I thought that Credit Suisse was one of the analyst firms that was bashing on CLF. But I can not remember now.
Glad to see you leave CLF as a shareholder. There is no room on the CLF shareholder list for anyone without strong conviction.
The only thing we have heard from management was that announcement that their cash balances were going to be way ahead of expectation. This announcement boosted the shares, but they have again faded a bunch as everyone waits for the q3 and CY 2014 results.
I have been more that ticked off about the delay in reporting. I am not going to make any excuses for it. I suspect that the new auditor is going over everything very carefully to make sure that there is nothing that would leave them as auditor's exposed. It is too bad that they have to do this as ESI just spent $7 million on a detailed top to bottom audit with their prior auditor. Now they have to do it all again.
There will be one thing for sure. When the new auditor gets done, everything in the acounting books will be double squeaky clean.
CLF is clearly being aggressive to restructure its balance sheet. That means reducing the face amount of debt and also pushing out maturities. This is a great move as it eliminates all the "going bankrupt" chatter on Wall Street and allows the company to reduce further its net effective debt load.
This is a really good point. So what are the pros and cons of hiring Credit Suisse?
1. Always good to have a number of investment bankers on the payroll because you never know when you may need them for some financing or other purposes.
2. CLF shows Wall Street that the company does not harbor a grudge, even when the investment banker's analyst puts out really #$%$ research. Wall Street bankers love it when a company is like this.
3. CLF may figure that using Credit Suisse will put pressure on their CLF analyst to do more detailed work on the company, hopefully leading to a change in the analyst opinion from a terrible rating to a rating that is better.
1. CLF is just paying an investment bank that probably does not deserve to be paid.
2. It may make CLF look like they are trying to "buy" a change in the analyst rating.
3. Wall Street laughs at CLF as it thinks that the company is just a bunch of stooges for paying Credit Suisse anything at all after what the analyst there has done.
To me. it looks like opinion could go either way. If I were CEO, I am not sure what I would have done in this case.
People buy stock for one reason only. They think that the shares are going to go higher. The insider buying shares is a huge vote of confidence by CEO Goncalves. There is no way he would put down $650,000 of new money into CLF if he thought that the shares were worth or were going to $0-$1. I am really surprised that his purchase did not get a lot of press. But then again, the press is being controlled by the short sellers, so they won't report anything favorable to CLF until it becomes so painfully obvious that the company is worth a lot more than the current share price.
One thing I have noticed in heavily shorted stocks is that the short sellers really work hard to punish the share price when earnings are announced, regardless of how good (or bad) the numbers are. When the numbers are getting better, as in JCP's case, the shorts will run the stock up into the earnings announcement. They do this by buying the shares against the box (ie not eliminating the shares they have shorted). When earnings come out, the shorts flood the market with sell orders with these recently bought shares. I see this time and time again. On Jan 30, JCP shares were $7.27. Shares in just a few weeks are up 24%. I also think that short term players remember how JCP just crushed estimates last quarter. Short sellers are being careful here and long players have been buying as they figure the fear of JCP having another solid quarter will cause the shorts to cover, until the earnings news is released.
Every once in a while I check the short interest in ESI to see what is happening. In the Fall there was the huge short seller disaster when the shorts piled on an additional 4 million shares (short interest got up to +13 million shares) and ESI stock went from $4 to $14 in two days. The short losses on that move were just stunning. But that is old news.
So today I see that the short sellers have been covering roughly half a million shares every two weeks for the past month and a half. That is a steady decline in the short exposure and the "institutional hedge fund" short sellers are clearly reducing their exposure.
There is only one reason these short sellers exit a position. It is because the game is over. After the October fiasco, they now see the risks and are booking profits. In the meantime, these short sellers have hired some bozo low life bashers to pollute the chat board with negative commentary while they go about buying shares in a deliberate and cautious manner so as to not excite a short squeeze. If the institution short sellers are closing half a million shares every two-week short interest reporting period, that means they are buying 50,000 shares every day, day-in and day-out.
I often cite APPL as a turnaround example. You fail to mention that APPL was 90 days away from filing for bankruptcy according to Steve Jobs (when he took over). Jobs immediately raised $150 million dollars from Microsoft (Bill Gates) to save the day. Gates needed APPL to stay in the PC market as a viable competitor as the government was attacking Microsoft's monopoly position in the operating system market and was threatening to split Microsoft's operating systems business from its desktop software applications business. That said, the claims that CLF will go bankrupt are people whistling in the wind. CLF will not go bankrupt. Their US business is too valuable and worth a lot more than the current stock price after factoring in the company debt.
Now I have to say that your comment is really funny and made me laugh. There is certainly more than an element of truth to it.
You make fair points. I simply do not understand however how TSLA cars sell so well elsewhere, but generate basically no sales in China. Why? It is a fair question and Musk should have an answer. If the answer is management, what did management do wrong in China such that TSLA is basically selling no cars there. It would be one thing if China sales were somewhat below expectations, but in this case, they are selling basically no cars.
Musk knows exactly what the company's China marketing strategy is. He has without question signed off on it. So why isnt it working? What was wrong with the strategy? Is the strategy sound, but management failed to execute on it. If so, Musk should elaborate on that failure and explain what happened, and not just threaten to fire everyone.
I just looked at the TSLA chart and it looks awful. There is a clear head and shoulders from May 2014 to Dec 2014. That is a super bearish pattern. Now I also see that the 50 day moving average have broken through the 200 day moving average, and that is also a really bad sign. I usually am not a chart guy and am not a big fan of technical analysis, but this stock chart looks really sloppy at best.
