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Insiders Active in Steel Play with EV, Automotive Exposure

by | Nov 21, 2021

Cliff’s Natural (CLF) with a notable open market buy this week on 11/19 when the EVP of CC Services bought 10,000 shares at $21.83. This is the first insider buy since March and largest since the CEO bought $900K in stock in March 2020 at $4.50. On the chart, CLF is back at monthly VPOC and putting in a reversal week after selling off over the last month. The longer-term chart continues to show a nice bull flag forming under $2650 with upside out to $33.50. Options flow has been bullish with buyers last week in the February $23 calls, April $17 calls, and December $24 calls in size. The December 23rd (W) $22.50 calls also seeing buyers last week. The $11.06B company trades 3.8X earnings, 0.65X sales, and 13.5X FCF. CLF is a leader in flat-rolled steel in the US after their acquisitions in 2020 of AK Steel and Mittal USA and positioned well in the automotive and infrastructure markets. The company should see demand jump in 2022 as auto production ramps, especially around EVs where their lightweight materials play a critical role. Analysts have an average target for shares of $30 with a Street High $38. Wolfe starting coverage at Outperform on 11/16 while GLJ Research raising estimates as the firm sees Cleveland Cliffs as a core portfolio holding given expectations for inflation to surge as pent-up demand arrives in 2022. B Riley raising their PT on 10/25 as the company alleviated concerns about a medium-term margin deterioration by disclosing impressive fixed-price contract renegotiations. Hedge fund ownership fell 16%. Hodges Capital a buyer of 850K shares. Short interest is 11.26%.

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