I would say that I am not sure what "Wall Street" motives are here in general. The shorts are holding fast and figure that they have momentum on their side. I also believe that the analysts on Wall Street got crushed in the share price decline from $100 and for the past year going with the short seller thesis is a much easier sell and pays better as their hedge funds clients have much higher commission generating trading volumes.
I do not trust the Wall Street analysts for one second and why anyone listens to them is beyond me. The analysts so far have been totally off the mark on CLF's earnings and in the last conference call virtually every analyst said positive things to the CEO regarding the CLF results and the job the CEO was doing (go reread the conference call transcript). That said, here we are with all the steel stocks (including CLF) getting crushed in the past 3 weeks. CLF is not the only steel stock declining lately. Do you read or hear about ANY other steel company making any comments about their rapidly falling stock prices? I have not heard a word from any of them at all.
People also forget that CLF has a limited number of important iron ore customers. The company is probably restricted in what they can say as any comments can immediately by inferred to CLF's steel producing customers.
No one can control or predict what a stock price will do over any reasonable time frame. A stock price can be controlled in the short term by manipulation, but over the longer term fundamentals will prevail.
I sent the CLF an email today for them to put out a press release to that effect. All they need to say is that they are unaware of any reason for the share price to have declined such a large percentage and that nothing has changed and that the company's financial forecast for 2015 is unchanged.
I am not happy to see CLF share price getting slammed. Yet, I have not seen a single post that can provide any reason for the recent drop, which has been significant on a percentage basis but tiny on an absolute basis considering the $95 decline for $100. What is another $1.50 on top of $95 points down.
I see the usual bashers, who so far have been correct on the share price action, but who also have not been correct on earnings (earnings well ahead of estimates for the past two quarters - ie since management took over) or balance sheet developments (significantly reduced debt).
All of that said, why is the CLF CEO to blame for the falling share price? The only thing that I read here from the disgruntled is that the CEO has not spoken out. I see no serious complaints from these people about any of the fundamental steps the CEO has taken. Do all of you really think that the CEO can control the stock price? I am not sure what the CEO should be doing more than what he currently has been doing.....rationalizing the cost structure, focusing on the company's core profitable businesses, unloading the problem businesses, and so on. Furthermore, these people here complaining are the same set of people that cried foul when the CEO told that analyst that his earnings projections were all wrong on the conference call. I suspect that these posters here would prefer to have the old management back - the people that overpaid for Bloom Lake and gave away $6 billion of shareholder money for nothing just so the stock market could pump CLF shares up to $100 before the bottom fell out. Now we have the opposite. Shareholders are ticked as CLF shares are trashed to ridiculously low levels as the company is making all the good moves to build future long term value for shareholders and to get CLF on firm footing and the right track.
I strongly doubt that Casablanca bought long dated puts. Such puts are frightfully expensive and if the share price actually performed well after the change in management, then Casablanca would not have made any money at all as the share price rose. This would have been a disaster as far as Casablanca's own investors are concerned. I strongly doubt that Casablanca hedged away its upside in the stock when it was telling its investors and everyone else that shares were a huge buy at $27.
That said, Drapkin's 7.5 million shares is tiny compared to the 50 million shares that have traded in the last 5 days or so. I find it generally difficult to believe that if Drapkin were being forced to sell that his shares would not have already been long gone.
Here is the press release from January 2014 outlining Casablanca's investment in CLF
"January 28, 2014
Casablanca Capital LP, led by Douglas Taylor and Donald Drapkin boosted its stake in Cliffs Natural Resources Inc (NYSE:CLF) to 5.2% of the company. Casablanca now holds 7.9 million shares of the company, with 7.5 million of the shares acquired in the last 60 days. The stock currently trades at $ 20.79, and lost nearly 25% so far in 2014. According to a 13 D filing by Casablanca Capital LP, the fund bought 7.5 million shares at around $25.1."
......Basically this move from $25 to $3.50 is a complete wipe out for Casablanca. It represents a loss of 86%. Even if CLF were in bankruptcy (which I do not think that they are going to end up at), CLF shares would probably trade a $1-2 as the shareholders would have some value after the bondholders were taken care of. That means that Casablanca has already seen the bulk of its investment disappear. I do not think that Casablanca's clients were thinking that this is how things would end up with their "activist" investment with them. Activists like Icahn and Ackman have been doing really well the last couple of years and it seems that many players are trying to go this route as it gives the investor the opportunity to influence the outcome, which is something that the general investor can not do.
