THERE they were last week, five noted hedge-fund traders getting sworn in and giving testimony before Congress.
Phil Falcone, Ken Griffin, John Paulson, James Simons and George Soros, no strangers to earning $1 billion a year by successfully shorting companies their research showed were over-leveraged or otherwise poised to fall, defended their shorting of stocks.
Missing from this lineup was Jim Chanos, whose $7 billion Kynikos Associates is enjoying a better 2008 than any of the less-fab five.
Chanos, readers of The Post learned last week, has posted a 53.2 percent increase through Oct. 31 for his $5 billion short-only Ursus fund.
The 50-year-old Chanos said last week that he posted the gains by shorting “all of the satellite and most of the cable companies” but would say no more.
So On the Money did a little digging and came up with the exact stocks Chanos has ridden to great success this year.
Time Warner Cable, Viacom, Cablevision, Carmike Cinemas and Dish Network – stocks that have lost at least half their value since he set up the trade – have been money in the bank for Chanos, according to investors in the fund.
Ironically, recent market volatility, a friend of a short seller, wasn’t the key to Chanos taking profit in this year’s trades – instead it was strategic planning set up years ago. He first touted his visionary investment strategy, which he calls “The Twilight of the Gatekeepers,” at an investor presentation he gave in New York in late 2005. He said cable and satellite companies would lose their lock on revenue from programmers as the Internet would open a gateway for networks to send their shows straight to peoples’ computers and bypass the fees paid to the cable guys.
Chanos’ bearish trade on large chain movie theaters proved profitable because he predicted we would see demand fall as people moved to fancy home theaters and faster distribution of films through alternative means, like On-Demand movies. One such bet against Carmike Cinemas earned him a whopping 90 per cent return when the stock slid below $3 in October.
This week Chanos’ short against the satellites began to play out when Dish Network posted lag ging earnings, losing 30 per cent of its value in two days. Teri Buhl
Big bang
Are Americans getting their “Dirty Harry” on?
FBI background checks of gun-license applications surged 15 percent in October, after rising just 4 per cent and 3 percent in August and September, respectively. Some social commentators have dubbed the sudden rise in gun applications the “Obama factor,” saying peo ple raced to apply for gun permits once it became clear Barack Obama was going to win the presidential elec tion. The theory being that an Obama administration would push through tougher gun laws.
Eric Wold, an analyst at San Francisco-based Mer riman Curhan Ford, saw the data on FBI background checks, reviewed inventory levels for gun-maker Smith & Wesson, and immediately upped his rating on the stock to a “buy.”
Wold believes the increase in background checks will translate into increased sales – and it won’t simply be a shifting of purchases from 2009 into 2008.
“Looking at the sales surge in 1993/1994 before the assault-rifle ban, shows that sales trends in the years afterward reverted back to normalized upward trends,” Wold wrote in a report last week. “We would not expect trends in the future years to be any different now.”
On the day Wold’s report came out, S&W shares gained 25 percent – while the S&P 500 dropped 1.3 percent. For the week, S&W was up 9 percent while the S&P was off 6.2 percent.
Richard Wilner
Tixfix
Music fans shouldn’t hold their breath that concert ticket prices will quickly start falling in the wake of Ticketmaster’s experiment with no convenience charges on seats it sells to the current Eagles tour.
Industry watchers say that with the concert business banking big bucks from such add-on costs, weaning ticketing companies, promoters and venues off those fees will be an uphill fight.
“Ticketmaster says this is a revenue neutral move, which suggests they are going to roll the fees into the cost of the tickets or find other ways to make up for it,” said Ray Waddell, executive director of touring for Billboard.
The legacy of the deal is likely to be as much about the way the concert industry presents its prices, as it is about the actual cost of seats.
The winners in the short term will be Eagles fans using print-at-home ticketing options who will be able to get tickets through Ticketmaster for a cheaper price than they could earlier this year.
New Ticketmaster boss Irving Azoff – looking for ways to repair the company’s image – also has managed to get ahead of the curve on an issue rival Live Nation is likely to compete on when it launches its new ticketing operation in 2009.
Brian Garrity
business@nypost.com