NEW YORK, July 17 Short-seller Jim Chanos of
Kynikos Associates said on Wednesday he is betting against the
shares of Caterpillar Inc and still has a short bet
Caterpillar shares fell 2 percent after Chanos' comments,
which were delivered at the CNBC Institutional Investor
Delivering Alpha Conference. Chanos is known for having
anticipated the 2001 collapse of energy company Enron.
Chanos, whose Kynikos Associates has roughly $6 billion in
assets, said the Peoria, Illinois-based maker of heavy equipment
will face "a series of supercommodity headwinds that I don't
think its supporters appreciate." He also said that bullish
investors in Caterpillar will face long-term disappointment, and
that the company is "tied to the wrong products at the wrong
part of the cycle."
A spokesman at Caterpillar, the world's largest maker of
mining equipment, declined to respond to Chanos's remarks. But
the company has acknowledged the slowdown in global mining is
weighing on its results.
In April, Caterpillar posted disappointing quarterly results
and cut its full-year 2013 profit forecast, citing a drop in
demand from mining customers.
The delayed and canceled sales from miners have also
prompted Caterpillar to lay off hundreds of workers at its
mining equipment plants in Decatur, Illinois, and Milwaukee.
Caterpillar's revised outlook for 2013, which it may update
next week when it reports earnings, reflects an expected 50
percent decline in sales of its traditional mining trucks and
loaders as well as a 15 percent decline in sales of draglines
made by Bucyrus, the Milwaukee-based company it bought in 2010.
Mining equipment is Caterpillar's most profitable product
category. Sales to the sector have been hurt in recent quarters
because miners, facing investor backlash over unpopular
takeovers, budget overruns and falling metal prices, have
slashed capital spending, slowed the development on some
projects and shelved others entirely.
Not everyone shares Chanos' bearish view on Caterpillar. Ann
Duignan, an analyst who covers the company at JPMorgan Chase,
recently wrote that she believes "most of
the downside risk" from a China slowdown has been priced into
Caterpillar's stock. She has an "overweight" recommendation on
the shares and a price target of $100.
OTHER STOCK PICKERS' TOP CHOICES
Chanos was one of several top stock pickers offering
investors advice at the CNBC event.
Billionaire hedge fund manager Leon Cooperman of Omega
Advisors said at the conference that he likes the stock of lab
equipment maker Thermo Fisher and pharmacy benefits
manager Express Scripts. Cooperman added that he likes
financial companies with high yields that can go higher such as
Atlas Resources, KKR, Chimera, and Arbor Realty.
Hedge fund manager Chris Hohn, founder of The Children's
Investment Fund Management, said he likes the stock of European
aerospace company EADS, automaker Porsche,
and freight rail operator Aurizon. He said that order
backlog and cuts in unit costs make him confident that EADS
stock will double in the next two to three years.
Kingdon Capital founder and president Mark Kingdon,
meanwhile, said he likes Japanese autos on account of Abenomics,
in reference to the loose monetary policies of Japanese Prime
Minister Shinzo Abe. Kingdon said he likes Mazda, Fuji
Heavy, and Toyota on account of those
Kingdon said all the Japanese carmakers trade at 8 to 10
times earnings, while they should be trading at 13 times
earnings. He said Mazda has the most potential upside.