Insider buying can provide clues about a stock’s future trajectory. Insiders sell company stock for many reasons. But they only buy stock for one reason – they expect it to rise.
In this report, we are going to highlight some interesting insider buying at Cleveland-Cliffs Inc (CLF:US). Cleveland-Cliffs is a vertically integrated producer of iron ore and steel products. The company – which recently acquired ArcelorMittal USA – is the largest and oldest independent iron ore mining company in the US. It is listed on the New York Stock Exchange and currently has a market capitalization of $8 billion.
Cleveland-Cliffs Inc: Insider Buying
Our data shows that on 5 March, two insiders at Cleveland-Cliffs purchased company stock. Those who bought stock were:
- Chairman, President and CEO Lourenco Goncalves who purchased 100,000 shares at a price of $13.17 per share, spending $1.3 million on stock.
- CFO Keith Koci who purchased 15,000 shares at a price of $13.45 per share, spending $202,000 on cash.
Combined, these insiders spent over $1.5 million on CLF company stock.
This insider trading activity stands out for two reasons. Firstly, both insiders are top-level executives. This means they are likely to have a high level of information on the company and a good understanding of its future prospects. It’s worth noting that Goncalves has a high Trading IQ meaning his previous purchases and sales have been timed well.
Secondly, this buying activity represents the largest amount of insider buying at Cleveland-Cliffs within a quarter for several years. The size of the purchases suggest that the two insiders are very confident the stock is set to rise.
Cleveland-Cliffs completed two key acquisitions in 2020 that the company believes will keep it thriving for the next century. In March, it acquired AK Steel, providing an entry into the high-end steelmaking market. It says this deal was a “perfect fit” and aligned with its positive future outlook for automotive production and manufacturing in the US.
Then, in December, it completed the acquisition of ArcelorMittal USA. This acquisition amplifies its position in the automotive steel marketplace and further improves its position in important US markets such as construction, appliances, infrastructure, machinery and equipment.
“Without question, 2020 was the most transformational year in our Company's 173 year history. We completed two seminal acquisitions, AK Steel and ArcelorMittal USA, that transformed us from an iron ore miner into the largest flat-rolled steelmaker in North America,” management said in the company’s recent full-year results.
“Our strong fourth quarter results offer just a sample of what we expect to accomplish in 2021, when we will show the full magnitude of the ArcelorMittal USA acquisition as well as the added contribution from our state-of-the art direct reduction plant. Our differentiated business model is set up perfectly to thrive in this environment,” management added.
In light of these acquisitions, we see the insider buying here as bullish. It indicates that insiders see the stock as undervalued at present.