Insider Buying

Insider Buying Report: Cleveland-Cliffs Inc (CLF:US)

Cleveland-Cliffs Inc
(CLF:US)
12 months:
+7.24%
Activity:
Bullish
Pattern:
Purchase from CFO and Executive Vice President
News:
Q1 results
Cleveland-Cliffs Inc
(CLF:US)
12 months:
+7.24%
Activity:
Bullish
Pattern:
Purchase from CFO and Executive Vice President
News:
Q1 results

CFO purchases can be extremely informative insider transactions. CFOs have considerable insights into their firms’ financial health, and some studies have found that these insiders earn higher profits following their purchases of company shares than CEOs.

Here, we are going to highlight buying by the CFO and another insider at Cleveland-Cliffs Inc (BX:US). Cleveland-Cliffs is a vertically integrated producer of iron ore and steel products. The company – which acquired ArcelorMittal USA in 2020 – 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 $11.65 billion.

Cleveland-Cliffs Inc: Insider Buying

Our insider transaction data shows that between April 26 and April 29, two insiders at Cleveland-Cliffs bought stock. Those who bought shares were:

  • CFO Celso Goncalves (4,000 shares @ $26.32 per share)
  • Executive Vice President Keith Koci (4,500 shares @ $27.14 per share)

In total, the two insiders spent around $250,000 on Cleveland-Cliffs stock.

Top-Level Insiders

The recent insider buying at Cleveland-Cliffs is notable for two main reasons.

Firstly, both of the insiders are likely to have a strong understanding of the company and its finances. Mr. Koci was CFO at Cleveland-Cliffs before being promoted last year. He is now responsible for growing the company’s raw material portfolio. Before he joined Cleveland-Cliffs, he was the CFO at Metals USA. Mr. Goncalves was Senior Vice President, Finance and Treasurer at Cleveland-Cliffs for five years before taking over the role of CFO last year. He was an investment banker before joining the business and executed capital markets and strategic advisory transactions on behalf of his clients.

Secondly, our insider transaction data shows us that the two insiders have been picking up Cleveland-Cliffs stock since March last year. In total, they have spent just under $1 million on company stock, which suggests to us they have been confident in the long-term prospects of the group for a while and continue to believe that the market is undervaluing the company’s shares.

Strong Revenue Growth

Cleveland-Cliffs generated impressive levels of revenue growth during Q1 2022 and the business was therefore able to produce high levels of profitability.

The consolidated revenue figure of $6 billion for the first quarter was 50% higher than the $4 billion achieved a year prior. Total adjusted EBITDA of $1.45 billion for the quarter was significantly higher than the $513 million the company earned in Q1 2021.

Looking ahead, the company increased its guidance for its full-year 2022 average selling price expectation by $220 to $1,445 per net ton. As a result, it expects to generate record levels of free cash flow in 2022.

“Our first quarter results are a clear indication of the success we have been able to achieve as we renewed our fixed-price contracts last year. Despite the decline in spot prices for steel from Q4 to Q1 and its lagged impact on our results, we were able to continue to deliver strong profitability. As this trend persists, we expect to set another free cash flow record in 2022," said Lourenco Goncalves, Cleveland Cliffs' Chairman, President, and CEO.

After analyzing these Q1 results and the outlook comments within them, we see the recent insider buying at the company as bullish. It suggests to us that the insiders continue to believe that the share price has further to run.

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