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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in Cleveland-Cliffs Inc. (NYSE:CLF).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
The Last 12 Months Of Insider Transactions At Cleveland-Cliffs
In the last twelve months, the biggest single sale by an insider was when the Director, Susan Green, sold US$128k worth of shares at a price of US$10.06 per share. That means that even when the share price was below the current price of US$10.30, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 17.1% of Susan Green's stake. Susan Green was the only individual insider to sell shares in the last twelve months.
Happily, we note that in the last year insiders paid US$213k for 19700 shares. On the other hand they divested 12700 shares, for US$128k. Overall, Cleveland-Cliffs insiders were net buyers last year. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insiders at Cleveland-Cliffs Have Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Cleveland-Cliffs. In fact, two insiders bought US$213k worth of shares. But we did see Susan Green sell shares worth US$128k. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Insider Ownership of Cleveland-Cliffs
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. Cleveland-Cliffs insiders own about US$43m worth of shares. That equates to 1.5% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Cleveland-Cliffs Tell Us?
It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Insiders likely see value in Cleveland-Cliffs shares, given these transactions (along with notable insider ownership of the company). Of course, the future is what matters most. So if you are interested in Cleveland-Cliffs, you should check out this free report on analyst forecasts for the company.
Of course Cleveland-Cliffs may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.