Focused Compounding Ep 419. Is the Steel Industry in Play? U.S. Steel and Friedman Industries
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Dec 26, 2023 The podcast discusses the recent surge in stock price for U.S. Steel and the consolidation in the steel industry. It explores Paramount's potential merger and sell-off talks, as well as analyzing 'Killers of the Flower Moon'. The hosts also discuss the proposed merger between Nippon Steel and US Steel, including interested bidders and political opposition.
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Friedman Industries Transformation
- Friedman Industries transformed from a net net into a bigger business by aggressively expanding capacity and buying back shares.
- Capitalism drives these changes, often through reinvestment and management decisions in cyclical industries like steel.
CapEx Drives Friedman Growth
- Friedman Industries significantly increased capital expenditures starting 2022, reflecting its expansion across the United States.
- This growth transformed the company from a steady asset play into a cyclical, earnings-driven steel business.
Steel Industry Entry Barriers
- New steel plants cannot be built today due to high costs and industry maturity.
- Acquiring existing steel companies with established plants is more viable than starting new operations from scratch.