Caterpillar Inc. (CAT): A Legendary Short Seller Hates This Stock — Should You?

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Bottom line

An investment in Caterpillar Inc. (NYSE:CAT) hinges on economic growth in China; if China continues to grow at a rapid pace, then Caterpillar will continue earning high profits as a result of its solid market position. However, if China experiences a sharp downturn — as Chanos expects — then global commodities markets and the Chinese construction industry will plunge along with Caterpillar’s profits.

So, if you are bullish on China, go long Caterpillar Inc. (NYSE:CAT). If you are bearish on China, join Chanos by shorting Caterpillar.

Ted Cooper has no position in any stocks mentioned. The Motley Fool owns shares of Terex.

The article A Legendary Short Seller Hates This Stock — Should You? originally appeared on Fool.com.

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