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Caterpillar Profile September 5, 2006

Caterpillar (CAT) manufactures heavy construction and mining equipment. They have three divisions: Machinery, Engines, and Financial. Machinery makes and sells machines. Engines makes engines for the machinery division, power plants, and others. The Financial division provides loans and insurance for Caterpillar customers. They are based in Peoria, Illinois. They have the biggest market cap of any company in their Industry: Farm and Construction Equipment, in the whole world. $44.1B of $102 B total for the industry.

Sector: Industrial Goods
Industry: Farm and Construction Equipment

Competitors:
CATERPILLAR INC [CAT] $44.1 B Peoria, Illinois, 1935, construction and mining equipment, engines, financial
DEERE CO [DE] $18.6 B Moline, Illinois, 1837, farm, consumer, and forestry equipment
KUBOTA CP [KUB] $10.8 B Osaka, Japan, 1890, farm & construction equipment, engines; water, waste, gas, etc, equipment; vending machines, condominiums, assorted products.
JOY GLOBAL INC [JOYG] $5.4 B Milwaukee, 1884, mining equipment
CNH GLOBAL NV [CNH] $5.2 B Amsterdam, Netherlands, 1991, agricultural, construction, finances.
COLUMBUS MCKINNON [CMCO] $142.4 M Amherst, NY, 1875, material handling products and solutions.
ASTEC INDS INC [ASTE] $408.2 M Chattanooga, Tennessee, 1972, road building equipment.
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Thoughts:
Market cap is number of shares times share price, not sales or income or profit. Are there big non-public companies in this industry?

Caterpillar has a finance division. That makes it very like an auto company.

None of the executives of these companies have any pay listed in Yahoo. Probably Yahoo is in error.

I'd not be able to get this on half a 5x7 card. Other than not leaving out words, what else am I doing differently than you do, jack?

Vickifool
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Vicki,

Well done. The biggest difference is that I usually don't put the comparison companies on the card. If I use them they end up in a spread sheet somewhere.

The 5X7 thing is my spin. Some people will use one sheet of paper, one side. The object of the drill is to boil the company down to something short and easy to digest.

There is a legend running around Hollyweird about one of the great executive producers, he gives screen writers his card and tells them to explain their movie on the back of it. If they can't then they aren't focused enough for him to want to work with. Either they can explain their concept or they can't. If they can't explain their concept then how is the director, actors, set designer and costumer suppose to know what to do?

Market cap is number of shares times share price,
Correct

None of the executives of these companies have any pay listed in Yahoo. Probably Yahoo is in error.

We will hunt this information down soon, so doubt sweat it.

jack
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There is a legend running around Hollyweird about one of the great executive producers, he gives screen writers his card and tells them to explain their movie on the back of it. If they can't then they aren't focused enough for him to want to work with.

And, back in the '70s the plots of Charlie's Angles and Three's Company were considered too confusing by most viewers.
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And, back in the '70s the plots of Charlie's Angles and Three's Company were considered too confusing by most viewers.

Which is why they made bras optional.

jack
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I thought I would toss up my idea of a profile for CAT

CAT
Best in class motors
Best in class Heavy Equipment
Has finance department
Sells products at a premium

Competitors
DEERE CO [DE]
KUBOTA CP [KUB]
Navistar International (NAV)
CNH Global aka Case/International (CNH)
Komatsu (No ADR)
Cummins (CMI)

This is not a critique on anyone else's way of doing this. I'm very familiar with CAT's products so I don't need a heck of alot to refresh my memory. I also use bullets for notes more then complete sentances. So this simple set of notes works for me. It may not work for you. My cut down list of competitors is also based on previous knowledge.

The idea behind the excercise is to familiarize yourself with the company and to leave simple foot prints for you to follow up on later. What we want is a 5X7 card(or 1/2 page) or the digital equivilents that we can quickly reference months from now. What ever company we look at may not be priced right today but it could come into our zone 6 months from now or a year from, seems silly to do it twice. I actually have cards for companies where the notes conclude "Don't bother, here's why: . . ." just in case they pop back up.

jack
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I thought I would toss up my idea of a profile for CAT

CAT
Best in class motors
Best in class Heavy Equipment
Has finance department
Sells products at a premium

Competitors
DEERE CO [DE]
KUBOTA CP [KUB]
Navistar International (NAV)
CNH Global aka Case/International (CNH)
Komatsu (No ADR)
Cummins (CMI)


That's interesting. I totally missed the "engines" competitors because they are in a different "industry." (NAV, CMI)
I also didn't see the "sells products at a premium."

Vickifool
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Vicki,

The sells product at a premium is somthing I know from life experiance. I hope you will run across it during the next assingment. The engines thing is the "trick question" of the assingment. You see it in the profile write ups on the web and then assume that they have included them somewhere else in their information.

Industry classification is also a bit messy. Different web sites use different names for sectors and industries. You will also get different numbers of sectors and industries from different sites. I'm really not sure, off the top of my head, what the underlying source for these differences are. I suspect someone is using Bloomberg another is using Moody's or S&P and a third has their own thing going.

jack
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Jack,

Playing on Vanguard, I saw a some new listings for Caterpillar (I think they were Internotes, and I didn't notice them being CAT Finance) of different maturities (I think there was a 2018, a 2016, and something else). These were among the new bonds that you can get for no commission at par (something I definitely want to watch for). The yields were unimpressive: I seem to remember I could do as well on a 5 year CD, and not even the Pen Fed ones.
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