Paulson Sells Large Portions Of BofA, Citi, Wells, Capital One, Dumps All Of Goldman, Adds 500,000 In Potash Merger Arb

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Mon, 11/15/2010 - 18:48 | 728694 Spalding_Smailes
Spalding_Smailes's picture
Got Cat ?



BHP's Problem Is Caterpillar's Opportunity By LIAM DENNING

Caterpillar's $7.6 billion acquisition of Bucyrus International coming a day after BHP Billiton said it would resume stock buybacks is surely coincidental. That doesn't mean they aren't linked.

The mining industry is printing money: Citigroup expects it to have aggregate net cash of $70 billion by the end of 2012. BHP's buyback is designed to address an embarrassment of riches now that its bid for Potash Corp. of Saskatchewan is dead. Similarly, Morgan Stanley sees Rio Tinto generating $79 billion beyond what it needs to pay off debt and fund capital-expenditure plans between 2010 and 2015.

When resource producers are rich, equipment providers do well, as anyone who owned oil-field-service stocks this past decade could tell you. Cash chases a slow-growing supply of tools, driving up prices and profits for the likes of Bucyrus.

Little wonder announced synergies relate mostly to pushing a wider suite of equipment through Caterpillar's dealers. This makes sense. But after upfront costs, and taxed and discounted at Caterpillar's own hurdle rate of 12%, synergies don't cover the $1.8 billion premium being paid.

Then again, the Federal Reserve is doing some printing of its own, so debt is cheap. Cut Caterpillar's discount rate to 10% and synergies cover the premium. And the company has effectively redeployed the $700 million it had earmarked for expanding its mining business organically.

Mon, 11/15/2010 - 21:16 | 729122 doolittlegeorge
doolittlegeorge's picture

harrowingly "Caterpiller went up today" as well.  This is how patently obvious the inflation trade has been ALL YEAR now.  We now know we have a massive "trillion dollar boondoggle to bankrupt America" as Nancy Pelosi's final "go phuck yourself America" minority leader election campaign.  It's never enough but "should the Italian government collapse tomorrow as per the intent" I will take some solace in that.  I do take note "Fiat is selling it's position in Ferrari"--good deal if you can get in on it. GOOD LUCK! If gold suddenly decides to roll over however--and the move in Ford's stock sure says it to me "a great moderation may be upon us."  Needless to say "we havn't had an economy to support these prices for over 2 years now" with the best being what Tom Keene called it:  "squishy."

Tue, 11/16/2010 - 08:02 | 730178 Instant Karma
Instant Karma's picture

They see what they want you to see.

Tue, 11/16/2010 - 08:40 | 730200 New_Meat
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Mon, 11/15/2010 - 18:50 | 728701 the rookie cynic
the rookie cynic's picture

If the POT/Biliton merger didn't happen, why didn't we see a bigger decline in it's stock price today?

Mon, 11/15/2010 - 18:57 | 728722 Spalding_Smailes
Spalding_Smailes's picture

The mining industry is printing money: Citigroup expects it to have aggregate net cash of $70 billion by the end of 2012. BHP's buyback is designed to address an embarrassment of riches now that its bid for Potash Corp. of Saskatchewan is dead. Similarly, Morgan Stanley sees Rio Tinto generating $79 billion beyond what it needs to pay off debt and fund capital-expenditure plans between 2010 and 2015.

Mon, 11/15/2010 - 19:37 | 728836 butblack
butblack's picture

a somewhat credible valuation has been placed, it has already been priced into the market

Mon, 11/15/2010 - 19:45 | 728852 KidDynamite
KidDynamite's picture

Canada blocked the deal last week already.  THAT was the news.

Mon, 11/15/2010 - 19:53 | 728882 Quantum Nucleonics
Quantum Nucleonics's picture

Everybody has known for weeks that the deal was dead.  The initial pop in the summer got it ahead of the market, but commodities have gone parabolic since.  Potash has been drifting lower for a month, while the market caught up.  It traded over 200 the last time commodites went ballistic in '08.  Could go there again if ag commodities head back up after last week's dip.

Mon, 11/15/2010 - 18:55 | 728718 greenewave
greenewave's picture

To find out more about the lies and fraud propagated by Washington and the Big Banks, watch the YouTube video Global Economic Collapse 2010 at (

Find out why there are a potential 17 million foreclosures in the pipeline over the next 5 years waiting to devastate the system!!

Global collapse is upon us.


20 minutes ago

I really hate the fact that you're right. I? wish we were wrong. I really do.

