If you wanted to take a large position in options, wouldn't you want reduced volume and volatility to greatly lower the prices?
Suppose I had the theory that all of the people who died at Nagasaki and Hiroshima died from natural causes rather than the effects of the nuclear bombs. Do I understand that you would argue that the consensus theory that the bombs actually killed them would have to remain unproven, that you'd consider it a religious belief, since there was no appropriate control?
There is no evidence that the massive, swift environmental changes in the past 100 years are due to natural causes. None. There is a preponderance of evidence they are due to increased greenhouse gases. We can do controlled experiments on simulated environments and reproduce the changes we seen by increasing the levels of greenhouse gases. Although we can't model the effects perfectly yet, none of the inconsistencies explain away the experimental data and the actual climate results we have.
There's also the issue of risk. If the climate change deniers--and the word is correct since they are denying the abundant evidence we have--are correct, we will waste a large amount of money doing things that we need to do by doing them earlier than we could. If the consensus is correct, we will become extinct if we don't act.
While you may venture the theory that someone could stand in front of a freight train moving at 60 mph in their direction and survive, they have but one opportunity in life to prove it. I certainly don't want to be the one tied to the tracks while you make a bet on it.
Personally, my credentials don't affect the argument in an way. The evidence is what it is.
"Each share of our mandatory convertible preferred stock has a liquidation preference of $1,000 (and, correspondingly, each depositary share has a liquidation preference of $25). Each share of our mandatory convertible preferred stock will automatically convert on the third business day immediately following the end of the final averaging period into between 28.1480 and 34.4840 of our common shares, par value $0.125 per share (respectively, the “minimum conversion rate” and the “maximum conversion rate”) (and, correspondingly, each depositary share will automatically convert into between 0.7037 and 0.8621 of our common shares), subject to anti-dilution adjustments."
Short people got no reason
They got greedy hands
They post on Yahoo
Tellin great big lies
They say shorted@40
And itgoin to 4
Dogs only pay em
Two cents for every single post
Well, I don't want no short people
Don't want no short people
Don't want no short people
Go ahead and throw your best, because global warming means warmer summers AND colder winters: increased volatility AND an upward momentum. Eventually Britain freezes, Georgia becomes a desert, and Florida becomes just a sand bar.
None of the matters. Nothing the analysts do affects CLF's performance. Nothing the shorts or longs do affects CLF's performance. The ultimate value of the company is based solely on how it performs. So how reasonable is his model for CLF's performance?
Not at all.
First, he ignores Bloom Lake. The recovery from that and other assets sales with bond repurchases could make up the shortfall even if the rest of his model was correct. Assuming zero recovery isn't plausible given what we know.
Next, he makes two fatal assumptions: no cost reductions going forth, and the cost of transporting+pelletizing ore to the midwest as being no more than 15% of any price. The former is unlikely, the latter is impossible. Even if all of CLF's contracts were to reset to being index based, they would be index based plus either a fixed cost or a cost not tied to ore prices. The price difference has to be at least the actual cost difference, and that's at least $20-$25/t no matter what. Quite simply, no will ever be able to buy DRI pellets at $57 + 15%. It costs more than $8 to ship and pelletize the product, even if you could get the ore for free.
There are reasons to short CLF even at this price. But assuming the absurd and then trying to justify it in an article isn't one of them.
Besides Graham's Security Analysis, any other book suggestions for valuing distressed assets?
If the take-or-pay contract is dismissed completely, it's virtually certain the company will get a substantial sum, but nothing is guaranteed. The court has extraordinary discretion. With no way to know what the outcome will be, we still should be able to come up with some intrinsic value to what's left. If the assets were auctioned off, what would *you* pay for them?
Deflation is takes much longer to resolve than inflation. Between falling yields and the company's improving finances, it's hard to say which will have more capital gains in a year, the preferred or the bonds. I opted for the preferred, but would have done better with the bonds so far from the point I made my decision. Still, at $1.12 in dividends + 86% of common...the preferred is still very attractive at today's price, though not as attractive as yesterday's. :-)
Which one? I pulled my quote from my ScotTrade account...and that's a helluva spread over yours.
Where are you getting that quote? Best I can get is .689.
Among other sources, they trade on the Frankfurt exchange, which allows unlimited naked shorting. They could asked to be removed, but all it takes is one hedge fund to declare itself a market maker on that exchange, and the loophole is open again.
Suppose the share price this quarter goes beyond your expectations, be in down to $3 or up to $15. What will you do with the money you make? Are you here just to make more money? For the excitement of the trade? Or do you have plans for the money you make?
This year I promised myself I wouldn't buy any more toys I don't have room for unless the proceeds for them came from a windfall. So I set a cap. Below that amount, the profits just get rolled into future investments. Above it, I get to play. Here's why I'm in Cliffs: I want a pair of Vivid Giya speakers. I can't justifying buying them; the speakers I have are fine. But I *want* them.
What about you? Are you buying or shorting for some particular purpose?
I'm reading The Snowball, Buffett's biography. In one section it talks about him buying Geico, when its stock had collapsed from $90/share to $2. They had tossed out the old management, and the CEO, Jack Byrne, was struggling to right the ship. It has this gem that reminds me of Cliffs:
"GEICO was getting such bad press, Byrne said, that if he had walked across the Potomac River, the headlines would have screamed, 'Byrne Can't Swim.'"
Legitimate shorts don't attempt to manipulate the market. Legitimate shorts don't fail to deliver shares when covering. Legitimate shorts don't pay people to post false messages to scare them into selling. Legitimate shorts don't prepare false research and distribute them through captured media outlets. Legitimate shorts don't kill the CEO's dogs and leave death threats on his wife's phone. Legitimate shorts don't vanish with millions of dollars of investors' money when the cops finally show up at their door.
Einhorn covered. I don't recall anyone accusing him of being a #$%$.
But the bucket shop boys who post in waves here? I think they deserve the appellation.
1. Sloppy earnings: It's true. They were covered in coal dust, rust, and if you sniffed, they still smelt a little of maple syrup. These earnings were filthy! They must be neat and tidy for the next quarter.
2. When they knocked the earnings out of the park in Q4, they broke Sam's window. Hey, dudes, Corolla windows aren't cheap!