A bullish investment thesis on Cleveland-Cliffs Inc. was posted on the r/wallstreetbets subreddit by a user named politicalinvestor. The company's stock was trading at $13.36 as of January 13. According to Yahoo Finance data, its trailing price-to-earnings ratio was 133.67, while its forward P/E stood at 62.89.
Cleveland-Cliffs is noted as one of the few steel companies that has not delivered multi-hundred percent returns over the past five years. This creates what the poster described as an asymmetric setup, with company-specific and macroeconomic tailwinds beginning to align.
After years of fluctuating market conditions, the company appears to be entering a phase driven by structural changes. A potential strategic investment from POSCO, estimated at a 10% to 20% stake, could strengthen its balance sheet and validate its vertically integrated U.S. steel model.
Management has idled or permanently closed at least six low-margin facilities, with further rationalization likely. This action is expected to lift consolidated margins and reduce cash burn. Beyond steel, the company's iron ore mining footprint presents a long-term opportunity in rare earth extraction, an asset that could gain strategic importance as the U.S. seeks to reduce reliance on foreign supply chains.
Tariffs continue to provide a direct boost to domestic pricing power. A shifting interest rate environment adds another lever, with Chair Powell expected to exit in 2026. Additional rate cuts could significantly ease the company's debt burden, especially if combined with proceeds from potential outside investments. On the demand side, interest-free or subsidized auto financing would support vehicle production and steel intensity, as Cliffs focuses on higher-value end markets.
Options activity after May allows for another earnings cycle to confirm improving fundamentals. Under pessimistic assumptions, upside toward $20 appears reasonable, while a favorable macro and execution scenario supports a move above $30. History suggests a pro-manufacturing policy backdrop could further amplify gains.
Previously, a bullish thesis on Steel Dynamics, Inc. by Gregg Jahnke in February 2025 highlighted operational efficiency and balance sheet strength. That company's stock price appreciated by approximately 27.82% after coverage, amid tariff dynamics and disciplined execution. Politicalinvestor's thesis on Cleveland-Cliffs emphasizes balance sheet repair, macro tailwinds, and asymmetric upside.
Cleveland-Cliffs Inc. is not on the list of the 30 Most Popular Stocks Among Hedge Funds. According to the database, 52 hedge fund portfolios held CLF at the end of the third quarter, up from 42 in the previous quarter.