To most market participants, hedge funds are perceived as slow, outdated investment tools of years past. While there are more than 8000 funds with their doors open at present, we look at the leaders of this group, about 450 funds. Most estimates calculate that this group oversees the majority of the smart money’s total asset base, and by paying attention to their best investments, we have identified a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 outpaced the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Just as beneficial, bullish insider trading sentiment is another way to parse down the marketplace. There are a variety of incentives for an insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this tactic if “monkeys” understand where to look (learn more here).
Now, it’s important to take a glance at the key action regarding Cliffs Natural Resources Inc (NYSE:CLF).
What does the smart money think about Cliffs Natural Resources Inc (NYSE:CLF)?
In preparation for this quarter, a total of 19 of the hedge funds we track were bullish in this stock, a change of -30% from the first quarter. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes considerably.
Of the funds we track, SAC Capital Advisors, managed by Steven Cohen, holds the largest position in Cliffs Natural Resources Inc (NYSE:CLF). SAC Capital Advisors has a $66.7 million position in the stock, comprising 0.3% of its 13F portfolio. On SAC Capital Advisors’s heels is Balyasny Asset Management, managed by Dmitry Balyasny, which held a $20.4 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining hedge funds that hold long positions include Ken Griffin’s Citadel Investment Group, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
Due to the fact that Cliffs Natural Resources Inc (NYSE:CLF) has witnessed falling interest from hedge fund managers, it’s easy to see that there were a few money managers that elected to cut their full holdings in Q1. It’s worth mentioning that Ken Fisher’s Fisher Asset Management said goodbye to the largest investment of all the hedgies we track, totaling close to $32.2 million in stock., and John Burbank of Passport Capital was right behind this move, as the fund dropped about $23.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 8 funds in Q1.
How have insiders been trading Cliffs Natural Resources Inc (NYSE:CLF)?
Insider buying is best served when the primary stock in question has seen transactions within the past 180 days. Over the last 180-day time period, Cliffs Natural Resources Inc (NYSE:CLF) has experienced 1 unique insiders buying, and 5 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to Cliffs Natural Resources Inc (NYSE:CLF). These stocks are Alliance Resource Partners, L.P. (NASDAQ:ARLP), Tahoe Resources Inc (NYSE:TAHO), Natural Resource Partners LP (NYSE:NRP), and Compass Minerals International, Inc. (NYSE:CMP). This group of stocks are in the industrial metals & minerals industry and their market caps are similar to CLF’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Alliance Resource Partners, L.P. (NASDAQ:ARLP) | 4 | 1 | 2 |
| Tahoe Resources Inc (NYSE:TAHO) | 6 | 0 | 0 |
| Natural Resource Partners LP (NYSE:NRP) | 4 | 4 | 0 |
| Compass Minerals International, Inc. (NYSE:CMP) | 10 | 0 | 4 |
With the returns demonstrated by our strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Cliffs Natural Resources Inc (NYSE:CLF) applies perfectly to this mantra.
