The first time I thought about Caterpillar (CAT) in an investing context was in the summer of 2013, when I was invited to speak at Vitaliy Katsenelson’s ValueX Conference in Vail, Colorado. Another speaker at that conference was Jim Chanos, the founder of the world’s largest short-selling hedge fund, Kynikos Associates, who called Caterpillar his best short idea at the time.

Part of Chanos’s argument was that the commodity super-cycle was at an end, and Caterpillar had built up too much productive capacity to handle the demand drop.

Most people wisely nodded their heads, but I was left with a few nagging questions: what is a commodity super-cycle, have they been observed before, and how long do they last?

This line of questioning brought me to the paper below, co-authored by two professional economists (one at the United Nations and one at Columbia University).

I will write in more detail about how much the thinking about super-cycles influenced me in my recent valuation of CAT when we publish the ChartBook on the company, but for those of you interested in the raw study, I thought I would post it here.

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