I would think that Casablanca has a lock up period for its investors. They invested with Casablanca with a set period of time where their money can not be withdrawn. When this lock-up period ends, then the investors ask for their money back, which then causes Casablanca to sell their CLF shares as this is their only stock in their fund. Normally these redemption periods are quarterly, semiannually or yearly. It could be that the June 30 date was the end of the lock up for Casablanca shareholders and they are asking for their money back. That said, Casablanca would have 7.5 million shares to unload.
The latest headlines out of China were as follows:
Inventories at Chinese ports increased by 2.8% last week to 81.55 million tons following 11 straight weeks of declines, according to Bloomberg.
.....I can not imagine that this is what is causing the decline in all shares related to steel and iron ore stocks. The decline in the share prices started three weeks ago - so two weeks ago, the Chinese inventories were still declining, which should have been favorable to the iron ore stocks (even though CLF has little to due with the Chinese market directly. I am increasingly thinking that there is fear among large investors that the Chinese will start dumping steel in the US. This will cause US steel production to fall and that in turn will hurt US iron ore unit sales. That said, the US government will not stand for this for one minute. Steel dumping here is 100% taboo and everyone has been down that road before. If it comes to that, huge tariffs will be put in place. to lock out the Chinese steel manufacturers. Steel is a critical industry for the US, especially and most importantly for military purposes. How would the US ever be able to build tanks, guns, airplanes, battleships, and so on without a standalone steel industry with domestic sources of iron ore supply and steel manufacturing capability? US government will never let the Chinese put our steel industry at risk.
I must admit that I am a bit confused by the magnitude of the drop in the share price when there has been no news. The only thing I can see is that the Chinese stock market is down sharply and I guess investors feel that the local Chinese economy is weak and that this will result in the dumping of Chinese steel into the US market. All the other major economies have already put through import tariffs on Chinese steel ahead of this possibility. The US has also put through new regulations that allow the US steel producers to ask for tariff relief. All the publicly traded steel stocks in the US have gotten crushed in the last two weeks.
CLF is also in the quiet period for CLF so there is nothing that the company can say to address the decline. Management buying back stock in their personal accounts has had not stopped CLF shares from falling further, although the buying has probably arrested the magnitude if the decline to some extent. I generally attribute more "value" to CLF from management buying stock in their personal accounts than I do the company making a corporate share buyback. As the share price acts right now, it seems like Wall Street could care less about a corporate share buyback. Wall Street probably does not believe the CEO on his comment to use the buyback if the shares got hit hard. Below $4, shares have been hit hard and there has been no buyback. so far. I do not believe that CLF is prevented from buying back shares during the "quiet period" before earnings are released. There is no such specific regulation that forbids it as far as I am aware. But who knows what CLF's securities lawyers are advising, if anything, on this front.
US steel stocks are down huge in the past several weeks on fears of Chinese dumping steel into the US market. I have seen no reports of actual dumping. All I have heard about are "fears" of dumping as the Chinese consumption of Chinese steel has slowed down in the past year.
Three months ago, the European Union imposed anti-dumping duties on imports of flat stainless steel from China and Taiwan.
Now, several steelmakers from the US is seeking tariffs on American imports of the same products from China, India, Italy, South Korea, and Taiwan to shun the "possible" onslaught of cheap imports to the country.
Behind the petition are steelmakers United States Steel Corp., Nucor Corp., Steel Dynamics Inc., ArcelorMittal USA, AK Steel Corp., and California Steel Industries.
The steelmakers said that the petition for imposing anti-dumping duties on the aforesaid countries came after continuous price decrease in the past months despite robust demand.
On the other hand, India has already imposed anti-dumping duties against flat stainless steel products coming from China and other Asian countries. The anti-dumping duties ranging from $180 to $316 per tonne will be effective until 2020.
Even though Obama signed in a new favorable law to allow US steel companies to seek tariffs for foreign dumping of steel, investors are worried about China dumping excess steel on the US market. This is the fear trade going on in steel stocks right now. I suspect that a falling seaborne iron ore price to China makes the hedge funds think that China's local demand for steel is weak. If local Chinese demand for steel is weak, then there is greater temptation or impetus for the Chinese to dump their steel in the US market. That must be the logic, as there is no other explanation for the recent two week beating in all the US steel stocks and in CLF.
No wonder why CLF shares are down. CLF shares are just following the terrible price action of the US steel stocks. AK Steel (AKS) shares are down from $6 to $3.50 in the last few weeks. MT shares are down from $12 to $9.50. X shares are down from $27 to $19.65. NUE was $50 and are now $43.80. All of this in the past few weeks. I am not sure what the news was in the US Steel sector to cause such a wipe out.
