Jim Chanos just delivered a presentation slamming a $70 billion energy deal people have been swooning over
Jim Chanos just delivered a presentation slamming a $70 billion energy deal people have been swooning over
By Linette Lopez: 7 May 2015
Last month, when the news broke that Royal Dutch Shell was in talks to buy British energy company BG Group, the market gave it the normal golf clap that it gives to eye-popping mergers of massive companies.
Short seller Jim Chanos, however, is hardly impressed. At a massive hedge fund conference, SALT Las Vegas, on Thursday, he gave a presentation slamming the deal and characterizing it as an opportunity to go short.
First off, he said the merger was “out of the blue.”
BG, he said, is plagued with the ills most of its industry faces, high replacement costs and high leverage to cover dividends and buybacks. He believes the company’s capital doesn’t cover spending even before dividends.
The TRUTH will set you FREE.
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