In addition to sharing my bearish view of China, I just learned today that Chanos might share my bearishness on NFLX.

See here: http://seekingalpha.co...

"He mentioned that it still amazed him people still rented DVD's by mail which could be interpreted as a short position in Netflix (NFLX)."

No offense to any fuddy-duddys who may still use snail mail, but it is rather an absurd business model, isn't it? I'd guess that most people rent movies for new releases, which Redbox handles just fine -hence the drop in NFLX when Coinstar announced its results recently.

Beyond that, we can now download movies via the internet or cable. That is really going to be the new distribution model, and Netflix knows it. They are preparing to be exclusively on-line by 2014 (they will probably be forced to much sooner). The problem is, so are big competitors like Wal-Mart, Hulu, etc., and expect the available titles in On Demand to surge soon too. I think NFLX bulls are really pricing in too much growth here given the technological changes and emerging competition.

I've shorted NFLX twice so far, the first time for a small loss and the second for a small gain, so I'm about even. The bulls are desperate and they've been piling into the dwindling supply of "strong" stocks, causing these overpriced growth stocks to resist the downdrafts we've been having. Since I don't have the funding of a Chanos to chase these butterlies down, right now I'm pretty much sticking with Shortscreen stocks as a kind of short seller's 'margin of safety', but I wouldn't be surprised if NFLX has a very steep fall from grace in the near future.
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My musings on the NFLX mention aside, the entirety of the seeking alpha article above is a good read. It has conveniently embedded notes on a speech of Chanos entitled "The Power of Negative Thinking" that outlines his short-selling philosophy. Interesting that he thinks good short sellers are born, not made.

This article: http://www.marketfolly...
was also linked to above which probably explains my success with my previously mentioned STRA short. Conatus was dumping it:

"Possibly the most notable information in their letter is the fact that Conatus has sold completely out of Apollo Group (APOL) and Strayer Education (STRA), two names we've seen many 'Tiger Cub' hedge funds fond of. This becomes all the more interesting given that Stemerman's former fund Lone Pine recently detailed they were bullish on education plays. Stemerman notes that Conatus exited the positions due to heightened government scrutiny and deterioration in their business prospects."

Indeed, not only is the government acutely aware that these for profit degree-mills are stealing/wasting money, but Strayer is particularly precarious in that it has multiple physical locations, so its overhead is far higher than other publicly-traded "universities". In spite of that feature, it boasted the highest valuation of all of its peers, which made it a particularly attractive short candidate.

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