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Short-seller Jim Chanos warns of 2021-style market mania — and says Elon Musk should get his mammoth pay package

Jim Chanos and Elon Musk
Jim Chanos and Elon Musk.Bill Pugliano/Getty Images; Reuters
  • Jim Chanos warned market speculation is approaching the absurd excesses of 2021.

  • The short seller flagged the resurgence of meme stocks like GameStop and SPACs as dangerous trends.

  • The longtime Tesla bear said the company should honor Elon Musk's mammoth compensation deal.

Jim Chanos clanged the alarm on market mania — and called for Elon Musk to receive his contested mammoth pay package.

The famed short-seller and Tesla bear told Bloomberg on Wednesday that 2021 was the "most speculative market" he'd seen in four decades of investing — and "we're getting back to that."

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"Not quite there, but it's close," Chanos continued. He pointed to the resurgence of meme stocks such as GameStop, special-purpose acquisition vehicles (SPACs) and the "absolutely insane valuations" of some restaurant chains.

The Chanos & Co boss is best known for rooting out fraud at companies including Enron and Wirecard, then betting against them. But he's since converted his hedge fund into a family office after several years of underperformance.

The Wall Street veteran warned retail investors against blindly following the crowd and buying the latest hot asset with no fundamentals to support its sky-high valuation. He emphasized that kind of FOMO-style trading was a "disaster" for them in 2021.

While Chanos has repeatedly bet against Tesla, he said the EV maker should honor Musk's compensation deal from 2018 as the CEO hit all his performance targets.

Several Tesla investors have blasted the payout as excessive and sued to stop it, and the result of a shareholder vote on the package was due Thursday.

"Even though I'm a bear on Tesla, I think a deal's a deal even if it's a bad deal, and they agreed to it," Chanos said. He added that while he's "not a big fan of Elon," that doesn't change the fact that Musk achieved the goals he was set.

However, Chanos did underscore that the deal was "very expensive" for shareholders and exceeded all the retained earnings Tesla has ever generated. He also questioned what Musk could demand next if he does get his way.

Read the original article on Business Insider