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Cramer: IBM CEO Rometty Signaled 'Real Commitment' To Stock

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Cramer: IBM CEO Rometty Signaled 'Real Commitment' To Stock
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Corporate insiders who sell their holdings can do so for multiple reasons, but insiders who buy shares of their own company do so for one reason: to make money, according to CNBC's Jim Cramer.

What Happened

IBM (NYSE: IBM) CEO Ginni Rometty purchased $3 million in IBM stock this week at a time when many investors are not pleased with the company's $34-billion acquisition of Red Hat Inc (NYSE: RHT), Cramer said during his daily "Mad Money" show Monday.

The executive's multimillion-dollar stock purchase with her own personal money signals a "real commitment" to the company and the stock, the CNBC host said. 

Why It's Important

What's even more notable is that two-thirds of Rometty's compensation is stock-based, and this week's insider buy is her first-ever on the open market, Cramer said. The executive could have sent out a similar bold message to the Street by purchasing a smaller amount, but it appears she's "doubling down," he said. 

What's Next

IBM's stock is backed by a solid balance sheet and attractive 5.1-percent dividend yield, Cramer said. The acquisition of Red Hat could prove to be a "bold move," but investors should be reminded It could be possible that all of the executives could be proven "100-percent wrong" in their decision to buy IBM shares, he said.

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Posted-In: CNBC Ginni Rometty Jim CramerNews Insider Trades Media Best of Benzinga

 

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