Add some of the above observations to a very high valuation and #$%$ fundamentals in China and much lower gasoline prices (making Tesla electric cars less interesting to buy), there are some serious things to think about as a TSLA shareholder at the present time.
you make a good point. Why do Tesla's sell so well in California, but they can not sell them in China? What is the issue? If the product is not selling in China at all, there is something about the product that just does not get it done for the buyers there. That is a product problem. It does not mean that the product is bad and I never implied such. Everyone knows the Tesla car reviews in the US. So, the question is what is wrong in the China market for Tesla cars? What is it about the product that fails to get people excited in China? The Chinese are buying tons of cars, so auto demand is not the issue. So what is it about the Tesla that makes it not something the Chinese want. Maybe it is just that there is no prestige in China to owning a Tesla. Maybe owning a Mercedes is much much better. I certainly do not have the answers to the above question.
That said, Musk has not answered the question either (a huge failing on his part) and his solution to fire all the country managers is a bit like a tyrant. And who wants to work for someone like that.
You make an excellent point and I read the comments in the press about what Musk said about his overseas managers. I thought that Musk's comments were ridiculous. If Tesla sells 10 cars in China in a quarter, the problem is not the managers, the problem is the product. And a product problem is the CEO's problem.
Who is going to want to work for Musk in any of these overseas jobs? Muck has no loyalty or consideration for these employees.
It sounds to me like the results for the quarter are going to be weak and Musk needs to pass the blame onto someone. Musk also knows that the share price on Tesla is way out of line and he even said so last year when the shares were $240 (and he said that about the stock price before there was any bad news). Now we have a pile of bad news and shares have fallen only 10% to $210.
I would say this also. I have yet to see a Tesla car anywhere. Now I do not live in California. But there seem to be know Tesla'a on the East Coast or the Midwest. I do not think that people are going to buy them in these regions. They are certainly not buying them in China either.
This web site shows all vessels on the Great Lakes. You can also click on "webcams" in the lower right hand corner to see how things look.
I am not sure what the ice conditions are in the Great Lakes currently, but one thing is for sure...2014 was one of the worst ever for ice. Thus, I expect 2015 q1 to be better for CLF's US iron ore business than it was in 2014. The other thing to consider is that maybe CLF's US customers were so freaked out by the bad 2014 ice/shipping conditions on the Great Lakes, that this year (2015) they may have taken some precautions and stockpiled a bit more iron ore going into the winter. This would be pure speculation on my part. I would also say that the odds of having two back to back horrible winters on the Great Lakes is probably very very low.
The winter of 2013-2014 was particularly harsh, and there are very few options for customers needing cargo that is blocked by ice. The reason so many steel mills and powerplants are located on the waterfront is so they can benefit from the efficiency of waterborne commerce. The U.S. Army Corps of Engineers has estimated that Great Lakes shipping annually saves its customers $3.6 billion compared to the next least costly mode of transportation. But many of these mills and power plants lack rail access. Others have limited rail access, but the railroads have little if any capacity to spare right now. The cost of new rolling stock and rail connections could only be justified by long-term contacts, not by spot market moves to fill a temporary gap in deliveries.
Great Lakes basin industries such as steel making, power generation and construction are now geared to receive cargo nearly year-round. The Soo Locks open on March 25 and close on Jan. 15. After the locks close, iron ore will continue to load out of Escanaba, Mich., at least until the end of January, often into February. The cement trade on the lower lakes often resumes about March 1 and iron ore shipments on Lake Michigan and Lake Erie start backing up not long after that. Demand for U.S.-flag cargos during periods of ice cover can approach 20 million tons. That’s why the U.S. Coast Guard has nine icebreakers on the lakes.
The 2014 opening of the Soo Locks at Sault Ste. Marie, Michigan on March 25 usually signals the start of the Great Lakes’ shipping season – but the locks still had not cleared the first vessel as of April 3, according to the Lake Carriers’ Association.
I do not think that CLF will report Q1 2015 eps that are at your range of $0.50-$0.75. Not that it matters. CLF's business is seasonal due to shipping problems in the Great Lakes in the winter. That means that steel producers stockpile iron ore going into the winter quarter and then when ice clogs the Great Lakes, ore shipments can not get through. See my separate post on the issue.
The seasonal q1 is well understood by the smart investors and the short sellers. I expect the short sellers to make a big deal of the seasonally weak q1 figures, although this will be just useless noise.
I thought that this was interesting. The board of directors set these 2015 ESI senior management objectives for purposes of compensation.
1. Resolve certain outstanding legal and regulatory matters involving the Company. 20%
2. Optimize the total number of contact hours in the first academic quarter of the ITT Technical Institutes’ program offerings. 20%
3. Effect matters relating to the third-party loan servicing organizations for the private education loan programs. 15%
4. Improve the 2015 ITT Technical Institute quarterly student evaluation average score. 15%
5. Reduce the current and future carrying cost and collateralization of the letter of credit that the Company is required to post for the benefit of the U.S. Department of Education. 10%
6. Improve the average NCLEX score of the 2015 graduates of the Breckinridge School of Nursing and Health Sciences nursing program. 10%
7. Acquire a training company to support strategic initiatives associated with The Center for Professional Development at ITT Technical Institute. 5%
8. Obtain requisite federal, state and accrediting commission authorizations for the ITT Technical Institutes to offer a dual high school diploma and associate degree program. 5%
Take a look at MLM today. Company says that US cement demand is strong. This has to be good for steel producers as steel rebar goes into cement and general cement demand also reflects strong infrastructure spending. This has to be good news generally for CLF.