Caterpillar Lacklustre

Caterpillar have announced another rejig, this time letting 10,000 staff go in its quest to lower costs and get back on track. Caterpillar look to set a new low in 2016; setting the milestone of four years of lagging sales, unprecedented in its history  >>Link<<

Study the graph to get the picture...

Right now, with the slide ongoing, I'd say Caterpillar are a good buy. Hell, their market cap is under $40 billion.

Caterpillar have challenges ahead for sure, but my bet is they'll handle it. Those challenges include making headway in China. Right now that isn't the case, buyers there, like many other buyers in the emerging market countries, look at price and make their equipment procurement decisions on price alone. In North America, Japan and Western Europe, the whole of life cost is paramount and on that basis Caterpillar win hands down. They're by far the best machine in most categories; but particularly their medium to large Wheel Loaders and Dozers.

Caterpillar have never made a good excavator though and that must be addressed. Hitachi are the standard there and they link up with Deere, so on that front Cat has a real fight on its hands. Caterpillar had better knuckle down and develop strong excavators. Either that or buy someone out who does. They've acquired technology in the past, Perkins comes to mind, so this should not be a problem.

Caterpillar has a strong financing arm, but at the dealer level they need to be more engaged with the end-user. I've stopped counting the number of times contractors in the USA have told me they prefer John Deere due to the local Cat dealer being rude to them. Many Cat dealers in the USA have an attitude of you are privileged to be dealing with them and that has to stop. Consider 60% of Cat sales are in the USA and you can see they have a problem.

Good management can solve any of the challenges I've highlighted. Have the senior managers looked in the mirror and asked themselves if they're up to the task?

(Note: These opinions are information only and do not constitute investment advice. If you need investment advice on these stocks or anything else for that matter, talk to your recognised and professional investment adviser. Better still, do your own research and act on it confident in your own ability.)

Japan Rugby Christchurch Connection

The media are not reporting a Christchurch connection with the Japan team that has upset South Africa 34-32 at this year's Rugby World Cup.

In the team is Kosei Ono, who grew up in Christchurch from the age of three, learned to play Rugby here and played for the Christchurch Boys' High School first XV. He now lives in Japan and plays there professionally. His father is still local to Christchurch, he owns a sports massage business called Ono Seitai Sports Clinic.

Journalists have likely flicked through the roster of this ground-breaking team and tried to spot the foreign names, and in the process missed a local lad doing well.

Kosei Ono at RWC 2015 

[ edit to add - Kosei Ono is now covered on Stuff...The Press got around to doing their job ]

Warren Buffett Nightmare

Those who have seen the Motley Fool internet advertisement about what makes Warren Buffett lose sleep at night will be wondering what it is. I can tell you they're talking about driverless cars and the impact that may have on the auto insurance industry. The argument goes that the Berkshire Hathaway owned Geico insurance will be impacted by these cars which are predicted to be commonplace within five years.

Motley Fool then recommend a computer chip maker that makes the type of chip for driverless cars.

A word of caution; while the insurance landscape may well change due to these cars, who is to say the business will be less profitable? Accidents will be fewer, meaning less claims and thus cost to the insurer, but car owners will still need to insure for those accidents that are unavoidable. 

Which chip maker will win in the race ahead is anyone's guess, invest carefully and only when you're confident, and the first thing to ignore I'd say, would be scaremongering of the Motley kind.