I am so sorry that the marriage between your buddy and CASA did not work out...he fell in love with the wrong man - Drabkin...
When you bail, please vipin and skittle with you...Good riddance to a CASA lover...unrequited love is a baitch!
וbastids המופחת ארצות הברית הפלדה (X) מתחת 25.00 $ ... כן , muddapucker אלה לא בהירים מדי
Gee, bastids and muddapuckers are the same in English and in Hebrew. I give up!
و قلل bastids الولايات المتحدة للصلب ( X ) أدناه 25،00 $ ... نعم ، تلك muddapucker ليست مشرقة جدا ..
You prefer Arabic? Looks like bastids and muddapuckers are the same in English and Arabic. A muddapucker will always be a muddapucker!
The bastids shorted U.S. Steel (X) below $25.00...Yes, those muddapucker aren't too bright..
Hey, you are full of chitshit - you're PAUL! Knock the capcrapcap off!
Is CasaBLANKa in bed with short sellers?
My dog is standing tall and wagging his tail. His ears are pricked up waiting for buyout news from CasaBLANKa. He eats well - filet mignon! LOL
"No. 1 retirement community in the country."
Who wants to live in a retirement community with demented folks. FYI, I own waterfront properties in Cape Coral, FL. I live in South Florida.
I would consider Casablanca's approach to be a second tiered strategy as it is mostly a 'bean-counter' attempt to realize value as opposed to a strategic business attempt to realize value. I personally prefer to invest in companies where I can legitimately consider them as a going concern with a viable business model and a competitive strategy. For the right investor Cliffs is possibly a 'buy' simply because you will probably see an appreciation in share price as the capital structure shifts to a general reduction in equity and an increase in liquid assets. In other words, share price is bound to go up simply because there are less shares in a company that is converting assets over to cash while the price to book is currently less then 1.00.
In the case of Casablanca, actual book value realization for the assets is not entirely necessary since the average price of Casablanca's initial stake in Cliffs was at roughly $22 - $24. This was during the end of November and start of December. If you take another look at the chart above you will see that the P/B ratio was at roughly 0.85 at that point in time. So Casablanca's basis in the stock with respect to book value is at roughly 80% - 85% and therefore a sale of assets at roughly that amount while purchasing back shares at a price to book value of 42% is a completely plausible strategy.
Here is a theoretical/textbook example of this situation at work: Naturally this is an extreme example as it would consider all of the assets to be sold and for the company to be completely shut down with a final distribution to shareholders. But it illustrates the point we are making here - the company is worth more through a sale of assets to Casablanca then it is as an ongoing operation. Additionally, as one can surmise from the diagram, as the current share price goes down, share buybacks become cheaper thereby rewarding those who hold their stock longer as assets become more liquid.
In an environment where a fund is under severe pressure to see a realization of its investment quickly, it would appear that Casablanca has taken the right course of action. This would be my course of action too if I was a managing member of Casablanca as it is a textbook answer to the situation faced by the fund as it has shares in a company which is within an industry facing declining demand in Iron Ore. The alternative strategy would be to cut CAPEX and wait out the decline in demand which was the strategy initially pursued by the recently unseated CEO, Gary Halverson.
The most important metric for Cliffs is the P/B because it shows us how price relates to the current book value of the assets owned by Cliffs. Generally we might consider metrics such as the P/E or Cash Flows, but here it is all about considering the current value of assets. If we were to consider Cliffs as an ongoing operation we might also consider the Altman Z Score for a bankruptcy test. But once again, Cliff's is converting assets to cash and buying back shares, therefore we should rank its book value more highly then metrics pertaining to continuing operations.
Casablanca has decided to pursue the course of selling off assets in conjunction with buying back shares. What they are doing goes back to Finance 101 where a business fundamentally reduces their capital structure. By reducing both the asset side of the balance sheet as well as the equity side Casablanca hopes that the final shares left held are worth more then the price that the shares were bought for from the common shareholder.
This strategy therefore all hinges upon selling assets for a greater amount then the discount price on the shares (or roughly 41 - 42%) and buying back the shares until the only shares left are mostly held by the fund. Clearly it is in the best interest of the shareholders (whether Casablanca or the individual investor) for the mining assets in West Virginia and elsewhere to be sold at book value, however we can safely assume that there will be a discount on the sale especially as the mining industry is currently doing rather poorly all together.
Cliffs Natural Resources (NYSE:CLF) is all about the P/B ratio, the share buybacks, and the capital structure. Iron Ore's price has declined and the demand for Iron Ore is at a 5 year low, but this is not as much a concern for the key shareholder Casablanca, a hedge fund attempting to unlock shareholder value, because Casablanca is considering the entire entity as a series of assets on a shelf which it can sell to buy back shares at a discount with hopes to gain on the differential.
Currently Casablanca has utilized its position on the board and its recently appointed CEO to steer Cliffs towards buying back its stock in a $200 Million purchase. However Citigroup's Brian Yu indicated that the company would have been better off reducing the overall debt.
Cliffs Natural's Board approved a $200 mln share repurchase program that translates to 8.1% of current shares outstanding or 7.0% of outstanding if we include the mandatory convertible preferred. With net-debt of $3.1 bln at the end of 2Q14 and estimated leverage of 4.4x for 2014E, our expectation is that deleveraging would be more of a priority, especially with iron ore priced around $90/tonne, approximating Citi's 2015 forecast of $90/tonne.
As the public was about to find out - Iron Ore's spot price kept getting lower after Citigroup's analysis, reaching about $87 just recently. So why did Casablanca want to buyback shares instead of the more logical reduction in debt that Citigroup suggested?
In short, because Casablanca isn't terribly concerned with the spot price of Iron Ore, mostly because they are also not terribly concerned with valuing Cliffs through continuing operations and treating it as a going-concern. Most of the share buybacks are probably going to be funded through the sale of various assets as was announced by the Wall Street Journal on Wednesday, September 3rd (and probably suspected for a long time prior to that).
Is this a bad thing? Not necessarily, because Cliff's value is all about th
While commodity supply rationalization continues, there is inconsistency across various markets and the process is still in the early to mid-stages. Despite improving global economic conditions that should drive demand, market dynamics are such that prices for most major commodities remain depressed with marginal upside potential over the near-term. Investments in mining capacity over the last several years will be maximized, leveraged up, or shut down as miners' capital expenditures will be focused on products and services that improve mine productivity and lower costs.
"Despite the depressed commodity pricing environment and oversupplied markets, our performance remains solid and we continue to see stability in our core service business," continued Doheny. "During the quarter, service bookings were up nearly 7 percent from last year marking the third consecutive quarter of growth. Service bookings growth tied to our global shovel fleet was driven by strength in global copper markets. Additionally, we saw some improvement in our service business related to U.S. coal market rebuilds as the ability of some of our customers to continue to delay maintenance appears to be reaching an end.
"Another area where we see opportunities is in the iron ore market. Although prices have declined nearly 30 percent since the beginning of the year, the steep global cost curve continues to provide service opportunities for our installed base with lower-cost producers. Iron ore demand, driven by strength in global steel markets, resulted in the booking of two shovels in China during the quarter. Quote log activity with other major iron ore producers remains active and we expect additional sales to materialize in coming quarters.