Failing his recent Netflix and Amazon short implosions, David Einhorn is now trying his hand in heavy construction – betting that the downturn in commodities isn’t just a cyclical issue, but a fundamental one.
“Bulls are assuming the current commodity environment is an ordinary cyclical downturn. We believe it is the end of a commodity supercycle, and this will exert a long period of earnings headwinds for these companies.”
Modern Day Asset Management
ValueWalk's Raul Panganiban interviews Ross Klein, CFA, and Vince Lorusso. Ross is founder and CIO at Changebridge Capital and Vince is Partner and Portfolio Manager at Changebridge Capital where they manage the CBLS, Changebridge Capital Long/ Short Equity ETF and CBSE, Changebridge Sustainable Equity ETF. The following transcript is computer generated and may contain some Read More
Now, Einhorn does have a long position in CONSOL Energy, which goes against his commodity comment. However, it’s more of a natural gas play, with a coal-kicker. Nonetheless, there are some obvious companies that Einhorn might be targeting – Caterpillar, Terex, Manitowoc and Joy Global.
He’d have good company in Caterpillar, where Jim Chanos has been a notable bear. Terex is getting bought out and Manitowoc in the middle of a split up – thus, it appears that Joy is the likely target.
Joy’s stock is already down 70% in the last twelve months and in a world of pain, trading at post-financial crisis levels, but when it rains it pours.
Join our free newsletter for some exclusive info we don’t share elsewhere.