Here’s Why Jim Chanos Beat Up Data Storage Stocks
Seagate Technology (NASDAQ:STX) is apparently the hot stock to short right now. Shares were off as much as 4.8 percent in afternoon trading on Thursday, retreating from a fresh 52-week high set just a few days ago. The stock is up more than 38 percent year over year, 32 percent year to date, and 14 percent in the past month.
Shares leveled out around $40.30 following comments by infamous short seller Jim Chanos made at this year’s Sohn Investment Conference. Chanos reportedly said that the company and the industry in which it operates — hard disk manufacturing / data-storage devices — is in trouble. According to the president and founder of Kynikos Associates, the decline in demand for personal computers will outweigh an increase in demand for cloud-based storage services.
But Chanos isn’t the only person bearish on the stock or the industry. Analysts maintain a mean Hold recommendation on the stock at an average price target of $38.72, about 4 percent below its trading price on Thursday afternoon. By all accounts the stock was due for some profit-taking in light of its 14.5 percent run in May alone. As of April 15, before Chanos had a chance to weigh in, 8.4 percent of the stock’s float was already short.