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Jim Chanos Side-Swipes Alibaba and Yahoo!, Too

Time will tell if his short position has a lasting effect.
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Short-seller Jim Chanos took a bite out of Alibaba's (BABA) stock price at mid-day Friday, and by extension, out of the stock price of Yahoo! (YHOO), too.

At one point in the day, Alibaba was down 5%. It recovered in the afternoon to finish down only 2%, but the damage was real.

This isn't the first time that someone has made allegations against Alibaba. Back in early September, when the stock was in the low $60s, Barron's came out with a cover story essentially arguing that the stock could go to the low $30s. Instead, the stock has rallied sharply to the mid-$80s until today's news.

As part of that Barron's article, there were allegations that there was nefarious actions going on at Alibaba, which eventually would lead to a drop in the stock. They quoted Anne Stevenson-Yang -- an American who has lived in China for decades -- sharing a skeptical point of view.

It's probably fair to say that Chanos shares this skeptical view as well. It is interesting, however, that according to the reports that relayed the news of Chanos' short position, Chanos, head of Kynikos Associates, also is long JD.com (JD). JD is a smaller but fierce competitor of Alibaba's.

Chanos has had many bold calls over the years from the short side. Some have worked out, such as his longtime short call on Caterpillar (CAT). Some haven't hit the mark. Chanos has been a longtime bear on China since 2009. That view was dead wrong for a good five years.

In shorting, as in life, timing is everything.

But now Yahoo! is also caught in this down draft because of the 384 million shares of Alibaba it still owns and that provide the vast majority of Yahoo's market capitalization.

Time will tell if this short position by Chanos is something that gets forgotten by Monday, or whether it persists longer. Alibaba likely will report next week another record Nov. 11 shopping holiday in China, and we won't get another earnings report from it for three months or so. Traditionally, the stock has rallied well through the end of the calendar year.

At the time of publication Jackson was long YHOO but positions are subject to change