Caterpillar Chairman Buys Stock With Investors at Crossroads

(Bloomberg) -- With Caterpillar Inc.’s peer-beating rally running out of steam, Chairman David Calhoun is sending the latest signal that a recovery in demand for its iconic yellow machines is yet to peak.

Calhoun bought 5,000 Caterpillar shares for $776,850 on May 14, according to a filing with the U.S. Securities & Exchange Commission.

The transaction follows comments on April 24 by then-Chief Financial Officer Brad Halverson that first-quarter adjusted profit “will be the high watermark for the year,” which sparked a selloff in the shares. Last week, Head of Investor Relations Amy Campbell reiterated that Halverson’s outlook referred to a price-cost mix and was in no way meant to suggest markets are peaking. That view was validated days later when the company reported that rolling three-month retail machine sales jumped 28 percent, sustaining momentum.

Investors nervousness may be lingering, with one gauge of volatility near the highest in two years. But analysts are raising their earnings expectations for the Peoria, Illinois-based company, the average 2018 estimate is up 15 percent in the past four weeks, the most among peers.

While Caterpillar shares are down slightly this year, they’re still up a whopping 49 percent in the past 12 months amid recovering demand from mining companies, oil companies and builders. A seven-day winning streak through Monday was the longest this year. The stock fell as much as 2.3 percent on Tuesday.

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