The political news was great on the steel front in the past several days as Obama signed in new favorable laws.
Obama signs two trade bills backed by US steel industry
Pittsburgh (Platts)--29Jun2015/432 pm EDT/2032 GMT
President Barack Obama signed into law Monday two pieces of trade legislation that US steelmakers believe will help open new markets and improve their ability to battle illegal imports. US Steel President and CEO Mario Longhi commended the president for signing the two bills that he said would open markets to US-made goods and protect US workers and companies by clarifying the injury standard in unfair trade cases.
"Today he took an important first step in the process of leveling the playing field against unfairly traded products and supported fair trade at home and abroad. We look forward to working with members of the administration to ensure that US trade laws and practices are strong and that countries who break our laws are punished before irreparable harm is done," Longhi said in a statement.
When one considers that there are some very large blocks of stock locked up out of the 150 million shares outstanding, 53 million shares traded in the last few days is an enormous number. It has to be well over half the "freely trading" shares, which implies that half the non-core shareholder base has turned over. And on what news? Some lame research from Wolfe? And after CLF reported that incredible quarter that was hugely ahead of all the analyst estimates. And with the balance sheet much improved. And the company's cash balance really solid. With operating costs way way down. And the company is going into the strong part of the US iron ore selling period.
My purchase at $4.30 the other day is looking lame, but I well knew that the shares could easily go to below $4.
Still scratching my head why the shares are down from $6.50 to $3.75 recently on absolutely zero news.
I am looking at the 1 minute trading and volume on CLF today. Look at that huge volume trade right at 11am. 570,000 shares. Some institution blew out of a pile of stock. They were clearly looking to sell in the morning and the share price had to find a level that enabled this block to get placed. Since that large block sold, the share volume has fallen to almost nothing.
Who knows why this block was sold and by whom. There is no way to tell unless you know the seller. That said, someone bought those 570,000 shares. So now we have a new CLF shareholder with 570,000 shares (or an existing shareholder with a larger position).
We will see what happens during the rest of the day. If the seller has more stock to go and wants to force those shares onto the market, CLF share price will probably go lower today (unless there are decent buyers at the $3.80 - $3.90 level).
There has been no share buyback as of yet, as reported in the SEC filed financial statements. There has been no change (reduction) in shares issued or outstanding or shares held in treasury (Probably a previous buyback from a long time ago).
It is easy to get frustrated with the share price, especially when it responds negatively to the inane Wall Street research from this Gordon bozo at Wolfe Research. This is where patience and conviction is required to overcome those that publish weak research and those that always have something negative to say, refusing to look at the positives.
1. The CLF CEO should not spend 1 minute responding to idiotic Wall Street research. He has more important things to do than to address these idiots and to attempt to placate shareholders who are of such weak minds that they need to be hand held on every drop in the stock.
2. The CLF previously gave a tongue lashing to an analyst on a conference call. Many here commented how he should not have done that. I thought it was great.
3. The CEO has already addressed to Wall Street and investors the exact impact that lower China spot iron ore prices would have on CLF's iron ore prices (ie not much). How can the CEO help it if the Wall Street dummies are so slow that they publish stuff that is completely wrong to the the company's detailed analysis of the situation.
4. Use the lower stock price to add to your position if you believe CLF has great opportunities as a company and as an investment. If you are over-leveraged in the stock, you are probably in a lot of financial trouble, which is unfortunate.
Why does anyone ever listen to any Wall Street analyst anymore? Haven't we been through the 2000 internet collapse and the 2088 housing/economic collapse, all fueled by overzealous Wall Street analysts looking to make a fast buck off their trading commissions and off their lousy research?
Normally, the news of a CEO buying shares in his own company would be a huge positive for the share price. But that has not been the case so far. There has been no bad news on anything related to CLF.
A $1 drop is hardly noticeable on the long term CLF share price chart with the shares down from +$100. However, the percentage drop in 4 days on no news is significant. This represents one of the challenges in a low priced stock. Shares like there often move up or down 20% to 40% in a flash.
This filing was issued in May. We are in July. Your information is a month and one half old. Moron.
you are a complete moron. What you are referring to is an S-8 filing with the SEC relating to shares to be offered employees in CLF's employee benefit plan program. This is a common employee incentive program and does not mean that there will be a public offering of shares at any price. THe S-8 filing shares will no doubt be offered to employees over time.
So shut up and go away, moron.
idiot. CLF made no such filing. The SEC website shows no filings. I suspect that you are confused with the news today that CLF paid its regular quarterly dividend on its outstanding preferred shares of $12.9 million. What a moron.