Multiple Insiders at Cleveland-Cliffs Just Bought Stock

There are two main reasons insiders invest in their own companies. They either believe that business is about to get better, or that the company is undervalued. Whatever the reason, insider buying tells us that those within the company expect the company’s share price 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 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 around $7.87 billion.

Insider Buying at Cleveland-Cliffs

2iQ data shows that between April 27 and May 2, five insiders at Cleveland-Cliffs purchased stock. Those who bought shares were:

• Chairman, President, and CEO Lourenco Goncalves (100,000 shares @ $14.96 per share)

• Executive Vice President & President Keith Koci (7,300 shares @ $14.87 per share)

• Chief Financial Officer Celso Goncalves (6,500 shares @ $15.18 per share)

• Board member Arlene Yocum (1,500 shares @ $15.14 per share)

• Board member Ralph Michael (10,000 shares @ $14.96 per share)

Combined, the five insiders invested around $1.87 million in the company.

Top-level Insiders

What stands out here is that two top-level insiders have purchased stock.

Mr. Goncalves has been Chairman, President, and CEO of the company since August 2014. And under his leadership, he has led the company through a major strategic initiative, transforming it into a leading player within the US steel industry.

Meanwhile, Mr. Koci was previously CFO of the company before he was promoted to Executive Vice President & President, Cleveland-Cliffs Services. Earlier in his career, he was an investment banker.

Given their positions, it’s fair to assume that these insiders have a good understanding of the company, and its prospects.

Strong Auto Sales

Cleveland-Cliffs’ share price has experienced a significant pullback recently on the back of economic growth concerns. Back in early March, the stock was trading near $23. Today, however, it is trading near $15.

Management remains confident about the future though. In the company’s rece, Mr. Goncalves noted that direct sales to automotive clients remain strong, and he said that he expects the company to benefit from higher sales volumes to the auto sector throughout 2023.

“In the first quarter, direct sales to automotive clients in our mix increased to 36%, confirming our view that our most important market is strong, and getting stronger. We expect that, throughout 2023, Cleveland-Cliffs should benefit from higher sales volumes to the automotive sector, and also from the increased prices we were able to achieve in our yearly renegotiations with each one of the car manufacturers that have Cleveland-Cliffs as their largest supplier of automotive steel,” he said.

Additionally, Mr. Goncalves said that, due to further results from the cost side, the company expects 2023 to be another year of great cash flow generation.

In light of this outlook, we see the insider buying here as a bullish development.