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The Kind of Company Cliffs Natural Resources Could Acquire

A top executive at Cliffs Natural Resources on Monday said the mining and natural resources giant is exploring possible takeover targets.

Chief financial officer Laurie Brlas said Cliffs is always looking for good deals for their shareholders. Brlas revealed that a future deal could exceed $1 billion, but it's not likely to be a transformative one. The 52-year-old executive said her company is more likely to acquire a smaller business that would help grow their position in metallurgical coal or iron ore.

When Cliffs reported third-quarter earnings results on Oct. 28, the Cleveland-based company was considerably more bullish on the metals space than its competitors at the time. With the fourth-quarter soon coming to a close, Brlas noted how other metals names are now also becoming bullish.

Meanwhile, Wall Street is looking at 100 basis points as China is expected to continue tightening, but Brlas said she's not too concerned about how that might affect demand.

"There's a lot of talk about a slowdown in China, but their economy grew by 9.6 percent in the last quarter," she noted. "So its still a strong economy and the segment that we sell into is very strong and very stable. so we think we will not be significantly affected."

What's the Trade?

Joe Terranova, chief market strategist at Virtus Investment Partners, called Cliffs a "great company." With a $10 billion market cap, he said it's hard to tell whether they'll acquire someone or someone will acquire them. He also likes its coal and Chinese exposure.

Speaking of coal, Brian Kelly of Kanundrum Capital said it has to shipped by the rails. So he recommends buying Norfolk Southern or CSX.



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Trader disclosure: On December 6, 2010, following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Jon Najarian is long (CME) stock, short (CME) calls. Jon Najarian owns (BTU), (ACI), (RSH) and (BUCY). Jon Najarian is long (CBOE) stock, short (CBOE) calls. Jon Najarian is long (DRYS) stock, short (DRYS) calls. Jon Najarian is long (MTW) stock, short (MTW) calls. Jon Najarian is long (WHR) stock, short (WHR) calls. Jon Najarian is long (GAS) stock, short (GAS) calls. Jon Najarian is long (AAPL) call spreads. Jon Najarian is long (YHOO) call spreads. Jon Najarian is long (XLF) call spreads. Jon Najarian is long (MS) call spreads. Jon Najarian is long (GS) call spreads. Jon Najarian is long (NFLX) call spreads. Joe Terranova owns (FCX) puts. Joe Terranova owns (CELG), (FCX), (PFE), (OIH), (UPL), (C), (GS), (NKE), (PEP), (VRTS), (AAPL), (OXY) and (CMA). Steve Grasso owns (ASTM), (BA), (BAC), (BWC), (C), (CSCO), (JPM), (LIT), (LPX), (MOT), (MHY), (NDAQ), (PFE), (PRST), (S) and (X). Brian Kelly owns (NSC), (CSX) and (MCP). Jonathan Chaplin owns Clearwire.

BRIAN KELLY
Accounts Managed By Kanundrum Capital Own (MCP)
Accounts Managed By Kanundrum Capital Own (AAPL)
Accounts Managed By Kanundrum Capital Own (C)
Accounts Managed By Kanundrum Capital Own (JPM)
Accounts Managed By Kanundrum Capital Own (WFC)
Accounts Managed By Kanundrum Capital Own (DRYS)
Accounts Managed By Kanundrum Capital Own (GDXJ)
Accounts Managed By Kanundrum Capital Own (TBT)
Accounts Managed By Kanundrum Capital Own (QCOM)
Accounts Managed By Kanundrum Capital Own (ARMH)
Accounts Managed By Kanundrum Capital Own (MON)
Accounts Managed By Kanundrum Capital Own (DE)

Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (ALK)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EPR)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LPHI)
Virtus Investment Partners Owns More Than 1% Of (MGRC)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of (CLB)
Virtus Investment Partners Owns More Than 1% Of (DRYS)

STEVE GRASSO
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and it’s partners own (CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co And Its Partners Own (UNM)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (MCD)
Stuart Frankel & Co and it’s partners are short (AAPL)

Jonathan Chaplin, Credit Suisse
Credit Suisse Is A Market Maker Or Liquidity Provider In (T), (S), (VZ), (S), (VZ), (T) Is Or In Past 12 Months Was A Client Of Credit Suisse
Credit Suisse Provided Investment Banking Services To (S), (VZ). (T) In Past 12 Months
Credit Suisse Provided Non-Investment Banking Services To (S), (VZ), (T) In Past 12 Months
Credit Suisse Has Received Investment Banking Compensation From (S), (VZ), (T) In Past 12 Months
Credit Suisse Expects To Receive/Seek Investment Banking Compensation From (S), (VZ), (T) In Next 3 Months
Credit Suisse Has Received Non-Investment Banking Compensation From (S) In Past 12 Months


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