According to CNBC: while many investors were caught off-guard Tuesday morning
by the giant, allegedly fraud-ridden write-down by Hewlett-Packard of the value
of Autonomy, hedge fund manager Jim Chanos wasn’t one of them.
Chanos, the founder of Kynikos (greek for “cynic”)
Associates said HP was one of the companies he regarded as “the ultimate value
trap” in a presentation delivered in July at the Delivering Alpha Conference
sponsored by CNBC and Institutional Investor.
Chanos related the story of why he began to consider
shorting HP. He had been short Automony,
the British cloud-based business software and data company. When HP bought the
company at a hefty premium, this raised a red flag for Chanos. What’s more,
Chanos pointed out, several top Autonomy execs left the company shortly after
the acquisition. Although some investors
believed that HP was cheap enough to be considered a “value stock” because its
price-to-earnings ratio was relatively low compared to competitors, Chanos said
that HP appeared to be masking the true costs of its basic R&D costs with
spending through acquisitions….
Read all about it at http://www.cnbc.com/id/49900831
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