CLF - Cliffs Natural Resources

[Moht]

I am not sure what advantage CLF has venturing downstream. AKS was slowly going out of business. Now when CLF goes downstream, they will have to compete with the likes of Nucor and Steel Dynamics - good luck with that.

 

Perhaps they felt they needed to do that or their ore /pellets would have no where to go, since Nucor and Steel Dynamics etc. use scrap rather than Ore or pellets.

 

Competing in some ways, yes. But CLF will also be selling HBI as feedstock to the EAFs like Nucor and Steel Dynamcis. And the Pig Iron they'll produce from Ashland, same thing.

[ratiman]

Why couldn't CLF just buy the Ashland plant without buying the whole company? This seems like a decent explanation:

 

"The risk of AKS going under was a real threat to CLF's share price," Johnson wrote, using the companies' ticker symbols. "We see this as a defensive move by CLF to support its share price."

[TwoCitiesCapital]

https://finance.yahoo.com/news/exclusive-arcelormittal-talks-merge-u-205433326.html

[Gregmal]

LG is a boss. I admire what he is trying to do. Its no minor feat taking on this industry and all that comes with it. His debt trading in March/April was epic.

[Gregmal]

https://seekingalpha.com/news/3677815-cleveland-cliffs-guides-q1-full-year-adjusted-ebitda-above-estimates

 

All hail LG. Guy is a legend.

[Gregmal]

Guiding to $5B FY adj EBITDA which basically means they're trading at less than 3x FCF and can likely eliminate all debt within a year. Crazy what LG has done here. 

[hasilp89]

greg have you looked at stelco at all? trading at 2-3x 2020 2021E FCF.  

[Gregmal]

I have not really, but its on the list. I generally dont like this area of the market and its certainly not within my circle of competence. CLF Ive followed since Ive long been in and around MSB. Was kind of a case of pattern recognition and a jockey bet. Although not really hugely successful as I didnt really like the AKS deal and sold down a bunch. Yea...what kind of retard makes a jockey bet and then sells because he disagrees with the jockey? Thats me! Poor execution and lack of ability to stick to the original thesis, at least with respect to a portion of the position and its sizing....forget the fact that LG was 1,000% right. But things look great with the well run commodity names and those with newer facilities and low debt to EBITDA are WAYYYY too cheap, IMO, even without a super cycle. 

[hasilp89]

lol. you're only human after all. Petec and viking have contributed some good research on the thread. Easy thinking is its cyclical, high cost structure yuck, believe there is more to the story though. CEO owns a lot of it (and some of the falcons?!?!) and has stated numerous times that he will return capital this year. Additionally debt is limited to a capped pension liability (CAD ~550 ) and a ~150M ABL - so tails i don't think you loose much in a down cycle (by which point i assume you've been returned 50% of your capital at todays prices). We'll see how it plays out.