Saturday, June 02, 2007

Moody: James Chanos Betting Against Warren Buffett

James Chanos, president of Kynikos Associates Ltd., is bearish on Moody's Corp., the bond rating company whose biggest shareholder is Warren Buffett.

Kynikos sold Moody's stock short, betting it will fall, Chanos said today. He said Moody's may face lawsuits for keeping its ratings of loans to the riskiest home borrowers too high.

``That's a ticking time-bomb,'' Chanos, who oversees $4 billion at Kynikos, said in an interview in New York.

Buffett's Berkshire Hathaway Inc. owns 48 million Moody's shares, valued at $3.39 billion, giving it a more than 17 percent stake. Berkshire spent $499 million to buy those shares, according to the company's annual reports. Given the potential problems ahead for Moody's, maintaining that stake may be ill- advised, according to Chanos.

``Warren Buffett makes mistakes, too,'' Chanos said.

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Source: Lincoln Minor

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