MSB Stock Overview
Mesabi Trust, a royalty trust, engages in iron ore mining business in the United States.
Mesabi Trust Competitors
Price History & Performance
|Historical stock prices|
|Current Share Price||US$20.61|
|52 Week High||US$37.36|
|52 Week Low||US$20.00|
|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 IPO||488.86%|
Recent News & Updates
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.
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.
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.
|MSB||US Metals and Mining||US Market|
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.
|MSB Average Weekly Movement||6.8%|
|Metals and Mining Industry Average Movement||8.7%|
|Market Average Movement||6.9%|
|10% most volatile stocks in US Market||15.8%|
|10% least volatile stocks in US Market||2.8%|
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
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
|MSB fundamental statistics|
Is MSB overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|MSB income statement (TTM)|
|Cost of Revenue||US$0|
Last Reported Earnings
Jul 31, 2022
Next Earnings Date
|Earnings per share (EPS)||3.21|
|Net Profit Margin||95.54%|
How did MSB perform over the long term?See historical performance and comparison