Moved ~all the dry powder in my IRAs into X between $31 and $32 today. I already had a position, and had valued it conservatively at $37 to $39 a share and planned to exit there. It came out that Cleveland Cliffs made public an offer to acquire them for about $34 a share approx half cash and half shares, then Esmark offered $35 for all public and outstanding shares in all cash. Both are competitors and know the industry and business well, and the leader of the Esmark offer is a former US Steel exec. So I think the offers are extremely unlikely to fall through, and now there’s the potential for a bidding war. Plus the name is now trending on Wall Street Bets so there’s the potential for them to do something stupid. They think Elon is going to get involved for the X ticker lol… I highly doubt that but he is obviously capable of doing stupid shit.
If it fell through it would likely drop to about $24 a share, so there’s a pretty reasonable margin of safety here. If it were just a single bid, I wouldn’t take this much risk for a 9-12% upside. But with the chance of a bidding war, and WSB getting involved, I think there is a small but not insignificant chance something crazy happens or the sale price ends up being like $40-50 a share. I think that’s more likely than it falling to $24 so I think this is great opportunity.
Definitely a bit uncomfortable with the size of the position relative to my portfolio and may throw a steel price hedge on tomorrow, especially since my PKX position is but I think this is the type of opportunity that’s worth piling into and taking some risk on.
Also after hours US Steel announced that these are not the only two offers.