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MSB

Mesabi Trust NYSE:MSB Stock Report

Last Price

US$20.61

Market Cap

US$270.4m

7D

-6.7%

1Y

-30.1%

Updated

24 Sep, 2022

Data

Company Financials
MSB fundamental analysis
Snowflake Score
Valuation3/6
Future Growth0/6
Past Performance4/6
Financial Health6/6
Dividends3/6

MSB Stock Overview

Mesabi Trust, a royalty trust, engages in iron ore mining business in the United States.

Mesabi Trust Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Mesabi Trust
Historical stock prices
Current Share PriceUS$20.61
52 Week HighUS$37.36
52 Week LowUS$20.00
Beta0.91
1 Month Change-26.10%
3 Month Change-13.55%
1 Year Change-30.09%
3 Year Change-13.62%
5 Year Change-10.39%
Change since IPO488.86%

Recent News & Updates

Aug 03

How Cleveland-Cliffs' CEO Pushed Mesabi Trust's Dividend Off A Cliff

Cleveland-Cliffs' CEO Lourenco Goncalves has a bone to pick with the Mesabi Trust. Cleveland-Cliffs' recent acquisitions have degraded Mesabi Trust's economic leverage within their relationship. With the Northshore mine shut down until April 2022, Mesabi's distribution is about to jump off a Cliff. The just published royalty report confirms that a massive cut to trust income has taken place. Given these facts, Mesabi Trust’s unit price is too high - I see 50% downside risk. Mesabi Trust (MSB) is a publicly traded entity that owns a royalty interest in the Peter Mitchel iron ore mine that is operated by Cleveland-Cliffs' (CLF) Northshore facility. This current article could be viewed as an update on my bullish article published nearly five years ago here at Seeking Alpha. A thorough review of the trust can be found in this article by James Duade - the first of a series of excellent articles that he wrote on the trust. Today, the situation is much changed Unfortunately for Mesabi's unitholders, Cleveland-Cliffs' CEO Lourenco Goncalves has a bone to pick with the Mesabi Trust. He does not like the trust’s royalty structure and (more importantly - thanks to recent acquisitions) has no immediate need for Mesabi’s iron ore. This is a radical departure from the past, when Northshore (and Mesabi’s ore) was a key asset needed to fulfill customer contracts. As CEO Goncalves stated in the last Cleveland-Cliffs’ earnings call: ...we are now extending the ongoing idle at our North Shore swing facility to at least April of next year. With the increased use of scrap company-wide in our steelmaking operations made possible by the acquisition of FPT last year, the pellets from North Shore are not needed at this time. Rather than deplete this finite resource for the benefit of the Mesabi Trust and its so-called unitholders we will keep Northshore idle until we decide otherwise. Mesabi Trust filed an 8-K related to the above (and earlier) statements by Goncalves, which can be found here. This is much worse than what I originally anticipated based on his earlier comments, as I tweeted in February: My note on Lourenco's earlier comment (Nat Stewart's twitter account @natstewart5) A shutdown until April will blow a massive hole in Mesabi’s next three distributions This is because Mesabi’s distributions correspond with Cliff’s prior quarter earnings - there is a three month lag. Up until this point, Mesabi unitholders have not been impacted by the shutdown. This will change with the next three distributions. Last year, the October distribution was substantial Mesabi Distributions: 10/22/2021, 1/27/2022, 4/28/2022 (Dividend History - Mesabi Trust) The current royalty report confirms that this October will be much worse The royalty report published yesterday (8/2/2022) confirms the above facts. Last year, the trust received $19,495,040 for Cliff's second quarter production - enough to support October 2021's large $1.42 distribution. This year, they received just $2,314,994 for the same period. After a $.04 estimate for trust expenses (assuming they choose to pay out proceeds and maintain current reserve levels) this trust will have around $.13/unit ($2.314M / 13.12 units - $.04) from the current period available for distributions - suggesting a 91% year-over-year distribution cut.

Jul 15

Mesabi Trust dips dividend -19.2% to $0.84/share

Mesabi Trust (NYSE:MSB) declares $0.84/share quarterly dividend, -19.2% decrease from prior dividend of $1.04. Forward yield 12.64% Payable Aug. 20; for shareholders of record July 30; ex-div July 29. See MSB Dividend Scorecard, Yield Chart, & Dividend Growth.

Jun 03

Mesabi Trust Is Not So Easily Ousted

They earn royalties on iron ore mined from one of Cleveland-Cliffs' main mines. Cleveland-Cliffs is trying to put a strain on Mesabi by idling mining as much as possible at the main Minnesota mine where Mesabi has the royalty agreement. Cleveland-Cliffs complained on earnings call about the royalty structure but hasn't tried to renegotiate it before making this move. We think investors should call Cliffs' bluff by buying Mesabi, because Cliffs has been CAPEXing a lot on the Minnesota mine, and with iron ore prices being so high, you'd want to utilise the asset. This is a bargaining tactic that makes sense, but ultimately Mesabi's position seems favourable. Dividend yield could be as much as 20% on a forward basis.

Shareholder Returns

MSBUS Metals and MiningUS Market
7D-6.7%-7.4%-5.2%
1Y-30.1%-16.6%-23.0%

Return vs Industry: MSB underperformed the US Metals and Mining industry which returned -16.6% over the past year.

Return vs Market: MSB underperformed the US Market which returned -23.1% over the past year.

Price Volatility

Is MSB's price volatile compared to industry and market?
MSB volatility
MSB Average Weekly Movement6.8%
Metals and Mining Industry Average Movement8.7%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: MSB is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: MSB's weekly volatility (7%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1961n/an/ahttps://www.mesabi-trust.com

Mesabi Trust, a royalty trust, engages in iron ore mining business in the United States. The company was incorporated in 1961 and is based in New York, New York.

Mesabi Trust Fundamentals Summary

How do Mesabi Trust's earnings and revenue compare to its market cap?
MSB fundamental statistics
Market CapUS$270.40m
Earnings (TTM)US$42.17m
Revenue (TTM)US$44.14m

6.4x

P/E Ratio

6.1x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
MSB income statement (TTM)
RevenueUS$44.14m
Cost of RevenueUS$0
Gross ProfitUS$44.14m
Other ExpensesUS$1.97m
EarningsUS$42.17m

Last Reported Earnings

Jul 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)3.21
Gross Margin100.00%
Net Profit Margin95.54%
Debt/Equity Ratio0.0%

How did MSB perform over the long term?

See historical performance and comparison

Dividends

20.1%

Current Dividend Yield

157%

Payout Ratio