Compound248 is back to host another episode of Business Breakdowns. His most recent podcasts have focused on digital infrastructure and today we continue with that theme, but with a twist. Our guest is Wall Street Legend Jim Chanos, famed for bringing a skeptical eye to a credulous world. Together, we walked through his short thesis on the US Data Center REITs, his bear case for commercial real estate, and some broader wisdom on how management can thoughtfully respond to short sellers. Let's get started.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Show Notes
(00:03:30) - (First question) - His counter-narrative thesis of shorting traditional data centers
(00:09:34) - How data center hyperscalers have been shifting the industry since 2016
(00:12:14) - The size, margins, and depreciation profile of the data center industry
(00:16:14) - The cash burn problem with digital REITs
(00:18:30) - How he thinks about interest rates, liquidity, and leverage in the space
(00:20:25) - More on why the value of these data centers is so elusive
(00:21:57) - The extent to which macro tech slowdowns intersect with his thesis
(00:23:13) - What investors see in these businesses that he discounts
(00:26:59) - Risks for the short and the bull case for data centers
(00:29:04) - Big concerns about the broader commercial real estate market
(00:36:34) - The best way for operators to handle a short thesis about their company
(00:39:49) - Critical mistakes he recommends managers avoid