Cliffs Natural Resources Inc (CLF): Insiders and Hedge Funds Are Buying, Should You?

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Cliffs Natural Resources Inc (NYSE:CLF) has had a good time on the markets over the past month or so, and today, the news is going to get even better bulls.

If you’d ask most market participants, hedge funds are seen as worthless, old investment vehicles of the past. While there are more than 8000 funds trading at present, we at Insider Monkey look at the crème de la crème of this club, around 450 funds. It is widely believed that this group oversees the majority of the smart money’s total asset base, and by paying attention to their top picks, we have unearthed a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (check out a sample of our picks).

Equally as integral, optimistic insider trading activity is another way to break down the financial markets. Just as you’d expect, there are a number of incentives for a corporate insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the valuable potential of this strategy if “monkeys” understand what to do (learn more here).

Cliffs Natural Resources Inc (NYSE:CLF)

Consequently, it’s important to take a peek at the latest action regarding Cliffs Natural Resources Inc (NYSE:CLF).

Hedge fund activity in Cliffs Natural Resources Inc (NYSE:CLF)

At Q1′s end, a total of 23 of the hedge funds we track held long positions in this stock, a change of 21% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly.

According to our comprehensive database, John A. Levin’s Levin Capital Strategies had the biggest position in Cliffs Natural Resources Inc (NYSE:CLF), worth close to $58.6 million, comprising 1.1% of its total 13F portfolio. Coming in second is Jason Adler of AlphaBet Management, with a $20.9 million position; 1% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Jim Simons’s Renaissance Technologies, Daniel S. Och’s OZ Management and D. E. Shaw’s D E Shaw.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Levin Capital Strategies, managed by John A. Levin, initiated the largest position in Cliffs Natural Resources Inc (NYSE:CLF). Levin Capital Strategies had 58.6 million invested in the company at the end of the quarter. Jason Adler‘s AlphaBet Management also initiated a $20.9 million position during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies, Daniel S. Och’s OZ Management, and D. E. Shaw’s D E Shaw.

What have insiders been doing with Cliffs Natural Resources Inc (NYSE:CLF)?

Insider buying is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the latest half-year time period, Cliffs Natural Resources Inc (NYSE:CLF) has seen 1 unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

Let’s take a look at some of the recent moves in CLF peers on the following page:

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