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Caterpillar Inc. Message Board

  • elstockjock elstockjock Jan 21, 2013 9:56 PM Flag

    Why I'm shorting

    The Siwei deal came as part of Caterpillar's larger ambitions in China. In early 2012, it added Jon Huntsman, the former U.S. ambassador to China, to its board of directors.

    The company, which already has 23 manufacturing facilities in China and four more under construction, said the Siwei episode would not change its strategy in the country.
    Of course it won't change the strategy: in fact, CAT will welcome the acquisition of futher such EPS-charge off enabling microcaps. After all, all it takes for the company to pull a get out of jail card by missing EPS by half in any given quarter, is for it to blame lax accounting and someone else's fraud for the problem.

    Because who is to say what is really going on? Naturally, nobody will trust the Chinese side of the story now. As for CAT: well, let's say operating earnings were so horrible that not even all the GAAP accounting magic in the world could make the company beat earnings estimates. So what does the company do? It takes a "charge" which allows it to mask a whopping one-eighth of its entire full year EPS miss courtesy of a perfectly convenient scapegoat. As for what is really going on behind the scenes - it could be due to Chinese business imploding, or global economic conditions getting so bad the firm just can't find a way to offset the losses, or anything else. Alas, we will never know as the official spian has been released.

    But in the meantime, business in China continues as usual of course, now that CAT has reset losses with enough of a buffer to last it one more quarter. And if Chinese growth, and by growth we mean the construction of empty cities and hollow malls, does not pick up, well then - some other "manager" will be thrown under the bus for pushing a "distracted" board to purchase yet another Chinese microcap, whose books everyone is shocked, shocked, to learn were cooked end to end.

    We look forward to even more high flying companies whose stock price has been pulled artificially higher due to the relentless ramp in ES by prop desk of primary dealers, to come up with comparable excuses for why earnings will miss. Because if it is not some softward glitch's fault, it is some manager, or some auditor, or some accountant, or some M&A advisor, or some regulator.

    Whose fault it never, ever is, is the ever declining global cash flow in a world in which the stock market and the economy have now hopelessly and laughably disconnected.


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    • Hey El, where are all the sellers? I thought we were going down big this morning? Seems pretty muted to me. Down less than we were up Friday. I guess the market just can't fathom how devastating this new is. Fools.

      Sentiment: Hold

    • I can understand if you think its a mistake to be involved with China but even if your right it could take years to really turn into something obviously bad for share holders ?
      Why not just put your money into something else ?

      I'm telling you Cat knows how to solve problems and will work through the bugs until they get something exceptable !

    • We're screwed.

    • Thank goodness there are other folks on this board who can make cogent arguments with facts and figures. I agree that CAT is set-up for a huge downfall. I would not be long!!!

      Sentiment: Strong Sell

      • 1 Reply to alzach999
      • you are betting not only against CAT but also against the market which is being pushed up with the huge devaluation of the dollar. You should not bet against the FED. If you don't like cat then you should offset it with a buy in JOY or a competitor you feel has an advantage but to bet against this market is foolish, I liquidated all my accounts after the first week of Jan thinking that we had not avoided the cliff but now the republicans have pushed it off for another 3 months to mid year and I don't believe it will become a problem so I am fully invested again. If it weren't for QE infinitum I would have a tendency to be on the sidelines but they are destroying the value of the dollar and that will push the DOW to new highs with cheap dollars.

86.33-0.30(-0.35%)Oct 21 4:01 PMEDT