They are trade imbalances as traders ( institutions and individuals) look to liquidate or add to their positions and they must be settled. Art Cashion on CNBC reports this imbalance every day and most of the imbalances is on the sell side as day traders are looking to liquidated.
This is from a Seeking Alpha article on 4/25/2013:
"The shares of this preferred must be converted to common stock on 2/1/2016. The conversion rate is based upon a complex formula that is related to the selling price of the common stock at the time. Each 100 shares of the preferred will be converted to 70 to 86 shares of the common depending on the price of the common on that date. If the current market price of the common on that date is greater than $35.53, one will profit from the conversion. If the current market price of the common is less than $29.00, one will lose money on the conversion."
Hope this helps you,
All I know is that CLV is getting closer to converting to CLF at unfavorable terms and the dividend is becoming less of a factor in owning it. Other than that, I really have not stayed up on the issue.
like I said, CLF performs good when the market is down big, don't know why. But CLF could be positive for the day.
My questions are:
- Can their low quality iron ore be easily converted to pellets?
- Does processing pellets from those reserves reduce output and increase cost to the point where the pricing advantage goes to the domestic Chinese suppliers?
- Does the oversupply and low seaborne prices keep a lid on pellet conversion?
I don't see Wuhan has a claim with the CCAA, they could have an agreement with CLF outside the process.
I have people file bankruptcy on me before and I know exactly where I stood in the food chain. As a landlord, I was an unsecured creditor, but I still own the house. But bankruptcies are really simple, if you have a claim with a lien, you get the entire proceeds from the sale of that item up to your claim amount.
If you are a lien holder and HAVE submitted a claim, you can receive up to your claim amount from the sale of that particular asset as a secured creditor. If the asset is sold for less than your claim amount, then the balance of your claim gets put into the unsecured pool of claim holders. If the asset is sold for more than your claim, that money is put into the pool to pay unsecured claim holders. All this process is just a bankruptcy proceeding and CLF is not the one going bankrupt, they are a creditor. CLF has also lent the CCAA money to finance this restructuring for which they will be paid back from proceeds before any secured creditor is paid.
Reviewing the claims, CLF has over $5 billion in claims that is secured by their ownership of the mines and infrastructure. I do not see where Wuhan has a claim listed. So if the mine is sold, CLF will get 100% of the sale of the real part of the mine. Now CLF may have an agreement with Wuhan to pay them a percentage, but that must be outside the CCAA.
This is a simple review and there has to be lots of verifications and settlements within the courts.
Low volume off the open and the shorts have not piled onto CLF in the first hour. Unlike the past couple weeks, buyers are winning off the book today, hopefully it is an indication that the shorts are starting to look elsewhere of their next target. Each day that passes, we get closer to the release of some asset sale or other positive news.
While we are getting close to the end of the CCAA, don't look for a complete end until the end of 2015. In a couple weeks we should have a date for the end of the bid review, but we should have some of the assets go to an auction. Quebec has publicly announced their bid for the rail and port assets, I have to assume there are others that see value in them as well like Alderon that can save millions off their Kami mine estimates in buying existing transportation assets. However, Quebec has made it clear that these assets must be held by the public. One of the key assets is the vast land holdings at the Port that Quebec wants to see developed.
CLF has information on all of this as it was stated that Quebec released bid information to CLF. And while negotiations with the coal mines continue, they must have some news on the progress. They just need to release something to explain they are on track.
You have four different transactions,
1. Pure sell at market
2. Pure buy at market
3. A buy of a market seller, that is where you get a buy at a half of a cent.
4. A sell to a market buyer.
So in your case where the price goes up, you have a wave of sellers that are greeted by a larger wave of buyers that absorb all of the sells and then are buying at market.
Did I even say that CLF's problems are tied to labor contract? Just reported on the status of the negotiations and any positive outcome to the contract will have a positive impact on the stock, based on previous contract negotiations. Just go back and look at them in the past. But if you took the time to review the issues the steel companies and unions are dealing with, you can easily see where both sides are coming from. Labor is one of the largest expense in a mining operation, any percentage increase or decrease on those cost make a major impact on bottom line profits.