CAT: Removing Short CAT From Best Ideas List, Would Hold Some Short Exposure Through 10-K Release

 

“Skeptical of Oil & Gas Capital Spending…Energy-related capital spending looks like ‘mining capital spending-lite’”

 

– Hedgeye Industrials 4/21/2014 CAT: Defining Differences & The Segment Formerly Known As Power Systems

 

 

Overview


Given the convergence of 2015 guidance and our estimate range, one of the primary downside catalysts has been realized in our CAT thesis.  The pull-back in the "resources capital spending tide" is better recognized now (to see slides from earlier CAT calls, CLICK HERE, or CLICK HERE, or CLICK HERE etc).  The lower guide may be a bit of a near-term ‘cover the news event’.

 

We are trying to use the Best Ideas list better; we view it as a signal for where we think it is worth initiating positions and spending research time

 

We would stay short some CAT through the mid-February release of the firm’s 10-K.  The 10-K should update such interesting items as the SEC investigation and credit exposures at CAT Financial (Textron-lite?).  CAT really does have some dicey exposures at CAT Financial, but, as we wrote yesterday, it will take some time for those to play out.  We may add CAT back to the list, but for now we don’t want to press current relative lows.  We may be getting too cute, but its hard to control 'position size' in a research note.

 

CAT: Removing Short CAT From Best Ideas List, Would Hold Some Short Exposure Through 10-K Release - CAT 1

 


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