Mazzaferro Research, LLC is a steel industry research boutique founded in 2017 by Aldo Mazzaferro, CFA. Aldo spent 36 years on Wall Street in senior research positions at seven different sell-side and buy-side firms, from the largest bulge brackets to smaller firms. He also worked for three years in the industry as the CFO of a start-up steel company planning to build, own and operate four $150 million steel rebar micro-mills and a $1.5 billion flat roll steel minimill. We are fully FINRA licensed and registered.
Aldo-on-Steel is our basic weekly research product. It is provided by email in PDF format. The report focuses on our current steel market outlook, updates trends in important indicators we track, offers supply, demand and pricing forecasts, tracks metal spreads and its components, and comments on important steel industry events with an eye on potential winners and losers. This is a product for corporate steel industry participants and for investors looking to better understand the inner workings of the steel cycle and its upstream and downstream markets.. All our published research products are included in our Basis package.
Premium Services are designed for the industry or investment who may have a special project to study, or need analysis of a specific entity. The Premium Services include bespoke offerings like contract research reports, special studies, organized corporate visits, plant tours, arranged meetings with public or private company managements, and other special products.
Our Methodology
- Valuation – Our intentions are simple but the implementation is complicated. We are basically trying to identify undervalued and overvalued equities, rank them from most to least, and arrange them accordingly. We use earnings, cash flow, sales and asset value estimates to project a Fair Value Range and measure how far the current market value is from the median of that range.
- Momentum – We are constantly measuring trends in supply, demand and steel pricing. We try to predict relative strength of certain product lines like sheets or bars, against supply estimates, and use that to influence our earnings estimates. We can apply a matrix of product mix to ascertain which companies might get a disproportionate impact. Steel pricing is probably the most important driver of steel stocks.
- Balance sheet – We think the balance sheet makes a lot of difference too, given that our valuations on cash flows, like EBITDA, are taken against measures of Enterprise Values, which measures the market capitalization of a company plus all its net debt and other liabilities (i.e. the total cost to own a company). Thus, our valuations are sensitive to a company’s use of free cash flow to improve the balance sheets. Liquidity or leverage measures on the balance sheet also influence the equity’s sensitivity to earnings changes, and can be used to enhance or moderate steel cycle exposure depending on the steel market outlook at the given time.
- Management – We maintain close relationships with management of our coverage, and have known many CEOs for a long time. We get perspective from experience, which gives us an edge when events happen quickly and in understanding the impact of strategic moves or investments.
- Qualitative – We use a dozen quality measures for steel companies, ranging from the value of the product line, to its position in the marketplace, to its cost competitiveness, to the use of new steel technologies, to the underlying efficiency and profitability of operations relative to others. We use the relative quality score to apply relative premiums or discounts to target multiples, like the PE, EV/EBITDA, Price-to-Sales and asset value. In our view, higher quality companies should command higher relative valuations.
About our Research
Mazzaferro Research differentiates itself through long-term experience and in-depth knowledge of the global steel industry. It has many close relationships with public and private companies and senior management teams. Mazzaferro Research uses proprietary valuation methods and indicators to guide stock picking and cycle timing. Key aspects of its research program involve a network of steel traders, scrap dealers, service center operators, steel mill sales people and others who help inform the investment perspective and make the firm’s industry events and corporate access quite unique.
For instance, the models used to estimate proprietary “Fair Asset Value” for steel mills, which were created specifically to value steel industry assets, much as a prospective mill owner would, use equipment replacement cost estimates and measures of value-added contribution to product mix. In addition, Aldo has held an annual Steel Traders Dinner in NYC for 30 years that features an open-mike, town hall format where steel industry professionals from mills, service centers, trading companies and scrap dealers discuss and debate global trends and insights across the steel sector. Both public and private companies attend along with clients.
Mazzaferro Research offers three levels of research service priced at incrementally higher quarterly rates, payable directly, through directed trades, or through all of the popular CSA/CCA “soft dollar” broker arrangements. All research and events are fully compliant and provided through IRC Securities, a FINRA-registered fully licensed broker dealer.
Basic Research Service entitles a client to all research publications. This includes “Aldo-on-Steel,” a weekly update on the steel market outlook, favorite longs and shorts for pair trading, company comments, industry supply, demand and pricing trends, and all stock coverage with investment ratings, target prices, investment risks and valuations. In addition, Basic clients receive all other published research notes and reports and are invited to all corporate access events.
Premium Research Service includes all the above plus an invitation to weekly interactive conference calls to discuss trends and investment views. Premium clients also have priority access to all corporate access events.
Gold Research Service includes all the above plus direct access via phone/email, or through arranged meetings, with Mazzaferro Research analysts. Gold clients can also access working excel models for valuation, earnings forecasts and other proprietary indicators, and they are guaranteed access to all corporate access events.
If you are interested in receiving research or would like to discuss research product offerings, please contact IRC Securities at sales@ircsecurities.com, or reach Aldo directly at aldo@mazzaferroresearch.com or 516-650-2022. You can also visit the Mazzaferro Research website www.mazzaferroresearch.com for more details.
We are a participant in the Research Prime Platform with IRC Securities, LLC (www.ircsecurities.com), a fully-licensed, FINRA-registered broker dealer, which provides the research products through client commission or soft dollar arrangements.
About Aldo
Most recently, before starting Mazzaferro Research, Aldo Mazzaferro was a Managing Director and Senior Analyst for steel and metals at Macquarie Capital (USA) in New York. He held that post from 2011 to September 2017. That position capped off a 36-year Wall Street career researching the steel industry.
Aldo’s career began in the equity research department of Standard & Poor’s Corporation in NYC in 1981 where he was assigned the steel industry for research coverage. He also covered coal, industrials and environmental stocks there. He was designated a Chartered Financial Analyst in 1984 (CFA membership #8021). In 1985, he moved to J&W Seligman & Co., a mutual fund manager, and then joined C.J. Lawrence as steel analyst in 1987, shortly before its acquisition by Deutsche Bank.
Aldo remained as senior steel analyst at Deutsche Bank from 1987 until 1998, when he left to co-found Anvil Capital, a steel and metals equities hedge fund in NYC. From Anvil, he joined Goldman Sachs in 2000 and led a globally recognized steel research franchise for eight years. In 2008, he left Goldman to join Steel Development Company, LLC., a start-up steel company attempting to build and operate a series of four rebar micro-mills and a large flat roll mill.
In July 2010 Aldo began a return to Wall Street and joined Burke & Quick Partners, an equity trading and research boutique on Long Island, NY. In August 2011 Aldo moved to Macquarie Capital in New York City, where he assumed the role of senior global steel and metals analyst.
Over his career, he was selected six times by Institutional Investor Magazine as an All-Star Steel Analyst and was ranked four times by The Wall Street Journal for superior stock picking. In his present role as Managing Partner and Director of Research at Mazzaferro Research, Aldo continues to research and write on the steel industry, provides investment research to institutional clients, and does consulting work for investors, corporations and financial institutions.
MAZZAFERRO RESEARCH 