Einhorn Reveals Positions in Caterpillar Inc., General Motors Company

David Einhorn is short Caterpillar Inc. (NYSE:CAT) and long General Motors Company (NYSE:GM)

May 5, 2016 at 11:01 AM
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Greenlight Capital's David Einhorn -- who recently waxed optimistic on Yelp Inc (NYSE:YELP) -- weighed in on two other stocks last night. Specifically, the activist investor revealed a short position on Caterpillar Inc. (NYSE:CAT), and a long position on General Motors Company (NYSE:GM). Below, we'll take a closer look at the stocks, what Einhorn had to say, and how options traders have been betting.

"While analysts are projecting a recovery in 2017 and 2018, we don't think CAT has yet hit bottom," remarked Einhorn on the construction equipment maker. He also cited idled equipment and China's economic slowdown as potential negative drivers.

It doesn't look like Einhorn is alone in betting against CAT. The stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 2.28, with put open interest more than doubling call open interest among options expiring in the next three months. What's more, this ratio ranks in the put-skewed 80th annual percentile. On top of that, CAT's short-interest ratio of 8.00 indicates it would take eight sessions for short sellers to cover their positions, at the stock's average trading volumes.

Technically, though, Caterpillar Inc. has been nothing short of impressive since bottoming at a five-year low of $56.36 in late January. At $73.64, the stock has advanced 31% in that relatively short time frame. And though CAT is 0.8% lower today, it appears the shares have found a layer of support in their 60-day moving average. A sharp bounce off of this level could force bearish options traders and shorts to flee the scene, potentially creating tailwinds.

Meanwhile, Einhorn described GM as "financially healthy and thriving." Adding credence to that statement was the automaker's strong April performance in China, as well as last month's earnings beat.

On the charts, though, GM has been a mixed bag. On the one hand, the stock is 10% lower year-to-date at $30.59. On the other, the shares have been stair-stepping their way higher since their mid-February lows, and look to be consolidating atop the round $30 level.

Options traders have been decidedly skeptical toward General Motors Company. During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 1.31 puts for every call -- a ratio that ranks in the 91st percentile of its annual range. Echoing this put focus is GM's SOIR of 0.81, which sits in the top quartile of its 12-month range.

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