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 miner Cliffs Natural Resources, Inc. (NYSE: CLF ) jumped as much as 13% today after an activist investor bought a stake.
So what: Casablanca Capital announced it has taken a 5.2% stake in the company and called for change across the board. In a letter to management, Casablanca said it wants to spin off Bloom Lake and other international assets, convert U.S. assets into an MLP, and a number of cost-cutting measures and divestitures as well.
Now what: Cliffs Natural has swung back to a profit recently and it's probably true that management could do more to save money and unlock value. But I'll also point out that the MLP spinoff is a very popular and predictable thing for a hedge fund to ask for right now with questionable value-add for shareholders. I don't think this alone is a reason to buy Cliffs and the assumption that shares could be worth $53 assumes that the separate parts are worth more than the whole, which may or may not be true.
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