Donald Drapkin Explains What Is Going On With Cliffs Natural Resources

• Donald Drapkin, Casablanca Capital Founder and Co-Chief Investment Officer, appeared on Wall Street Week on Sunday morning.
• Among other issues, the investor went into what he’s doing with Cliffs Natural Resources Inc (NYSE: CLF).
• Shares of Cliffs Natural Resources were down more than 7 percent on Monday.

Casablanca Capital took over control of Cliffs’ Board of Directors (the firm controls 8 percent of the stock, but 100 percent of the Board) and Management team (they also installed Lourenco Goncalves as Chairman and CEO) more than a year ago, aiming at a turnaround. However, the stock price has continued to tumble as shares have lost more than 77 percent over the past year.

On Sunday, Donald Drapkin, the firm’s co-chief investment officer, was a guest on Wall Street Week, and discussed activist investing with co-hosts Anthony Scaramucci and Gary Kaminksy, as well as with the New York Stock Exchange’s former CEO and Chairman, Dick Grasso.

At one moment, Drapkin was questioned about what is going on with Cliffs and the issues that Casablanca has not been able to resolve yet. It should be noted, however, that iron ore price have plummeted roughly 60 percent since the firm’s activist campaign started.

“Cliffs is a perfectly well-run humming machine," Drapkin assured. "He got rid of the $6 billion noose around their neck, [Goncalves] reduced debt, reduced expenses, he's reduced lifting costs."

The investor continued, “When the price of iron ore goes from $140 a ton and you get BHP and other producers that can produce down at the $45 level, you're a commodities business. There is just nothing you can do about it... You have to ride out the commodity cycle.”

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.