I listened to the conference call and here are my thoughts.
1) Earnings were clearly a disappointment not due to the Australian business, which did fine and generated some reasonable EBITDA, but because the US business had surprising low volumes and weak pricing due to short term price resets for pellets sold to hot rolled steel producers. Both the low volumes and prices seemed like a big surprise to management by the tone of their voices. I think that they were very shocked. No one on this chat board or anywhere else had any idea that the pellet prices for hot rolled steel would drop. CLF's contracts are non-disclosure in agreement with the customer, so analysts and Wall Street do not know all the nuances.
2) pellet volumes are projected to increase in Q3 to 5.5 million from 4.2 million in Q2 (when customers ordered the minimums that their contracts would allow).
3) Steel companies have filed antidumping suits for cold rolled steel products. They have yet to do so for hot rolled steel. Look for antidumping complaints to be filed for hot rolled steel shortly. This will help in hotrolled steel demand and pricing.
4) CLF sill announce the sale of another asset (Pinnacle) shortly.
5) Bloom Lake is proceeding and we should hear news in the next 3 months.
6) Stock buyback is not clear. With Q2 being below estimates for the US business, management may hoard cash until the picture is better. I am just not sure about the buyback anymore.
7) Management continues to stand by its claim that CLF has ample liquidity - which I think that most people take to mean that no one should expect bankruptcy (as many here have opined).
Given the rampant fear mongering from dumpers/bashers on this chat board and the CLF management claiming that the company has ample liquidity, I figured that I would revisit the situation to come to my own conclusions. Here is what I came up with.
Currently ready available cash is $276 million plus the upcoming $130 million tax refund, = $406 million. There is also the unused ABL, which stands now at $332 million. The combined number is therefore $732.8 million. FYI, the notes maturing in 2018 are for $434 million. CLF is currently attempting to retire $100 million of these bonds for $50 million payment in cash. CLF also has $487 million in inventories which I am sure management will drive down sharply in the next six months and that should free up $150 million to $200 million in cash. Overall, we are looking at adjusted liquidity of $900 million.
So how does the cash flow situation look? For 2015 so far: CLF's current assets were reduced by $67 million, consisting in part with a reduction of its Accounts Receivables by $70 million (faster payment from vendors or whatever) offset by a rise in Inventories rose (consumed cash) of $227 million. (Be advised that overall CLF's current assets were $67 million lower, much less than the benefit of lower accounts receivables netted against higher inventories). CLF reduced its current liabilities by a huge $200 million (ie paid off short term obligations owed). CLF spent $135 million buying back bonds, $34 million on cap expenditures, and $25 million on Preferred dividends (which will go to zero shortly).
If one adds these sources and uses of capital, one sees that CLF spent $335 million on reducing (debt and current liabilities) its "obligations". It also added $227 million in inventories. That is $562 million in uses of funds. It used the $500 million first lien notes to pay for the reduction in obligations and increase in inventories. But the inventories will be converted back to cash.
I was reading the ridiculous posts from oht yesterday. What a waste of time. The guy is a complete idiot. Who would ever trust this clown with anything he says. Yesterday he boasts that if CLF shares trade at $2.35, it is all over for the stock and that it will collapse straight to $1 with no bounce. I have yet to read a post from this dope regarding any fundamental development in CLF or the industry. I guess he just stares at charts all day and we all know how many people have made fortunes from doing that - none. There is not one person I have ever read about that made any significant money using that approach over time. Who even knows who this clown oht is. Why would anyone listen to some dope that they do not know that invests by looking at charts? He is probably still short Apple Computer from when it was 90 days from bankruptcy.
w999surf has been 100% correct on CLF fundamentals. Few people on this chat board have a better understanding of CLF. That said, everyone knows that no one can ever predict how a stock will trade. All we can do is hope to make reasonable investments based on our understanding of business fundamentals and valuation. That in and of itself does not guarantee short term, or even medium term, success. But in the long term, fundamentals will rule and short term, misguided gyrations in share prices will turn out to be just that - short term, misguided gyrations.
you are an idiot. Your thesis is already proven to be wrong. Today Vale just cut production by 25 million tonnes.
