Caterpillar Falls After Chanos Says Margins Will Shrink

Caterpillar Inc. (CAT), the largest maker of construction and mining equipment, fell after short seller Jim Chanos said the company is being hurt by the slowdown in commodities demand.

The shares dropped 2.2 percent to $86.26 at 12:47 p.m. in New York. Earlier they declined 2.6 percent, the most intraday since June 24.

Caterpillar “is tied to the wrong products at the wrong time in the cycle,” Chanos said today in a speech at the CNBC Institutional Investor Delivering Alpha Conference in New York. “Profit margins will revert with viciousness in the next 10 years.”

Chanos, the president and founder of Kynikos Associates Ltd., said he’s shorting the stock and the company is “being aggressive with their acquisitional accounting.”

Jim Dugan, a spokesman for Peoria, Illinois-based Caterpillar, declined to comment on Chanos’s statements.

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Simon Casey in New York at scasey4@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.