Here’s a very efficient way to generate income:
CLF is very volatile and pays A LOT of up-front premium. That makes it attractive – even though the company itself is shaky (the polite term):
🚢 Your notes are mostly right; CLF at ~$9.70 is interesting value, but the debt question is the real hinge.
Where CLF stands now
- Price ~$9.7, market cap about $6–7B.perplexity
- 2025: revenue $18.6B, GAAP net loss $1.4B, adjusted EBITDA only $37M (essentially break‑even on a $19B revenue base).stocktitan+3
- Long‑term debt $7.25B at year‑end 2025, with ~$594M net interest expense, cash‑from‑operations ‑$462M for the year.clevelandcliffs+1
So yes: last year’s result gives them tax shields going forward (NOLs they can use when they get profitable again), but it also came with a lot of pain and higher leverage.
What the extra debt bought them
You’re right they ramped debt versus a couple of years ago and it wasn’t just “lighting $4B on fire”:
- End of 2023 net debt was about $2.9B, with total debt in the $3.4–3.5B range and plenty of liquidity.clevelandcliffs+1
- Through 2024 they took on additional debt to fund the Stelco acquisition (Canadian integrated steelmaker) and heavy capex (guidance $600–650M in 2024, including environmental upgrades).clevelandcliffs+2
- By end‑2025 long‑term debt is $7.25B, reflecting the Stelco deal, capex, and the fact that negative cash flow forced them to rely on the balance sheet instead of paying it down.finance.yahoo+2
So what they have to show for it?:
- A larger, more integrated North American steel footprint (including Canada).
- More capacity and product breadth for autos, electrical steel, and other tariff‑protected segments.clevelandcliffs+1
- But also very thin margins and high fixed charges until the cycle turns.
Why your macro thesis isn’t crazy
- Protectionism: CLF is explicitly cheering Section 232 and the new 50% tariffs on certain steel derivatives (electrical laminations, stainless exhaust parts), which directly help their product mix.clevelandcliffs+2
