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Cliffs Natural Resources Inc (CLF) Shows Some Relative Strength

Cliffs Natural Resources Inc (NYSE:CLF) shareholders are pretty happy today despite the stock only inching up 1.4%. Although the gain isn’t much for a stock with Cliffs Natural Resources Inc (NYSE:CLF)’s volatility, shares of the iron ore pellet producer did pretty well given the circumstances.

First, Cliffs Natural Resources Inc (NYSE:CLF) showed relative strength versus the broader market, which was slightly in the red for the session. Second, and more importantly, Cliffs Natural Resources Inc (NYSE:CLF) showed that it could brush off the ‘Trump Trade’ reversal, which caused other stocks such as Freeport-McMoRan Inc (NYSE:FCX) to fall sharply. Due to the House failing to even bring a bill to repeal Obamacare to a vote on Friday, many investors feared that other parts of the Trump agenda might be harder to pass and they sold shares of stocks that might benefit from Trump’s agenda on Monday, namely banks that will benefit from deregulation, commodity stocks that will benefit from Trump’s proposed trillion dollar infrastructure program, and big corporation stocks with a lot to gain if taxes are lowered.

Given that Cliffs Natural Resources Inc (NYSE:CLF) will benefit from higher demand if Trump’s infrastructure bill passes (it should also benefit from Trump’s ‘Buy American, Hire American’ belief), the stock’s relative strength today shows that there is accumulation, which is generally a positive sign, at least in the short term. Also potentially helping Cliffs Natural Resources Inc (NYSE:CLF) outpace its peers today could be Michael Gambardella of JPMorgan’s price target hike on the name. The analyst has a $13 price target, up from the previous $12, due to his belief of higher iron ore prices and more resilient Chinese steel demand.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

In terms of aggregate smart money activity, 13F filing data certainly shows that elite funds became more bullish on Cliffs Natural Resources in the fourth quarter. Of the 742 elite funds we track, 28 funds owned $359.49 million of Cliffs Natural Resources Inc (NYSE:CLF) and accounted for 18.50% of the float on December 31, versus 23 funds and $265.98 million respectively on September 30. Among the funds that raised their stakes include D E Shaw and Ken Griffin‘s Citadel Investment Group, which upped their holdings by 79% and 28% respectively in the fourth quarter to 6.4 and 2.9 million shares.

The Bottom Line

Cliffs Natural Resources Inc (NYSE:CLF) showed relative strength on Monday, suggesting accumulation below $8 per share. Meanwhile, Michael Gambardella of JPMorgan raised his price target to $13, from $12.



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