At the Delivering Alpha Conference today, Kynikos Associates' Jim Chanos laid out the chase to short Caterpillar (CAT). Basically, he sees CAT as a loser in a commodities super cycle (on the heels of a Chinese construction boom) is coming to an end.
This notion isn't really new from Chanos, as he has repeatedly talked about his bearishness on China property/development.
Chanos says Caterpillar is a great company, but they're essentially levered to the wrong products at the wrong time (the worst part of a cycle). While it's cheap at 12-13x earnings, he points out that earnings aren't really expected to grow in the next few years (meaningfully above historical levels).
Embedded below is the video of Chanos' idea explained in full:
For more on this short seller, head to Jim Chanos' Sohn Conference presentation on shorting hard disk drive makers.
Wednesday, July 17, 2013
Jim Chanos Short Caterpillar (CAT): Delivering Alpha Conference
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