Bullish Cleveland-Cliffs Insiders Loaded Up On US$2.40m Of Stock

In the last year, multiple insiders have substantially increased their holdings of Cleveland-Cliffs Inc. (NYSE:CLF) stock, indicating that insiders' optimism about the company's prospects has increased.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Cleveland-Cliffs

In the last twelve months, the biggest single purchase by an insider was when Chairman C. Goncalves bought US$1.0m worth of shares at a price of US$16.76 per share. That means that an insider was happy to buy shares at above the current price of US$6.99. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Happily, we note that in the last year insiders paid US$2.4m for 157.95k shares. On the other hand they divested 37.55k shares, for US$554k. In total, Cleveland-Cliffs insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for Cleveland-Cliffs

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insiders At Cleveland-Cliffs Have Bought Stock Recently

It's good to see that Cleveland-Cliffs insiders have made notable investments in the company's shares. Overall, three insiders shelled out US$243k for shares in the company -- and none sold. This is a positive in our book as it implies some confidence.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Cleveland-Cliffs insiders own 1.8% of the company, worth about US$65m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Cleveland-Cliffs Insider Transactions Indicate?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. Given that insiders also own a fair bit of Cleveland-Cliffs we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 2 warning signs for Cleveland-Cliffs (1 can't be ignored!) that we believe deserve your full attention.

But note: Cleveland-Cliffs may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.