We added a touch of this name this AM since we had cut it back so severely, but I am adding another layer here in the $96-$97 range (in larger scale as it falls) - it is now down 16% today alone. Cleveland Cliffs (CLF) now up to 1.7% stake. It just scraped its 50 day moving average at $96. Amazingly, despite the carnage - this really only takes names like this back to where they were 3 weeks ago. Stocks definitely fall a lot faster than they usually rise.
I have a whole subset of stocks I am willing to make into 4-6% type of positions - I am just waiting to see if they fall to prices that would make me more content. Whoever falls first of this small group will get those slots... this would be one of those "best of class" names. If we can get a move down to the $70s or $80s I'd be moving it up the food chain in terms of position in portfolio.
[Jun 24: Cleveland Cliffs - a Man Among Boys]
Long Cleveland Cliffs in fund and personal account
10 comments:
Mark,
You can put me down for $15,000 in your fund. I believe you have my email. :)
BD
San Diego, CA
Thanks sir
Yes I do.
Mark,
Do you see this as a temporary drop for CLF and the whole group (since you are adding more) or do you suppose that this is more of a consolidation phase or plateauing out like how the ag plays(POT/MON etc) have done recently? I believe in the long term story for coals/metals, but I just can't decide whether there is some more downside pressure to these high flyers in the short term.
Hi David,
Generally after they sell off we have about 1-2 weeks of talk about the strong dollar, the strength in the US economy in 2nd half 2008 (I believe that will soon be postponed to 2009) and all that jazz so they sort of middle around. Usually there is not a V shaped bounce in the group as Barrons puts out an article about how commodities are dead, Cramer says buy JC Penney, etc. Then a few weeks later they resume their trend.
This time around they will throw in the global growth story is ending and coming from a guy who has been saying steel and petrol cannot continue going up or we are going to put the global economy into a death spiral, I am going to say it is nonsense. Most of these companies have oodles of underestimated earnings even if prices dropped 20% from here. Just my opinion but that won't stop the stocks from doing what they do.
But if you are buying today expecting a bounce tomorrow or in 2 days or 5 days I would not count on that. I am personally hoping for further downside of 10-20%. It will cause some pain on current holdings but those purchases will be the ones that generate the best medium term gains. i.e. CLF I'd like to see 70s or 80s. Apply same % to coal and fertilizer names.
Maybe when natural gas breaks down and DUG finally works we will be at a safer spot to conclude everyone has been smashed. The ability for that group to not be punished is my biggest beef with the "calling a bottom" thought.
No mention from you about adding to Mechel. It now down 27% from its recent high. According to estimates. MTL is expected to earn $4.78 per share in 2008, making it p/e a measly 8.9. What's more, analyst estimates for 2009 are $6.75 per share, making a forward p/e of 6.3. They are due to report next week.
Mark,
Thanks for the insight. I would also love to start positions in CLF and companies..
CREAM, trying to get MTL closer to $40. It is getting (aha) creamed.
I don't think PE ratios are being respect right now. :) See DRYS, see TSL.
Good news, I see CNBC saying the commodity story is over because GM doesn't need as much steel
And commodity are done and oil is the only thing going much higher (on its own) LOL
;)
They are saying sell coal...lol sell coal but oil goes higher ;)
YAY
Mark,
Any idea why CLF is diving by nearly 10% this am?? It's at 87.31 as I write this!! I see no real news to push it either way. May be a buying opportunity!
Because hedge funds are moving away from commodities. Pull up chart of Aug 07, Jan 08 and March 08 for similar moves.
This always happens towards the tail end of a sell off - this one has been 6 weeks in the making. So they are finally getting around to trashing the commodities. We've been warning about this for a month.
It will be a buying opportunity. Just waiting for a bottom to form - it could be a $70 stock for all we know.
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