My net conclusion is as follows: CLF has much more than ample liquidity to stay more than in business, but actually build new business (ie the DRI pellet activity). Going into the DRI pellet business would probably cost $500 million (a total guess on my part), and CLF would need to find a partner for that level of financial commitment. But CLF's situation is not such that a DRI pellet partner would walk away because of fear of CLF financial stability.
Had CLF not gotten rid of Bloom Lake, there is no question in my mind that it would have consumed another $1 billion in cash in that poorly timed venture and that it would be currently bankrupt. However,the current management has turned the ship around. Wall Street just does not realize all of this yet.
I find it interesting that RIO and BHP are not getting much commentary on their chat boards. I think that this may be due to the fact that even though these shares trade in ADR form in the United States, they are still foreign companies, domiciled overseas. I suspect that this keeps many investors, especially retail ones, out of the stocks and off those chat boards. Thus, there is not much commentary about the Vale news. CLF has had more commentary on its chat board about it and the news really is of no consequence to CLF as CLF is a US iron ore play.
Fail to deliver data is available from the SEC regularly. The last data is for the two week period ending June 30, 2015. In that two week period, CLF shares experienced almost daily "fails to deliver". Many fails were on the order of a few thousand shares. However, on June 22, there was a stunning fail to deliver of 412,755 shares and on 6/26 and 6/29 there were fails of 95,062 and 92,138 shares.
Looks to me like the SEC is doing nothing to curb the naked shorting of CLF shares. I have no idea how the compliance for failure to deliver works with the SEC and brokerage firms. Does the SEC contact the responsible brokerage firm and demand that shares are delivered? If so, if the brokerage firm fails to comply, is the offending trade broken or is the short seller forced to cover? Or does the brokerage firm just shift the shares from one account to another, hiding the failure to deliver? Since shares must be delivered in 3 trading days for settlement, if the brokerage firm shifts shares around among short seller accounts, it can perpetuate a large naked short interest that never gets reported. ie I am short 1 million shares; another investor shorts 1 million shares after me, but does not have the shares; the brokerage firm takes the shares from the "long" buyer to whom I sold the my original 1 million shares and lends them to the new short seller; each lending of the shares has to result in a share delivery at the end of the third day - this means that the same 1 million shares can be passed around in a circle to the various naked short seller three times (three days settlement). So an original 1 million share borrow of CLF shares can be parlayed into a three million shares short position with in effect 2 million of those shares shorted naked.
Generally, all shorts in a stock must have the shares borrowed "in advance". By borrowing the shares in advance, there should be no naked shorting ever. But clearly this does not happen.
oht is a low valued moron. He got lucky on the collapse in the commodity sector. He has had little added value on this board. His prediction that CLF shares would decline has come true, but it was not because of any fundamental that he pointed out here. His posts have been woefully lacking in any fundamental analysis. Even at $2.40 he was calling for more declines. Then the shares rose to $2.60 and he called it a dead cat bounce. Now we are at $3 - so much for his great predictions.
you are useless. Instead of asking the question for everyone else to do the fundamental investment work that you yourself should be doing, I suggest that you find out...
1. What coal subsidiaries did Vale and BHP sell?
2. When were they sold at at what price?
3. Where are the mines sold located?
4. What were the total mineral reserves at these mines?
5. At what price were they sold?
6. Do the sales include any special features, like installment payments over time?
7. How do these compare to CLF's coal mines?
8. Based on the above, what do you think CLF's coal mines are worth?
9. And so on.
Stop being a total twerp and tool. Do something constructive with your time. You a such a nag. Awful. No wonder why everyone finds you annoying.
The Department of Education disbursed some $100 billion in student loans during the 2013/2014 academic year, according to a study by the Center for American Progress published in the Chronicle of Higher Education.
More than a third of that, approximately $35 billion, went to grad students. The 20 schools drawing the highest levels of federal loan dollars pulled in $6.6 billion, representing an astound 20% of the $35 billion total.
