Jim Chanos says he's short General Electric stock
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Famed short seller Jim Chanos said he's short General Electric (NYSE:GE) and believes the company's fair value is somewhere "way below" the current stock price.
"The risk reward we think is a handful of points on the upside and many many points on the downside," Chanos, the founder and managing partner of Kynikos Associates, said in an interview on CNBC.
The GE valuation "is pretty full to say the least," Chanos, who highlighted that GE shares had risen about 75% since the end of the third quarter, added. He also pointed out that GE earnings estimates continue to be reduced.
Chanos explained that he believes GE bulls are under-counting the company's liabilities, which he estimates are close to $39 billion, though Wall Street he said estimates are $0 to $14 billion.
Chanos said GE is trading on sum-of-the-parts basis as it prepares to split off into different pieces, including GE Aviation and GE Vernova. He said that Wall Street views GE's SOTP value at about $89 a share.
GE shares pared a bit of their gain amid the Chanos comments, though still ticked up 0.7% on Wednesday.
GE Healthcare (GEHC) began trading in January after it was spun off from GE. The completion of the separation of GEHC marks the first step in the historic breakup of GE.