Jim Chanos: A Short Thesis on Data Centers - [Business Breakdowns, EP. 103]

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.  ----- Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes. Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here. Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss | @ReustleMatt | @domcooke 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