Jim Chanos, founder of the Kynikos Associates hedgefund, stated that he is shorting Royal Dutch Shell (RDS-A), (RDS-B) and BG Group (BRGYY) stock, because of the disappointing outlook for LNG producers.
We are just waiting for disaster to strike, he mentioned during the SkyBridge Alternatives Conference in Las Vegas. He added that he is also betting against Chevron (CVX), next to Shell and BG Group. According to Chanos demand for LNG has been stagnant for the last few years and capacity is about to rise enormously.
Short on Shell
Shell took over its smaller competitor BG only in March for the sum of 70 billion dollars. In the oil and gas industry it is the biggest deal of the decade. Chanos, who predicted the fall of Enron in 2001, mentioned during the conference that he was short on big oil companies.
These companies are in trouble because they are active in tough and expensive places, Chanos said to Bloomberg on the matter. The big players have already gone down a lot so his hedgefund already closed out a lot of its shorts in the first quarter. Meanwhile some of these stocks have gone up a bit again so they are exploring additional short options.
Reactions Shell and BG
Kyniko, head quartered in New York, had about 2.5 billion dollars under management at the end of February, including leverage. Lachlan Johnston, a spokesman for the BG Group, did not want to comment on Chanos’ statement nor did Kurt Glaubitz, spokesman for Chevron.
Kelly op de Weegh from Shell, however, referred to the words of Ben van Beurde, Shell’s CEO: ‘LNG revenues have grown substantially over the last years at Shell. We have seen an increase of 40 percent since 2010’, Van Beurden said last month when he announced the deal. The BG portfolio will bring important new LNG opportunities for Shell, in his view.
