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Shortseller Jim Chanos has a stellar reputation. He picks shorts from the industries that are going through innovation and creating a lot of technological obsolescence. Several years ago he handsomely profited from the decline of Kodak (EK) and Blockbuster. Three years ago, in an interview he gave to Bloomberg’s Katherine Burton, he said the following about Netflix (NASDAQ:NFLX):

Look at Netflix. Consider the concept of having little old ladies in warehouses stuffing envelopes with DVDs. That might be a business for the next two or three years, but then it won’t work. Why anyone would pay twenty-seven times earnings for that is beyond me.

It’s been three years since that interview. We wonder whether Jim Chanos is now short Netflix. Recently, Whitney Tilson publicly questioned Netflix’s valuation and announced that he has been short Netflix. Earlier this week, the New York Times reported that Time Warner (NYSE:TWX) considered Netflix a fading star, supporting Whitney Tilson’s pessimistic views.

This Friday Netflix will replace the New York Times (NYSE:NYT) on the S&P 500 index. New York Times shares will take a hit and Netflix shares will get a bump. Short sellers don’t know how long this torture will go on, or whether it will even end one day. Netflix is a survivor. While they were being belittled in the media world, the company managed to beat giants like Wal-Mart (NYSE:WMT). That feat isn’t something to ignore.

Source: Is Jim Chanos Short Netflix?