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Caterpillar Inc. Message Board

  • justpayal justpayal Mar 4, 2009 9:13 AM Flag

    CAT - Short Squeeze

    I do not understand who would short 5% of this puppy !!!

    well you get squeexed now

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    • alphahunter Mar 4, 2009 12:42 PM Flag

      Back to basics then.

      PS: I'm logging off from this for now, I've got to catch up with some news.

    • 22 dollar price is sentiment, it was there because of fear not fundamentals, and I am not saying it won't get there again, but not because of any foreseen fundamentals.

    • In order for the stock to be at 22 value wise, annual sales would be 15 to 20 bil, with 600mil outstanding shares. And I like your post with Manitowoc but you are leaving out half of Cats revenue by only talking about machinery sales. There power generation, The largest natural gas engines in the world built in Germany and China, Cat Finance, and the largest parts sales distribution in the world along with their global re-man business. Manitowoc just isn't as diversified.

    • alphahunter Mar 4, 2009 12:16 PM Flag

      No, not market sentiment, it's too volatile and I don't day-trade.

      I think there will be more PWs to come driven by lower sales. Here is the helicopter view that I posted in Manitowoc:

      "Why drives the revenues of capital goods companies? It's not the required output from their clients, but the derivative of it (multiplicator effect)

      Say there are 100 diggers/crane/excavator in the world etc,.. to produce 100mt/year of say mining stuff [or '000 miles of roads, etc ]. The demand increases to 110m(+10%), you (caterpillar, terex, Manitowoc)... sell collectively 10 units. The demand increases to 126.5mt/year (+15%), which requires an additional 16.5 units, the collective turnover increases by 65%,...etc...

      Now the demands slows down to 130mt/year (+2.8%), that's an incremental positive output of 3.5mt/year, that can be covered with only 3.5 new units and the collective revenues of capital good stocks plunge by 78%.

      Of course, that a short summary (you have to factor in the renewal of installed base, say after 5 year so that 20% added to the turnover [+], the productivity output/unit increases over time [-], extension of usefull life of installed equipment when in cost cutting mood [-]...) but you've got the idea.

    • I do not know whether you are shorting at 22, or not but if you are you are not shorting on the fundamentals of the company, but maybe market sentiment which is ok but not the basics.

    • Agree

    • It basically levels the playing field that JDCC GMAC GECC and the Banks could play in but Cat couldn't...

    • I understand where you're coming from graf and I'm not saying it's a bad thing.

    • They've had trouble competing.. this will help considerably, it also helps with commercial asset backed securitizations, the shadow market that Cat Finance participates in....

    • alphahunter Mar 4, 2009 10:27 AM Flag

      Well I'm short, missed the TALF stuff and I'm hot happy bunny this morning.

      Need to go back to basics, i.e. how much of sales shrinkage is down to slack in global demand (derivative of the end market vs installed park, reuse of second-hand equipment,...) and how much is down to US customers not accessing the financing. From there, what sales can they achieve in 2010, what does it mean from a profit (if any) /cash-flow and dividend perspective.


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