Cliffs Natural Resources (CLF) -5.2% premarket after Goldman Sachs downgrades shares to Sell...


Cliffs Natural Resources (CLF) -5.2% premarket after Goldman Sachs downgrades shares to Sell with a $25 price target (from $33). The firm says CLF's decision to delay its Bloom Lake expansion and curtail some operations underscores the disadvantages for high cost producers like CLF in a relatively weak iron ore market. The firm also expects lower production volume in Canada will translate into higher costs.

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Comments (6)
  • Thomas Azzara
    , contributor
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    TODAY... (Nov 20 2012) ....Credit Suisse analyst (Nathan Littlewood and Yan Truong) lowered their 2013 FY earnings estimates for CLFs to - 78 cents (from +1cent) and lowered 2014 estimates as well to - $2.65 (-1.64).

     

    This AP release yesterday explains what's going down in better detail!
    http://on-msn.com/Wh2bKV

     

    According to the company, their Eastern Canadian iron ore sales volumes will fall to 9 million to 10 million tons for 2013 from its prior expectation of 13 million to 14 million tons.
    The company cited weak demand and plentiful supply as well as weak iron ore prices and higher labor and mining costs.

     

    If you crunch the numbers, 2013 production TONs (and associated revenues) will decline by a hefty sum... by as much as 20%.
    20 Nov 2012, 08:29 AM Reply Like
  • Donald Marchiony, Westpark ...
    , contributor
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    One of David Einhorn's short ideas from the GIBI conference a few weeks ago, here's a link: http://bit.ly/Q870YR
    20 Nov 2012, 11:00 AM Reply Like
  • RSI Raistlin
    , contributor
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    The article explictly stated Einhorn did not say it was a short recommendation of course........an example in the sector.
    20 Nov 2012, 12:36 PM Reply Like
  • Thomas Azzara
    , contributor
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    There's not much "short" left in CLFs at $30 a share. CLFs might make $2 a share in 2013 with IO prices of $125/$135 a ton it might trade at $40++ again.....but.. i doubt this scenario...today.....
    20 Nov 2012, 12:39 PM Reply Like
  • Donald Marchiony, Westpark ...
    , contributor
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    All I said was that it was a short idea, I did not say it was a recommendation or position. In his presentation he estimated that IO could get to $80/MT given new supply coming online and slowing Chinese demand. He indicated that this would put CLF's 2013 EPS at $0.25 vs. a (then current) consensus estimate of $3.50. It's obviously just an opinion, draw your own conclusions.
    20 Nov 2012, 02:06 PM Reply Like
  • Thomas Azzara
    , contributor
    Comments (453) | Send Message
     
    On July 31 2008 IO prices were $180 and CLFs traded at $110.

     

    On Sept 30 2008 IO prices were $139.34. CLFs traded about $50.

     

    One month later.....!!!!!

     

    On Oct 31 2008 IO prices were $88.57. CLFs traded about $27.

     

    When IO prices fell to $60 a ton in April 2009 CLFs was at $13. That was the height of the recession.

     

    Guess it pays to watch those IO prices carefully before you go long the IO producers (VALE, RIO CLFs)!

     

    CLFs looks like its at its "bottom" for now.. until next earnings session. idoeno

     

    Cheers!
    20 Nov 2012, 03:16 PM Reply Like
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