4. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 54
Bill Gates’ Stake Value: $1,638,532,000
Percentage of Bill Gates’ 13F Portfolio: 8.28%
Stock Price as of June 14: $194.79
Caterpillar Inc. (NYSE:CAT) is a Deerfield, Illinois-based manufacturer of construction and mining equipment, diesel and natural gas engines, industrial turbines, and other heavy equipment. The company has taken the initiative to shift its global headquarter to Irving, Texas.
On May 20, Ivan Feinseth at Tigress Financial increased the target price on Caterpillar Inc. (NYSE:CAT) from $278 to $282 and reiterated a Buy rating. The analyst sees strong demand for the company’s products in the end market and considers it well-positioned to benefit from the increase in capital spending as economic activity has started to return to normal after the pandemic. Caterpillar Inc. (NYSE:CAT) announced a new share buyback plan of $15 billion on its analyst day in May. This is equivalent to 13.6% of the current market value of the company.
US President Joe Biden has passed a $1 trillion infrastructure bill into law, which will also be a positive catalyst for Caterpillar Inc. (NYSE:CAT). The stock is trading at $194.7 with a P/E ratio of 16.50x as of June 14. Forbes has estimated Caterpillar Inc.’s (NYSE:CAT) valuation to be around $244 per share, reflecting an upside potential of over 20% from the current stock price.
Oakmark Funds shared its insights on Caterpillar Inc. (NYSE:CAT) in its Q2 2021 investor letter:
“Having followed the company closely for north of a decade, Caterpillar is a name we know well. For much of its history, the operating efficiency of the company left much to be desired, but its underlying competitive position was rarely in doubt. A series of actions over the past decade (e.g., LEAN implementation, improved service mix, optimized manufacturing footprint) helped to narrow the gap between Caterpillar’s potential and its realized results, driving material margin expansion and strong share price performance. In our view, the company remains among the highest quality industrials in the market, but its underlying business is cyclical, which can translate to large swings in both performance and investor sentiment over short time periods. Our ability to focus on the long-term, sustainable earnings power of a business (rather than getting distracted by near-term fluctuations) is our most significant edge when investing in cyclical businesses. Due to the inherent volatility in Caterpillar’s end markets and operating performance, we suspect we’ll have a future opportunity to own this high-quality business at a more attractive price once the cycle turns and today’s enthusiasm wears off.”
Overall, 54 hedge funds reported owning a stake in Caterpillar Inc. (NYSE:CAT) as of Q1 2022.
