Editor notes: It is seemingly that the pricing of iron ore is at its worst pessimism of below $50 while the inflection point for supply versus demand is either reached or nearby. We are patiently optimistic on the rebound of iron pricing of this cyclical business. Cliffs also has the stellar management like CEO Goncalves who put his money where his mouth is. The Chief has also been prudently executing the turnaround plan, laid down in September 2014. If we have it our way, we wish to fire another round of financing of at least $500 million to ensure an even a wider margin of safety. In addition, we are awaiting for progress in the upcoming quarters. Nonetheless, if improvement appears during this earning report that will just be icing on the cake. Taken altogether, the ten baggers profits of this cyclical business versus the risks of total loss warranted a small percentage of one portfolio for intelligent speculation.
“Unless you’re a short seller or a poet looking for a wealthy spouse, it never pays to be pessimistic,” noted Peter Lynch, as the legendary investor referred to his optimism that a cyclical business will rebound. That being said, we will feature a long thesis on Cliffs Natural Resources (NYSE:CLF), the iron ore mining business that was a case study of the Brugada in the making.