I need to raise cash since I want to buy more Cleveland Cliffs (CLF) on this 10% drop - so I can either (a) liquidate some short exposure or (b) shuffle some exposure from 1 bucket to another on the long side.
Since I still don't see any signs of a real bottom, I've chosen the latter. Hard to pick what to sell, but in a pinch I've decided to close Mexican homebuilder Homex (HXM) right under $55 and roll the funds into Cleveland Cliffs in the $98s. The only risk I see to CLF here is a bidding war, but since this is not a hostile takeover and both boards have agreed to the deal perhaps another suitor won't be coming. Either way, CLF as a stand alone business is worth a lot more than these prices.
I sold the last 0.6% of portfolio stake in Homex at around $55, and rolled the entirety into Cleveland Cliffs in the $98s. Remember this fell to $85 in the panic selloff just last week, so there is potential for even better prices ahead. CLF is now back to a 2.3% stake.
As for Homex, we bought this in March at right around the same price it is today [Mar 7: Restarting Position in Mexican Homebuilder Homex Development (HXM)] No change of opinion on this name (still bullish) but without a real fund up and running and new investments coming in from shareholders, I have a closed system of dollars so something had to go.
There is just a ton of news today from CPI (still way understating reality but finally inching up) to Wells Fargo (best in breed in a terrible neighborhood) to the fight against short sellers to the rumors of Goldman causing run on banks with their "rumors" etc. Just no time to get to it all right now but this is one very interesting day, in a historical time in our markets.
[May 30: S&P on Homex]
Long Cleveland Cliffs in fund and personal account
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