We came across a bullish thesis on Mesabi Trust (NYSE:MSB) on Special Situation Investing’s Substack by Six Bravo. In this article, we will summarize the bulls’ thesis on MSB. Mesabi Trust (NYSE:MSB)’s share was trading at $28.12 as of Dec 30th. MSB’s trailing P/E was 4.01 according to Yahoo Finance.
Mining machinery surrounded by a vast and rugged iron ore mine.
Mesabi Trust (NYSE:MSB) remains a compelling investment, bolstered by its recent $71 million litigation victory against Cleveland Cliffs. Following a 31% rise in the stock price since last September, the Trust’s financial position has significantly strengthened. Mesabi’s cash balance, historically around $10 million, surged to $96 million post-award, reflecting the resolution of past uncertainties. With mining operations now at full capacity, the cash balance is expected to normalize, potentially freeing up $86 million for extraordinary distributions. Additionally, Mesabi’s regular quarterly distributions, currently at $0.39, are poised to revert to the pre-shutdown average of $0.67 as production stabilizes at 1 million tons per quarter. This normalization could yield investors an extraordinary distribution equivalent to 23% of the current market cap and a 9.3% annual yield based on current distributions. While no longer a deep-value play, Mesabi Trust offers attractive returns driven by its robust cash position and improving operational outlook.
Mesabi Trust (NYSE:MSB) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 6 hedge fund portfolios held MSB at the end of the third quarter which was 6 in the previous quarter. While we acknowledge the risk and potential of MSB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.