Mesabi Trust Shares Plunged: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of iron ore royalty trust Mesabi Trust (NYSE: MSB  ) fell as much as 16% in intraday trading Thursday on extraordinarily high volume.

So what: Mesabi Trust closed yesterday's trading down 6% (nullifying the gains from earlier in the day), but apparently Mr. Market wasn't quite done with the sell-off. It's tough to know what exactly is driving this heavy punishment, but when you consider Mesabi Trust's volatile nature (a beta of 1.8), exposure to commodity prices, and the fact that its stock has more than doubled over the past six months, big drops shouldn't be a big surprise.

Now what: Investors should see this weakness as a possible income opportunity. Without any big company or industry-related news, I'm taking the latest move as part of the normal stress that comes with such a volatile stock. You might want to diversify your iron ore bet with Vale (NYSE: VALE  ) , BHP Billiton (NYSE: BHP  ) , and Rio Tinto (NYSE: RIO  ) , but Mesabi is a proven outperformer at least worth looking into.

Interested in more info on Mesabi Trust? Add it to your watchlist.

Fool contributor Brian Pacampara doesn't own a position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (3) | Recommend This Article (7)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 16, 2010, at 1:37 PM, exeter17 wrote:

    Only down 10% as of now. I want it to drop to 40 so I can buy in. Stock hyping the stock and let it fall so I can buy more!

  • Report this Comment On December 16, 2010, at 2:41 PM, MadMicro wrote:

    I bought more this morning at about %15 percent down... already recovered part of that. I am very confident that this will pop again after the first of the year based on its balance sheet and great performance.

  • Report this Comment On December 29, 2010, at 11:56 AM, susan400 wrote:

    sometinhg is wrong here.

    tey have been paying out more than they can afford.

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