US Steel: Always Been There, Always Will Be.

With all the talks of recession, of manipulation in the financial markets, of hedge funds short selling the brokers and of oil hovering around all time highs, sometimes it seems that investors get too caught up in the fast paced world of Wall Street. Sometimes people forget about the "old-timers"...the companies that are responsible for making Wall Street what it is today. Companies that saw the Great Depression come and go, saw two world wars pass and saw times when titans like J. Pierpont Morgan, Andrew Carnegie, Charles Schwab, and so many other notables ruled the Street.

Perhaps I'm just being a little nostalgic for a simpler, more gentlemanly time, but it just seems like today's Wall Street players, people like Vikram Pandit, Jamie Dimon, Lloyd Blankfein and Jeffrey Immelt can't quite stand up to the caliber of their predecessors. I'm not doubting the intelligence of these individuals nor do I mean to diminish their accomplishments, but what I am saying is that I think they're caught up in a Wall Street that just over complicates things.

Take for example, US Steel (X) in the year 2008. In a year that has seen all of the major indices fall into bear market territory, US Steel has seen its shares rise 28% year to date. Yet, no one on Wall Street seems to notice. I never hear Jim Cramer dedicate a segment to US Steel and the Wall Street Journal has given more attention to the crumbling airline stocks than they have to a perennial winner like US Steel. Why is this?

I think the answer is simple really. US Steel just isn't very "sexy" by today's Wall Street standards. They don't engage in transactions that require an accountant, an engineer and divine intervention to value. You never really hear them griping about short sellers manipulating their stocks and you don't see them taking their excess capital to the NYMEX to speculate on crude oil. No, US Steel focuses on one thing. It is the same thing that they have focused on (minus that brief 20 year period when they owned Marathon Oil) for their entire century plus of existence. That is producing and selling steel.

There was a time, though, when US Steel was the "sexiest" thing on Wall Street. Incorporated on February 25, 1901 with the efforts of J.P. Morgan, Elbert H. Gary and Andrew Carnegie, US Steel was the world's first ever IPO in excess of 1 billion dollars. It was so massive and so revolutionary that for years, Wall Street simply referred to it as "the Corporation". The great Charles Schwab was the company's first president (he would leave in later years to run Bethlehem Steel).

US Steel has had a history of resilience too. They have fought off the anti-trust efforts of the federal government, survived the difficulties of the Great Depression, withstood countless labor disputes and even repelled an effort by President Harry Truman to nationalize their steel mills.

Even more than most people realize, US Steel is also an American icon. They have lent elements of their logo (the three multi-colored hypocycloids) to the Pittsburgh Steelers NFL team and in 1906 they built the city of Gary, Indiana (and still operate the largest steel mill in the northern hemisphere in Gary).

But even with such a rich history, Wall Street still doesn't even seem to recognize US Steel now. They don't make extraordinary profits like some on Wall Street would like, but they do make a steady flow of profit. Their share price has risen this year which could easily be attributed to the high worldwide demand for steel (which isn't likely to decrease any time soon), but the bottom line is that, US Steel knows the steel industry better than anyone else (that's bound to happen when you've been in the same business for a century).

It is likely that their current CEO John Surma has documents in his file cabinet signed by Charles Schwab, Andrew Carnegie and the incomparable J. Pierpont Morgan. These documents are probably lost to time though just like the once great company that was known by all simply as "the Corporation".

I can't ignore the fact that US Steel is still profitable and that they focus simply on producing steel. Even the subsidiary companies that they own now are involved in the production of basic materials needed to produce steel or in the distribution of steel. This company has experience in its industry that you just can't find anywhere else.

Maybe it's time that I stopped feeling so nostalgic and just put US Steel out of my mind like Wall Street seems to have done. But when I ask myself "if the likes of J.P. Morgan were here today where would he be putting his money?" The answer that I invariably come to is that Morgan would be ashamed of Wall Street and its CDO's and of the irresponsible lending that led to this current crisis (even though I think he would be proud of the way Jamie Dimon "rescued" Bear Stearns) and he would have his money in none other than US Steel. And J.P. Morgan certainly wasn't wrong all that often. Something to step back and think about for all those in the fast paced world of Wall Street.

Happy Investing

InglefoX