Caterpillar's disappointing earnings good for Jim ChanosJuly 24, 2013: 2:12 PM ET
It's looking like a good day for at least one famous short seller.
Just a week after hedge fund investor Jim Chanos announced he was betting against Caterpillar, the industrial equipment maker reported disappointing earnings and cut its outlook for the year.
The bad news sent shares of Caterpillar (CAT) nearly 3% lower Wednesday. The stock trimmed some of the losses as they day went on, but remained down 1.7% in the afternoon.
Sales in the division that mainly makes mining equipment fell more than 30% last quarter. That probably didn't surprise Chanos, who predicted that Caterpillar would be hurt by the end of the commodities and mining boom, during a speech at the CNBC Delivering Alpha conference last week.
Chanos, founder of Kynikos Associates, is best known for his bet against Enron.
Caterpillar's weak results and Chanos' win gave traders on StockTwits plenty to chat about.
Business in China may be picking up, but that's starting from a pretty weak spot.
Caterpillar said it expects China's economy to grow around 7.5% this year, with industrial production rising 9%. While those growth rates are slower than predictions made earlier in the recovery, the company expects they will lead to more construction and commodity use.
While Caterpillar was somewhat optimistic about China, traders were not.
That'a a fair point. Earlier Wednesday, a report from HSBC showed that manufacturing in China continues to decline.
Yikes. Traders don't seem to have much hope for Caterpillar, and they're cautioning against rival CNH Global (CNH), too.