Graduate degrees account for virtually all the student loans that are more than $100,000 per student. Once these students get these degrees, it is impossible for them to pay them off due to their massive size. ESI students graduate with $23,000 in loans and are trained in professional disciplines. Graduate degrees just do not pay. And of the schools with the most graduate student loans, ESI was of course not even on the list.
clfcomeback is just a "dumper pumper". A dumper pumper is one who posts conflicting buy and sell messages in an effort to confuse people. Confusion to potential investors is seen as risk. Perceived risk means that the buyer requires a more favorable price at which to buy (if at all) in order to offset that risk. It is all part of the short seller pollution on this board driven by short selling hedge funds and Wall Street trading desks that are naked short CLF. The hedge funds already have dumper othaeg on the board so straight forward dumping tactics are already covered here. Clfcomeback is just a different species of the same.
Damn dude. Every post you make is beyond idiotic. Are you really that stupid. Even w999surf can not help you.
You got you nicknuts in some underwear that is too tight.
Sell you shares and go away, moron.
What other stock does this? I know of none. 10% daily is almost like a small move in this stock.
Shorts could care less. If CLF retires $100 million in bonds for 50 cents on the dollar, it certainly does not seem to be impressing anyone. And longs are probably wondering why don't they use the money to buy back shares.
CLF has a choice. Buy back stock, buy back bonds, or hold the cash. If I were the CEO and thought that the company was going to go bankrupt, I would probably buy back stock. Why take the money and give it to the bondholders? Give the money to stockholders. Might as well. If I hoard cash and go bankrupt, then the value of the cash accrues to the bondholders. If I buy back bonds, the value of the cash also accrues to the bondholders? But, if I were not going to go bankrupt, then I have to pay off the bonds. So, why not tender for the bonds now at 50 cents on the dollar. Makes sense. However, that means that there is less cash for a stock buyback, if there will be a stock buyback at all.
after not showing your face on the board yesterday at all (when CLF shares rose 10%), you appear early inthe morning today when CLF shares were down 2% gloating how CLF shares could not hold a two day up move. Now shares are up another 5% and you post some more garbage. Pathetic.
When don't you give us a full rundown on CLF's liquidity. Management sayid on the Q2 conference call that it has more than enough liquidity in its business? Crunch the numbers and tell us whether that statement is correct or not.
hey fruitcake ohtaegun, where were you yesterday??? Not a single post on the day CLF shares go up 10%. Nowhere to be found?
Of the $160 million tax refund, $67 million is going to retire $123 million of the 3.95% 2018 bonds (net price of $0.55 per $1 bond). The 2018 bonds will be reduced from a face value of $436 million to $313 million, a 23% reduction. At current prices the remaining $313 million of 2018 bonds could be bought back with only $172 million. The effective yield on these bonds is 31% (buy bonds at $0.55, collect 5 semiannual payments with 3.95% annual interest rate, and get $1 principal payments in January 2018). Given that there are only 5 semiannual interest payments left in this bond issue, it is going to be interesting to see how the price of the remaining $313 million in 2018 bonds behaves.
The $123 million of face value 2018 bonds saves CLF $4.9 million per year in interest expense. How much is that worth in market cap to CLF. Well, spending $67 million on bonds should translate into at least a similar dollar increase in equity value, but actually should translate into an increase in equity value of the total debt reduction of $123 million (or a 25% jump in the share price). The $160 million in cash generates no interest income at current fed rates. The repurchased bonds saves cash interest and a much larger principal repayment in 2018.
CLF is now left with an extra $93 million from the tax refund. That could retire 18% of the common shares, but I doubt that CLF will buyback that amount of stock. CLF is probably buying back 5% of the company or $25 million in stock. That is my guess. 5% share repurchase is not insignificant and if ti were a separate shareholder, that purchase would require a 13D filing with the SEC.
Overall, the debt repayment and excess cash available should translate into an increase in CLF valuation of $400 million, or more, plus an additional amount for the reduced financial risk of the overall company. Lower debt must translate into lower perceived risk by my calculation. Lower risk means a higher stock price.
Let's face it, you are a complete clown on this chat board and everyone knows it. All this blabber how you have been short since the $20's. Where were you at $110? And then when share run you blab about getting long. It is just so pathetic. Absolutely no thought or intelligence. Just go stare at your charts. You will make more money writing a book about that stuff than you will trading any stocks. You are the type of idiot that buys GPRO, BABA, WYNN, GMCR and all the other hot stocks at the top just because the chart shows that they are "going up". Pathetic.