Does Sinking Cliffs Natural Resources Inc (CLF) Amid Iron Ore Glut Provide An Entry Point?

How are hedge funds trading Cliffs Natural Resources Inc (NYSE:CLF)?

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, down about 35% from one quarter earlier. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were upping their holdings meaningfully.

Of the funds tracked by Insider Monkey, Casablanca Capital, managed by Donald G. Drapkin and Douglas Taylor, holds the biggest position in Cliffs Natural Resources Inc (NYSE:CLF). Casablanca Capital has a $38 million position in the stock, comprising 100% of its 13F portfolio. Sitting at the Number two spot is David E. Shaw’s D E Shaw, with a $26.4 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism encompass John A. Levin‘s Levin Capital Strategies, Jim Simons’ Renaissance Technologies, and Cliff Asness‘ AQR Capital Management.

Judging by the fact that Cliffs Natural Resources Inc (NYSE:CLF) has witnessed a declination in interest from hedge fund managers, we can see that there exists a select few funds that decided to sell off their full holdings last quarter. Interestingly, Douglas Dethy‘s DC Capital Partners sold off the largest investment of the more than 700 funds tracked by Insider Monkey, totaling an estimated $7.1 million in stock, while Israel Englander of Millennium Management was right behind this move, as he dumped about $4.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by nine funds last quarter.

On a concluding note, although insider trading sends a clear buy signal, given the bearish hedge fund sentiment, low margins, and poor industry outlook, we would wait for the stock to fall more, before a suitable entry point is created.

Disclosure: None