Wall Street is betting against

Giuseppe Macri Tech Editor
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One Obama campaign fundraiser is leading the Wall Street bet against the president’s lead contractor in light of the website’s disastrous debut.

James Chanos infamously made his fortune short-selling Enron stock at its peak — right before the energy firm’s value crashed amid scandal in 2004, taking the company with it.

Chanos — who convinced his considerable network of Wall Street associates to donate at least $200,000 to Obama’s campaign — just made a new bet against CGI Group, the parent company of CGI Federal, which was commissioned to build

Newsweek reports that Chanos’s $6 billion hedge fund company Kynikos Associates (which means cynic in Greek) has placed CGI on its “largest short positions” list, meaning Chanos is trading on the assumption that the $11 billion value in CGI shares are about to plummet.

Chanos wrote in a 10-page memo to clients that “the PR mess” created in the fallout of the website’s failed launch would “reduce the likelihood of future government contracts” for CGI.

The company has enjoyed rising investor interest and confidence over the last five years, in large part from scoring the lead contract for the website of the president’s signature legislation.

Now CGI may actually have to return some federal funds after congressional hearings revealed gross mishandlings throughout the project.

If it wasn’t true before, Chanos’s negative endorsement might make it so — Kynikos Associates is easily the largest hedge fund stock short seller on Wall Street, with a reputation for setting investor trends.

The Canada-based tech firm already had 11 percent, or about 29.9 million shares, shorted in the Toronto stock exchange as of Wednesday according to the Newsweek report.

CGI Federal is currently up 56 percent for the year, though its already fallen from its peak price of $41.47 per share to $34.66 after Wednesday trading.

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