Seeking Alpha

Investors may be too optimistic over Cliffs' Bloom Lake outcome, Stanley says

  • Cliffs Natural Resources (CLF -3.2%) is looking into whether its Bloom Lake project makes sense in the current environment, and Morgan Stanley believes a decision could come when CLF reports its Q4 earnings on Feb. 13.
  • The firm surveyed investors to get a sense of the consensus opinion around Bloom Lake and found it perhaps overly bullish; most investors expect CLF to find a new partner for the remaining ~$1.25B needed to complete Phase II, but the firm thinks it could be difficult to find a new partner on reasonable terms.
  • The firm also forecasts higher shipping costs, so it lowers its price target on CLF to $12 from $14 while maintaining its Underweight rating.
  • The latest report indicating a cooling Chinese economy is weighing on CLF and other global base-metal miners: RIO -0.8%, BHP -1.2%, VALE -2.3%.
Comments (11)
  • robnaro
    , contributor
    Comments (28) | Send Message
     
    I will be happy to buy at $12.
    23 Jan 2014, 11:31 AM Reply Like
  • chunghk
    , contributor
    Comments (305) | Send Message
     
    Me too. Dividend yield will be 6%, much better than a 5-year CD bank rate. Great! Let's wait.
    23 Jan 2014, 12:04 PM Reply Like
  • lsuavecito
    , contributor
    Comments (652) | Send Message
     
    Patience will be rewarded here. You will see CLF under 10. The dividend may have to go bye bye.
    23 Jan 2014, 02:08 PM Reply Like
  • chunghk
    , contributor
    Comments (305) | Send Message
     
    Yes, you might be right. C could go to $0.99 per share and BAC $3.90 not long ago. Enron bankrupt. So, let's wait, wait. Thanks.
    23 Jan 2014, 03:56 PM Reply Like
  • johnaudio
    , contributor
    Comments (11) | Send Message
     
    CLF will go up from here and surprise shorts! NG is gettin more expensive. Ca't switch on a dime.
    23 Jan 2014, 10:04 PM Reply Like
  • Evren
    , contributor
    Comments (4) | Send Message
     
    Global steel production increased in 2013
    Thursday, January 23, 2014 | Source : AFN | first to comment
    BRUSSELS ( Reuters) - The global steel production increased in 2013 by 3.5 percent to 1 607 million tonnes , driven by growth in Asia . The World Steel Association announced Thursday.

     

    Steel production in Asia increased by 6 percent to 1080.9 million tonnes , led by a rise in China by 7.5 percent to 779 million tonnes . China last year took 48.5 percent of world steel output, against 46.7 percent a year earlier
    24 Jan 2014, 07:48 AM Reply Like
  • sulo
    , contributor
    Comments (111) | Send Message
     
    It is at times comical to watch a brokerage firm make a negative call to reinforce their particular position. Are the analysts overly bullish on Bloom Lake as they suggest, or is MS overly bearish? Does anyone have disclosure on whether or not they are short?
    24 Jan 2014, 10:04 AM Reply Like
  • chunghk
    , contributor
    Comments (305) | Send Message
     
    Apparently a battle between bull and bear. Result will be in around mid Feb. Not too bad for small investors to gain a 3% dividend against 5-year bank CD rate. Thanks.
    24 Jan 2014, 12:07 PM Reply Like
  • lsuavecito
    , contributor
    Comments (652) | Send Message
     
    chung, there are more attractive equities in which to receive 3% dividends and more, like 5%-7%+…….without the headaches.
    CLF's 6 year bonds are trading at a discount, and have a YTM of approx. 5.5%
    24 Jan 2014, 01:04 PM Reply Like
  • sulo
    , contributor
    Comments (111) | Send Message
     
    Do you still see clf going under 10?
    28 Jan 2014, 11:59 AM Reply Like
  • lsuavecito
    , contributor
    Comments (652) | Send Message
     
    8.80!
    29 Jan 2014, 01:10 PM Reply Like
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