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Cadiz Inc. Message Board

xds58 29 posts  |  Last Activity: Apr 29, 2015 7:06 PM Member since: Mar 26, 2002
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  • xds58 xds58 Apr 8, 2015 10:51 AM Flag

    I'm puzzled by this too - someone apparently really didn't like the news. What are we missing?

  • Reply to

    Buying opportunity

    by mstrouse54 Mar 31, 2015 12:08 PM
    xds58 xds58 Apr 1, 2015 9:03 AM Flag

    traded above 20 for 2007 - not sure what your point is?

    MSB pricing isn't tied directly to seaborne ore - its a contractual price with MT. Hence I think the key risk is MT volumes.

    End of 2016 they renegotiate price, and its conceivable low seaborne price will impact that negotiation. But contracted price already pretty low, so doubtful it will go lower. It could remain flat.

    That said, there is clearly something going on based on volume. I'm not sure what.

  • Reply to

    Here's our problem (end of day sell off)

    by xds58 Mar 31, 2015 4:20 PM
    xds58 xds58 Mar 31, 2015 5:47 PM Flag

    PS I should add that Minntac is an ore operation run by US Steel, and US Steel has already idled some of its steel production, so not sure how direct the read through is to MSB. Clearly some big holders think its direct. Maybe they're right - feel like there's a bit of info vacuum right now - until CLF and MT report won't really know what the outlook for US production is.

  • Selling the stock down to this level on what presumably are temporary steel shutdowns seems to me to be short sited, but what do I know? Obviously the worry here would be that MT, where MSB ore goes, also shuts in capacity.

    U.S. Steel (X) Stock Down Today on Plan to Idle Minnesota Plant
    ByShawn IngramFollow | 03/31/15 - 03:33 PM EDT

    NEW YORK (TheStreet) -- Shares of U.S. Steel (X - Get Report) were falling 4.3% to $24.35 Tuesday after the steel producer announced it will idle its Minntac plant in Mt. Iron, MN.

    U.S. Steel said it will idle the plant on June 1 due to the company's current inventory levels, and the ongoing adjustment of its steelmaking operations in North America. The company said it will continue operating Minntac in a reduced capacity in order to meet customer demand.

    The steelmaker did not say how many workers will be impacted by the idling, saying the number will be determined by operational and maintenance needs.

    Earlier Tuesday JPMorgan Chase (JPM) issued a bearish note about metals and mining companies, including U.S. Steel. Analyst Michael Gambardella said the firm is "not looking for a material increase in steel prices, as we think imports will remain elevated and scrap prices depressed."

  • Reply to

    Buying opportunity

    by mstrouse54 Mar 31, 2015 12:08 PM
    xds58 xds58 Mar 31, 2015 4:11 PM Flag

    The issue isn't so much ore price, it's volume. Unless you think the US steel industry is going to close up shop and never re-open, this is probably a pretty good price. I'm mystified as to why someone would knock it down an additional 5% at the close.

  • xds58 xds58 Mar 19, 2015 11:22 AM Flag

    Thanks - so what's your thought re MSB at this price - is it already priced in? I take it you think the risk is on quantity/demand - does this hold up since they are a low cost inland producer? Lower steel and oil demand means reductions from MSB competitors - or do they take a hit too?

  • My understanding is the MSB contracts are based on delivered pellets, the cost of which I believe is at a fairly wide premium to seaborne prices which are widely quoted - I believe the seaborne price is based on fines delivered? Is this correct? How wide is the spread typically between pellets and fines?

    If this is the case, I think it leads to a certain amount of misunderstanding of this name, as I believe their contracts are still below seaborne pellet price - but would like to confirm this. Thanks

  • Reply to

    Rising Interest Rates

    by bokky Mar 17, 2015 1:00 PM
    xds58 xds58 Mar 17, 2015 2:04 PM Flag

    As far as interest rates, the stock tends to react to Fed concerns, but fundamentally they are in decent shape because a substantial portion of the loans (assets) are libor plus, and there is a natural inflation hedge on the owned real estate portfolio. There is some discussion of rate sensitivity in the 10-K, not sure how helpful it really is.

    Frankly, I don't think rates are the thing to worry about here - the bigger issue is spreads (what they earn vs. what they pay), gains on conduit issuance (again something of a market/spread issue) - and why the CAD guidance is down year over year. Unfortunately we may have to wait for the next earnings release to get clarity.

  • Reply to

    Rationale

    by nosurebet Mar 17, 2015 10:38 AM
    xds58 xds58 Mar 17, 2015 11:23 AM Flag

    I'm a little surprised by this too. All I can guess is that if you break out CAD, you've got:
    Recurring CAD: 0.73 - 0.91 (midpoint would be 0.80)
    CAD from gains: 0.28 (at midpoint)

    That might be a little lower than people expected on the recurring portion and don't think they get much credit for the gains, as they are viewed as lumpy and potentially non-recurring (although their prob. is a recurring element as part of the business)

    So then question is what is right multiple on recurring CAD -
    My own sense is 10x is about right, which implies fair value around 10 x 0.80 = 8 --

    I think that's pretty conservative, especially since a growing portion of the CAD is from owned real estate.

    Will it get there? Beats me - hopefully it will get easier to analyze the contribution of the various parts post Taberna -

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