Good vid.


Mon, 11/15/2010 - 18:58 | 728725 Gordon Freeman
Gordon Freeman's picture

All those guys know the bank stocks are dogshit--Fed or no Fed

Mon, 11/15/2010 - 19:03 | 728733 ghostfaceinvestah
ghostfaceinvestah's picture

The only people dumber than Paulson are the people who give him their money to manage.

Mon, 11/15/2010 - 19:10 | 728755 HarryWanger
HarryWanger's picture

And Soros added a bunch of AAPL. So did David Einhorn. And on and on. If all these guys are buying, I don't think you will see AAPL/stock market make any sudden downward moves any time soon.

Mon, 11/15/2010 - 19:49 | 728870 Tyler Durden
Tyler Durden's picture

Hopefully you and all Zero Hedge readers realize that all these filings are as of Sept 30, before the parabolic ramp up in the stock started. Unlike retail investors, HFs buy low, incite a short covering squeeze and sell at the top. As for who they sell to, that's a different question.

Mon, 11/15/2010 - 19:51 | 728875 HarryWanger
HarryWanger's picture

Thanks for pointing that out, I scream at the television when this is "Breaking News". 

Mon, 11/15/2010 - 20:06 | 728933 rocker
rocker's picture

Absolutely correct.  They are screaming Paulson's trades on CNBC. They forgot to tell us it's old news. Hmmmm.

Tue, 11/16/2010 - 00:14 | 729767 I am a Man I am...
I am a Man I am Forty's picture

Nobody around here thought Apple was low at $240, which is what Einhorn was DCA'd in at.  Would like to know when you thought Apple was low??

Mon, 11/15/2010 - 19:26 | 728798 AccreditedEYE
AccreditedEYE's picture

Either Paulson will now have to like Potash on its fundamentals,

Hmmm...fundamentals? What are those again?

Mon, 11/15/2010 - 19:26 | 728805 bugs_
bugs_'s picture

all of goldman

Tue, 11/16/2010 - 08:55 | 730222 sunnydays
sunnydays's picture

I find it very interesting that all of Goldman Sachs was sold.  Since Goldman runs the government.  What does he know about them?

Mon, 11/15/2010 - 19:31 | 728823 goldmiddelfinger
goldmiddelfinger's picture

Paulson had one great hit. Pretty easy hit to have, one needed capital/large investors in order to capitalize on the leverage angle. it's hard to repeat. His gold play has very little leverage and his stock picking is weak if he overlooked Ottawa in a low return natty resource arb.

Mon, 11/15/2010 - 21:28 | 729146 doolittlegeorge
doolittlegeorge's picture

actually he had two--with the second being even greater than the first.  the first was "the big short" and is obviously what you refer to.  what you forget is "he then wheeled around and bought all the banks for basically nothing."  HUGE gains on the upside as well.  "Now it get's tough."  Shorting certain muni's seems like a slam dunk--but the trade is ominous.  Should this be a municipal bond market bubble or worse...and Greece and Ireland are good examples of "how government non-inflation still yields soaring interest rates" this so called "urban legend" will look all to real.  It also "involves goobermint."  As in "hello, I'm from the Central Intelligence Agency."

Mon, 11/15/2010 - 19:53 | 728879 Problem Is
Problem Is's picture

Paulson: What a Swami!
You crystal balls, Tarot card readin' mother fucker...

Mon, 11/15/2010 - 20:15 | 728957 SwingForce
SwingForce's picture

Help me Harold, if Paulson knows how deep the banks are into the mortgage mess (he had a front row seat for 5 years) then why in God's name does he own Bank of America?

Mon, 11/15/2010 - 20:24 | 728970 SwingForce
SwingForce's picture

Paolo is/was the bomb. Shoulda tipped him 20%+, even a waiter gets that much.

Anybody ever work at Houston's?

Mon, 11/15/2010 - 20:38 | 729021 deagle44
deagle44's picture

I bet he regrets selling his XOM.

Mon, 11/15/2010 - 23:28 | 729533 ebworthen
ebworthen's picture

If he has inside knowldege this would indicate Gold up, AAPL up because people will pay for entertainment in a Depression, and GET THE HELL OUT of financials.

Remember Citi at $1?

What happened to WaMu stock and Bondholders?


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Mon, 11/15/2010 - 23:46 | 729710 treemagnet
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When the gorillas leave the bank tree you gotta think they know something about the banana situation the others don't/won't.

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