#Jim Chanos shrinks Tesla short, praises Elon Musk

Five years into his crusade against Tesla’s stock price, Jim Chanos is licking his wounds — and finally tipping his hat to Elon Musk.

The 63-year-old short seller admitted on Thursday he has slashed the size of his bet against the electric car company near the end of a year in which its stock has surged nearly 600 percent, making it the most valuable automaker in the world with a market capitalization of $562 billion.

Data from August compiled by S3 Partners showed that Tesla short sellers lost more than $25 billion combined betting against Musk and his cars in 2020. Tesla’s stock is up almost 20 percent since then.

“It’s been painful, clearly,” an understated Chanos told Bloomberg on Thursday.

News of Chanos’ long-awaited capitulation sent tongues wagging across Wall Street.

“It’s about time!” exclaimed a rival hedge fund manager. “Shorting something that’s up big will hurt you big. Shorting something up 600 percent will f–king kill you.”

Chanos, president and founder of New York hedge fund Kynikos Associates, is Musk’s loudest and longest-tenured critic, having called Tesla “a walking insolvency” as far back as 2016. He has been a steady gadfly for Musk, throwing barbs in his investor letters, media appearances and thinly-veiled Twitter persona @WallStCynic.

Using that account, Chanos responded to a Musk tweet updating progress on Tesla’s notoriously-delayed autonomous driving program by replying sarcastically, “As your attorney, I advise you to stop speaking immediately.”

Musk, meanwhile, has consistently taunted Tesla short sellers, telling his own young children during a January 2019 Rolling Stone interview that investors taking a short position on Tesla are “jerks who want us to die.”

Another major hedgie who has gotten hurt shorting Tesla is David Einhorn. Having predicted Musk’s downfall for years, he instead saw his Greenlight fund lose 34 percent in 2018 with Tesla causing much of the pain. Musk famously sent Einhorn a pair of shorts in the mail during one of their online arguments in August of that year.

Nevertheless, it’s Chanos who has been Musk’s arch-nemesis when it comes to short sellers. In November 2019, Musk tweeted, “So many reporters gave Chanos airtime when he called Tesla a worthless fraud. Now that he has been proven wrong, silence…”

While Chanos remains short Tesla stock, according to his interview with Bloomberg the position is well below 5 percent of his portfolio at Kynikos. And while he tweeted mockingly about the car company’s still-delayed “full service driving” program as recently as Wednesday, he showed he is willing to back off when push comes to shove.

Chanos reiterated his belief on Thursday that Tesla is more of a cult of personality built around Musk than a long-term profitable manufacturer of cars. But when asked by Bloomberg what he would say to Musk if the two ever met in person, Chanos replied dryly, “I’d say, ‘Job well done so far.’”

Tesla shares on Thursday rose 4.3 percent to close at $593.38.