The most common and most likely answer to this crossword clue is the 11 letter word TELEPATHIST
I've seen this crossword clue in The Daily Telegraph
T
E
L
E
P
A
T
H
I
S
T
Buddy explains!
The straight part
We know that "he knows what you are thinking" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case he knows what you are thinking = telepathist.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.