The Rising Influence of Rising Affluence

[DewDiligence]

Thanks for your feedback. Everything you say is true; however, CLF is a relatively small company that was in financial trouble as recently as the 2008-2009 recession. The Ring of Fire project is going to require a huge amount of capital and expertise to commercialize, and it doesn’t leave much margin for error if the global economy turns soft again.

I’m rather bullish on the global economy, so I don’t expect CLF to run into financial trouble, but I don’t like the bet-the-company swagger management has assumed lately, which is probably due to the 5x increase in the share price.

Part of my original premise for buying CLF was that it was an obvious buyout target for one of the multinational giants such as BHP and VALE. If they stuck to their iron and coal assets, I think CLF still would be a buyout target, despite the sharp appreciation in valuation since the bear-market low. However, the Ring of Fire project makes me think CLF will resist buyout overtures and will seek to stay independent no matter what. I hope I’m wrong, but that’s how it looks to me. Regards, Dew