Jim Chanos — who famously shorted Enron before the company collapsed — has a new “large”
short position in CGI Group, Newsweek’s L
ynnley Browning reports.
CGI Federal, a wholly owned subsidiary of CGI Group, is the company behind the high-profile bungling of Healthcare.gov. From Newsweek:
…A 10-page memo Chanos sent recently to clients and obtained by Newsweek outlines the reasons he believes CGI’s corporate performance — and stock price — warrant scrutiny. Among them are decreasing cash flow — a key metric of financial health — and falling bookings of new business, as well as various “accounting conventions” that have improved CGI’s earnings, in part through recognising revenue already counted by Logica plc, a big technology company CGI bought last year. Citing what he termed “the PR mess” surrounding its work on Healthcare.gov, Chanos added that the fallout could “reduce the likelihood of future government contracts” for CGI and even require the company “to give money back to the government.”
Shares of CGI are up 15% in the last month and 54% year-to-date.