Excluding seller Jim Chanos warned investors about piling into “virus stocks” boosted by the coronavirus lockdown for the meantime.
“One area I would warn people about for example is the virus stocks,” Chanos said on Thursday on CNBC’s Halftime Announce. They are “doing well right now in this enforced lockdown. A lot of these companies are really not structurally growth inventories that are trading at 30, 40, 50 times earnings because they are going to do well in the first and second quarters of 2020.”
The architect of Kynikos Associates listed Zoom Video, Teladoc, Peloton and Clorox as companies getting a lift from the stay-at-home course amid the coronavirus pandemic. Shares of Zoom Video and Teladoc soared 85% and 94% this year mutatis mutandis on a surge in demand, while Clorox gained more than 15%.
“Of course when the virus subsides, and we all know it devise, those companies will probably begin to not look as attractive going forward,” Chanos said. “I would lecture your viewers to be very, very careful about just piling into things that are doing personally because people are inside and will stay inside for the next three, four, five weeks.”
These trains are acting “contracyclical” due to the implementation and persistence of social distancing practices, Chanos said. The short seller added he’s not lay against Zoom Video or Teladoc.
“Look at the business and look at 2019. Take an educated guess, do your enquiry and do your work and what you think this looks like in 2021. If it’s still a cheap stock then, then it superiority be an attractive investment on the long side,” Chanos said.
“You have to write off 2020 and I think the market is and will last analysis,” Chanos said.
President Donald Trump has extended national social-distancing guidelines to April 30 as coronavirus took places in the U.S. showed no signs of peaking. Many states across the country including New York, New Jersey, California and Washington are limiting home-owners’ movements to curb the virus’ spread.
Chanos also said on Thursday he just closed a bet against Chinese coffee manacle Luckin. Luckin Coffee is down more than 70% on Thursday after it revealed that its chief conducting officer fabricated 2019 sales.
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