Short-seller Jim Chanos doesn’t believe Valeant is headed for a turnaround and he also believes a few Elon Musk companies are in for trouble.
The legendary short seller said on Wednesday his firm is still shorting Valeant Pharmaceuticals along with Tesla and SolarCity.
“We’re still short Valeant,” Chanos said in an interview with CNBC at the Sohn Conference.
The pharmaceutical company has been hit particularly hard with Securities and Exchange Commission investigations, Senate investigations, and a nearly 80% decline in its market cap over the last 12 months.
Chanos said “everybody” was using metrics that were “just as bad as Valeant’s accounting … I think that a lot of people are operating in this stock on the basis of false presumptions.”
“The whole idea was to buy things and then hike prices dramatically. The payers have woken up — that is the difference here. Valeant was genius at gaming the system; that game is over … This was financial engineering, this was not pharmaceutical development.”
Valeant shareholder and board member Bill Ackman has admitted that the company erred in purchasing drug companies and then raising their drug prices by 500% or more.