In a public letter the hedge fund urged Cliffs to combine its Canadian Bloom Lake property and its Asian segments to create a new company it calls Cliffs International. Casablanca would then have the mining company spin off the new company to existing shareholders. The move, the hedge fund says, can potentially raise shares of Cliffs to $53 a share.
In a press release, Cliffs says it held "productive preliminary conversations" with Casablanca, and that it "looks forward to continuing the dialogue to better understand their assumptions, projections and overall views."
The press release goes on to say the mining company expects to "continue making progress on reducing costs, strengthening its balance sheet with cash flows from operations, and taking a disciplined approach to capital spending."
TheStreet Ratings team rates CLIFFS NATURAL RESOURCES INC as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLIFFS NATURAL RESOURCES INC (CLF) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, a generally disappointing performance in the stock itself and generally higher debt management risk."