Activist Casablanca Capital wins battle for Cliffs

Activist Casablanca Capital wins battle for Cliffs

Cliffs Natural Resources’ Michigan operations.

New York activist hedge fund Casablanca Capital has claimed victory in its battle to toppled the board of Cliffs Natural Resources (NYSE:CLF), the US biggest iron ore miner, ending a six-month fight for control of the company.

The fund, with just a 5.2% stake in Cliffs, has vowed to sell or spin the miner's international operations. One of the first assets to go is said to be Western Australia’s Koolyanobbing mine, acquired in 2008 through Cliffs’ takeover of Australian-listed Portman.

The mine produces about 11 million tonnes of iron ore a year, making it one of Australia’s largest iron ore mines not owned by heavyweights BHP Billiton (ASX:BHP), Rio Tinto (ASX:RIO) or Fortescue Metals (ASX:FMG).

Last year Koolyanobbing accounted for almost all of the $367.1 million in sales margin generated out of Cliffs’ Asia-Pacific arm, but it only has a mine life of six years.

Activist Casablanca Capital wins battle for Cliffs

Activist investors, those that take stakes in companies and agitate for management or financial changes, are increasingly scoring wins in several industries. In May, Brian Heywood ended up taking Japanese musical instruments maker Roland Corp private.  And yesterday, Jana Partners reiterated its call for PetSmart to consider a sale.

Soon to be released research from Novus, the New York City-based analysis firm that monitors hedge fund positions, points out the aggregate activist portfolio they track totals $176 billion as of June of 2014, totalling 9.3% of total hedge fund assets.  This compares to 3.9% of hedge fund assets controlled by activists in 2004, Novus says.