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Posts on ‘May 16th, 2016’

Why Jim Chanos is Shorting the Oil Majors

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Screen Shot 2016-05-06 at 15.37.54By RAKESH UPADHYAY: May 16, 2016

Famous short seller Jim Chanos is shorting oil majors Royal Dutch Shell Plc and Chevron Corp, according to Bloomberg. He is operating under the belief that the negative cash flows and dividend payments using borrowed money by both the companies is an unsustainable move in the long-term.

He also believes that a preference for electric cars and trucks can seriously dent the demand for crude oil in the near future.

Shell’s current cost of supplies earnings tanked in the latest quarter from $4.8 billion to $0.8 billion. The worrying point was the $4.6 billion in cash flow against an expenditure of $6.1 billion in Capex. $3.7 billion of dividends were distributed to the shareholders, of which the company managed to settle $1.5 billion in payouts by issuing 65.7 million A shares under the scrip dividend program. read more

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