U.S. Steel Takeover Chatter: True or False?

Blue horseshoe loves U.S. Steel X? Trading desks have been abuzz today regarding a possible takeover of United States Steel. Such rumors have been commonplace for the company over the past few years, as it is often touted as one of the best pure economic plays in the world for prospective buyers. One of the more recent reports surfaced in August of 2010, when it was said that rival steelmaker Arcelor Mittal MT was mulling a purchase of the company for $80 per share. The rumor, as most of them do, turned out to be untrue, but that did not stop shares of United States Steel from enjoying a nice pop as a result. The beating that U.S. Steel has taken over the past 52 weeks only adds fuel to the fire, as it would appear that the company is a relative bargain at current prices. Shares have plunged 40% from this time last year, and are down 55.8% from the 52-week high of $63.86 (set on February 18th). Whether the current chatter is valid or not is impossible to know, as only company insiders have access to such information. Recent price action, however, suggests that something is going on. Option volume for U.S. Steel has exploded recently. The 30 and 35 strike calls have received most of the attention today, with 21,010 (open interest - 9,501) and 20,209 (open interest - 44,240) contracts changing hands respectively. The company's common stock has seen a surge as well, currently trading 6.2% higher on the session to $28.18 (heavy volume). Every selling wave in today's session has been met with an abundance of buying, continuously pushing the stock to new intraday highs. Shares have been on a tear over the past few weeks, gaining 49% since hitting a 52-week low of $18.85 on October 3rd. As stated, whether the rumors regarding a possible takeover are true, cannot (and likely will not) be verified. Every day market participants simply do not have access to such high level information. What we do know, however, is that the shares of U.S. Steel are receiving heavy buying interest as of late, and appear poised to continue their push higher. Time will tell…..