Jim Lebenthal Buys More Cleveland-Cliffs Stock Amidst Shifting Narratives

Shifting Narrative for Cleveland-Cliffs

• 💡 Jim Lebenthal is buying more Cleveland-Cliffs stock, preferring to do so when the stock is down rather than when it was up significantly the previous day.
• ⚠️ Critics suggest the stock's prior rise was due to talk of "rare earths," a narrative now being questioned, leading to a downgrade by Wells Fargo to "underweight" citing "excess exuberance."

Fundamental Drivers Beyond Rare Earths

• 🚀 Lebenthal dismisses "rare earths" as a primary driver, focusing instead on a changing narrative for the company.
• 🚗 Auto demand is picking up, with Cleveland-Cliffs signing favorable contracts with major OEMs for the next two to three years, representing one-third of their business.
• 🤝 A memorandum of understanding with an international steel company to leverage idle assets at Cleveland-Cliffs is also a significant positive development.

Technical Indicators and Market Sentiment

• 📈 While acknowledging he's a fundamental investor, Lebenthal notes positive technical indicators, including the 200-day and 50-day moving averages trending upwards.
• 📉 He views the current stock dip as a technical "gap fill" from the previous day's surge, making it an opportune time to buy.
• 💰 Lebenthal personally purchased more shares during the segment.

Tariffs and Profitability

• ❓ An outsider's perspective suggests US steel prices might be artificially inflated due to tariffs, yet the company reports negative gross margins.
• 📊 Lebenthal clarifies that EBITDA is positive and better than expected, which is the key profitability metric for investors in Cleveland-Cliffs.
• 🛡️ The company believes tariffs will last due to national security concerns, evidenced by a recent $400 million order from the Department of War for grain-oriented electrical steel for a national strategic stockpile.