hewlett-Packard.

To see Ross and Cortes analyze Hewlett-Packard, watch the video above.

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