Mesabi Trust Shares Plunged Again: What You Need to Know

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 10% on above-average volume.

So what: Shares of Mesabi continue to experience unusually big swings of late on extraordinarily high volume. The stock seemed to be recovering nicely from last Thursday's 16% plunge, but today's double-digit loss -- already coming on more than 2.5 times the average volume -- erases the gains made over the past week.

Now what: With still no obvious news out, today's weakness looks like yet another opportunity to pounce. While Mesabi is up more than 230% over the past year, it sports a tantalizing dividend yield of about 8%. As long as you're able to handle the extreme volatility, Mesabi seems like a total-return bet worth considering.

Interested in more info on Mesabi? 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.

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Read/Post Comments (3) | Recommend This Article (12)

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  • Report this Comment On December 24, 2010, at 7:06 AM, haywool wrote:

    The talk on the street is that steel is in demand and headed up. MSB can and will fill that market. Hang on ...

  • Report this Comment On December 30, 2010, at 5:07 PM, georgevt wrote:

    MSB price is falling for two reasons: 1) While MSB has been dropping, rare earths have been rising about the same amount. This is caused by bubble chasers who must pull their money out of some stocks (e.g., MSB) to chase bubble stocks (MCP and REE). 2) There was "Seeking Alpha" article indicating that the dividend would be down to about $0.61 from the previous quarter dividend of $0.91. What the article failed to mention was this is a normal seasonal dip and is still $0.10 better than same quarter of the previous year.

    MSB was over priced and has now dropped back to a more reasonable price.

  • Report this Comment On January 02, 2011, at 8:56 PM, TexasPicker wrote:

    I've been selling the JAN $40 put on MSB for a bit over $2. I'm considering selling a few more now that they are at $3. If MSB is under $40 on Jan. 22nd then MSB will be "put" to me at $40. However, my cost basis will be $38 or less depending if I sell more puts. As of Jan. 3rd open we're right around $38. Does anyone think the stock will come in more (drop more) over the next 3 weeks?

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