Wednesday, July 17, 2013
Jim Chanos at Delivering Alpha Conference on Why he's Short Caterpillar
Today CNBC and Institutional investor hosted their annual Delivering Alpha Conference. At the conference Jim Chanos delivered his thesis on why he is short Caterpillar. His net thesis is that 30% of their revenue comes from global mining capex and 50% of their operating profit. With China slowing down this will really impair the commodity supercylce and hurt mining capex. Mining capex is going to come down fast and he thinks Caterpillar will bear the brunt of this. He goes on to share that he is still short Hewlett-Packard and he thinks the stock has had a huge run on the perception that it is a turnaround. He doesn't buy into the turnaround thesis. He thinks HP's revenues are declining 10% annually across the board - including services. He thinks this goes onto show that there is an issue with the tech services industry as cloud computing will have major impacts.