Cleveland Cliffs ($CLF) The bastion of steel
Morning all you Regards and Degens i'm here today with your next opportunity to lose everything.
Cleveland Cliffs had been on a steady decline the last year starting at 20$ in January reaching as low as 11$ this morning. Between declining steel prices and an economic slowdown the industry in general has been taking a hit.
From everything I've seen, this is just a fire sale 💰💰💰
Streamlining the process
If you've paid attention to this company the last 3-5 years, you'd know of the multiple acquisitions by Cliffs
2019 Purchase of AK STEEL https://www.clevelandcliffs.com/investors/news-events/press-releases/detail/50/cleveland-cliffs-to-acquire-ak-steel
On a side note - this sale included the now known Cleveland Cliffs tooling and stamping. This is an extremely good purchase for a company like cliffs - multiple production plants for automotive manufacturing/ tooling facilities allowing it to dip its toes into other operations. https://www.clevelandcliffs.com/operations/tooling-and-stamping
2020 Purchase of US operations of ARCELORMITTAL This purchase is what allowed cliffs to jump into the NA #1 position for flat rolled steel. If you're familiar with the industry at all, you'd know that theses coils are ESSENTIAL to automotive stamping - the facilities they own can now operate with in-house product (which you can imagine saves even more $) With the huge "American made" push we're seeing with EV's and other industries I can only see Cliffs getting propped up like a saint. https://www.clevelandcliffs.com/news/news-releases/detail/13/cleveland-cliffs-inc-to-acquire-arcelormittal-usa
StelCo acquisition This is similar to the ARCELORMITTAL acquisition but on a smaller scale - more facilities for flat/cold rolled steel bolstering their #1 position
Possible U.S steel acquisition Following the announcement of the sale for U.S STEEL ($X) Cliffs made a bid ~8B$ that was ultimately doubled by japanese company Nippon steel. The sale isn't looking to promising for them with Biden and following candidate Harris and Trump both stating they would block the deal to the Japanese company. This put cliffs as one of the remains offers with CEO Lourenco Goncalves saying he's still open to negotiations.
Optimism With the recent developments we've seen - proposed tariffs on Chinese steel, blocking of the US steel sale, needing American production of steel (national security risk) and cliffs steady acquisitions are making me rock hard and bullish. As these fairly new acquisitions are incorporated into the company we can expect to see cost saving and production increases. Also this Goncalves clip: https://youtu.be/kcagi2icXaU?si=-pLkBqM_r_82hqpL
TLDR: Within a few years Cliffs has managed to fortify their position as a bastion of American steel - slowly increasing their output and integrating other companies under them. With them dipping their toes into other industries
Positions: 330 shares @14.00$ (averaging down as it drops)
Mix of options varying from 15-25$ strikes expiring January, August (hoping to capitalize on a possible us steel acquisition)
Few Jan 26' 35$ calls
Good luck gambling!