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Famous shortseller thinks Alibaba is shady

The China bear's victory lap: Jim Chanos

Famous investor Jim Chanos thinks Alibaba's accounting looks shady -- even by China's standards.

"The accounting at Alibaba is some of the most questionable I've ever seen" for a major company, Chanos said of the world's largest retailer.

Chanos' crusade against Alibaba could be self-motivated. After all, he has a lot to gain if Alibaba's stock tanks. That's because Chanos has a negative bet -- or is "short" -- Alibaba (BABA, Tech30) stock since last November.

But people don't just brush aside what Chanos says. He is the well-known billionaire short-seller who made his career by being early to see the problems that led to Enron's collapse in an accounting scandal early last decade.

Speaking this week at the SALT hedge fund conference in Las Vegas, Chanos expanded on his bearish view, complaining about a lack of transparency and Alibaba's "exploding" capital spending. Chanos said he challenges anyone to tell him if the business is truly profitable or not.

The fact that Alibaba is based in China only increases Chanos' skepticism.

"I default to my view on China: If there's something you don't see, 99% of the time it's not good news," he said.

In addition, Chanos believes Alibaba uses off-balance-sheet entities that make it difficult to know how much money the company actually makes. Chanos is concerned that Alibaba's delivery operations are part of a separate entity not...


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