AK Steel Holding Corporation (NYSE:AKS) is one of the few big movers in an extremely low-volume Friday on a little bit of takeover chatter that’s rattling shorts in AKS stock.
While nothing has been confirmed, the rumor of the day is that Japanese metals company Mitsui & Co Ltd (ADR) (OTCMKTS:MITSY) is interested in buying AK Steel. That has AKS shares up more than 8% in Friday’s trade.
Also helping out is a suddenly worried bear crowd; short sellers have worked their way into a position of roughly 22% of AKS’ float.
AK Steel has ebbed and flowed since its 2008 collapse, but has never been the same, suspending its dividend 2012 amid profitability issues. That problem hasn’t gone away either, with the company digging into its red ink last year but unable to produce positive earnings.
AKS stock — like most other steel plays — popped during the last two months of 2016 amid Donald Trump’s presidential victory, which brought with it the hope of a massive infrastructure spend that would buoy the financials of AKS and competitors including United States Steel Corporation (NYSE:X).
However, as some of Trump’s other initiatives, such as passing healthcare reform, have either failed or been delayed, AK Steel has given up much of those gains, with the market unsure if or when a great infrastructure plan will finally be unfurled. In fact, AKS shares are off 25% this year versus a 5% gain for the market, even with today’s gains.
From a technical standpoint, Friday’s move has AKS stock bouncing strongly off its 200-day moving average, which shares have been testing as support since late March. Overhead, AK Steel is now colliding with its shorter-term 20-day moving average, which has acted as pretty resilient resistance since January, when shares pierced below it.
That included a first test in late January that failed hard after AK Steel reported a fairly upbeat fourth quarter, but said on a conference call that it believed Q1’s average selling prices would be “relatively flat.”
AKS’ next earnings report is expected Tuesday, April 25, before the bell.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.