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Caterpillar Inc. Message Board

  • daniel.feldman18 daniel.feldman18 Jan 25, 2013 5:09 PM Flag

    Book value of 27. For every $1 billion cash, owe $10 billion

    How are people blatantly saying this thing will go higher? Really...

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    • Do you have a clue what they use that debt for? It's been discussed on this board forever. One of Cat's three principle business is their finance arm, Cat Financial. Cat Financial borrows at 1-2% due to Cat's pristine AA credit rating and lends it to equipment buyers at market rates of 5-6% to finance their purchases. Cat Financial has been in business for nearly three decades and has never had a single year that they were not profitable, not even during the '08-'09 financial crisis that nearly bankrupted GE Capital. This is a cash printing machine. They only finance Cat equipment and they happen to know something about that market. If they do need to repossess a machine they resell it through their massive dealer network usually at a net gain. Lending standards are very high and have a historic low and consistent default rate. So before you read a one page financial review and jump to conclusions you really need to research the company. GL.

      Sentiment: Hold

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