Cliffs Natural Resources -3.5% as Morgan Stanley outlines bear case


Cliffs Natural Resources (CLF -3.5%) is the biggest loser in the S&P 500 after Morgan Stanley explains its bear case on the stock, citing Great Lakes supply, cost control issues and weaker seaborne iron ore pricing.

CLF long has enjoyed near monopoly pricing power in the isolated Great Lakes iron ore market, but the firm expects that will end as 10M tons of new capacity hits the market, and major global projects from Fortescue and Rio Tinto start up at the end of this year, which could pressure pricing in 2014.

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Comments (5)
  • wykie722
    , contributor
    Comments (10) | Send Message
     
    Nothing like a little manipulation as short sellers are having to cover their positions. Why not throw some speculative negative news into the mix hoping to bring the stock down so they can cover at a lower price. Good job MS- Keep up the good crooked work...
    19 Aug 2013, 11:20 AM Reply Like
  • WPSPIKER
    , contributor
    Comments (1149) | Send Message
     
    Shorts better cover they got a good chance to do so here but it held it's uptrend line at the low today and is now going up hoping to break back positive after recent pullback. stocks mostly flat today with hard assets holding the line.

     

    New capacity means little when lot of long term contracts already in place thru I believe 2015.

     

    M
    19 Aug 2013, 12:01 PM Reply Like
  • Bugle Boy
    , contributor
    Comments (173) | Send Message
     
    One of the risks a shorter term trader has to deal with is this type of article. Better to watch the market, carefully pick an occasional security, read, read, read and then make your own considered decisions. Review your decisions on some sort or regular basis.

     

    Some times these releases work in your favor, some times not. When there is a beaten down stock, one will expect the shorts to play. When it rises, they need to cover.

     

    Morgan Stanley has added speculation to the mix, perhaps based on facts it sees as valuable. I will not assume any particular purpose in its release. Rather, I will accept it for what it is and continue to act as an informed, and not an impulsive, investor.

     

    I think that MS is wrong on this one and I will remain long in a small position, unless there are real factual changes in the company's fortunes. I can be smug if I am correct and MS is not; if I am not, well....
    19 Aug 2013, 12:34 PM Reply Like
  • maverta
    , contributor
    Comments (332) | Send Message
     
    Truth is no one, neither Morgan Stanley or the posters here, know what will happen with supply or more capacity coming on line. Bottom line is that CLF is a very risky stock with many headwinds facing it. If the news out of China was terrific, I'd say this is a good place to be. But it's not and that is why this stock has done so poorly. I would not be a buyer here. If I owned, I'd hold but with a mental stop. In a market correction, CLF will get hurt more than most. On the other hand, in rally mode, CLF will go up faster than most PROVIDED NEWS OUT OF CHINA IS POSITIVE FOR THEIR ECONOMY!
    19 Aug 2013, 02:33 PM Reply Like
  • Johan1952
    , contributor
    Comments (34) | Send Message
     
    Fact is nobody and i repeat nobody predicted iron ore price that high 6 months ago ! everybody was talking about China slowing down, massif new supply coming to the market etc.
    Now with q3 almost 2/3 away iron ore price is close to $140 and CLF should have another healthy quarter !
    Keep on the good work MS
    20 Aug 2013, 12:56 AM Reply Like
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