David Einhorn is betting against one corporate stalwart and on another.
The head of Greenlight Capital said Wednesday he is short Caterpillar and long GM as the former faces a decline in some of its core businesses and the latter tightens its belt and faces a stronger future.
"While analysts are projecting a recovery in 2017 and 2018, we don't think CAT has yet hit bottom," Einhorn said at the Sohn Investment Conference in New York.
Caterpillar faces challenges from a boom-and-bust cycle in mining as well as a slowdown in China and drop in energy exploration revenues. He said the company also faces a significant sales headwind from idled equipment.
Caterpillar's stock is likely to trade at half its current value as the variables play out.
As for GM, he said the company has done a solid job in cutting costs and channeling its focus.
"GM is now focused on four brands: Chevy, Cadillac, GMC and Buick, and is financially healthy and thriving," he said.
GM is trading at too low a multiple while Caterpillar is too expensive, Einhorn added.
"The reality is we're at much closer to mid-cycle for both companies than we are a peak or trough, and investors are assigning the wrong multiple to both companies," he said.
Caterpillar was off 1.5 percent in after-hours trading while GM rose 1.3 percent.