Michael Dell Buys $100 Million Worth of Dell Stock
09/09/08 Categories: Stock Investing and
Investments
Just
this afternoon Dow Jones
News, parent company of
The Wall Street Journal 
, reported that Chairman and CEO of
Dell Inc.
(DELL) Michael Dell bought 4.88 million shares
of his company at an average price of
$20.49 last week. A total price tag of nearly $100 million!
This is a large insider buy, which usually signals that the inside buyer of the stock believes that the stock is either undervalued or going up in the near future. It could also mean both scenarios are the case. Regardless, following insider transactions (or insider trading) have been a trading strategy that many investors use.
Another indicator that Dell might be a good investment is that on September 3, 2008 Dow Jones News quoted Michael Dell saying that we will most likely see a "rapid" turnaround for Dell in Western Europe. He admitted that no one was happy with Dell's performance in Europe recently and is ready for a change.
Two key things happened in this announcement:
- The CEO, Michael Dell, admitted that they were doing something that wasn't working.
- There is a plan in place to improve conditions.
Warren Buffett is known for admitting the mistakes he's made throughout the year in his annual shareholder letter. He also provides that a plan is in place to improve the conditions of the problem, thus improving performance. Mr. Buffett says that a CEO that can admit mistakes of himself or the company and then provide a plan for improvement is a CEO worth keeping. CEOs that deny there are problems or that they were caused in any part by them run the company (and its investors) into trouble.
The single most important aspect about insider trading is that executives that have more of their money invested in their company are more likely to run the company better. It sounds like simple common sense, but you would be surprised at how many investors forget that and how many minimally invested execs perform poorly.
If you put all of the pieces together about the Dell story, it is painting a picture of a rebound in Dell stock. My investing advice on this trade would be if you are going to buy this stock based on this recent news, put a stop to limit your losses should something go wrong with the tech industry or the stock market as a whole.
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This is a large insider buy, which usually signals that the inside buyer of the stock believes that the stock is either undervalued or going up in the near future. It could also mean both scenarios are the case. Regardless, following insider transactions (or insider trading) have been a trading strategy that many investors use.
Another indicator that Dell might be a good investment is that on September 3, 2008 Dow Jones News quoted Michael Dell saying that we will most likely see a "rapid" turnaround for Dell in Western Europe. He admitted that no one was happy with Dell's performance in Europe recently and is ready for a change.
Two key things happened in this announcement:
- The CEO, Michael Dell, admitted that they were doing something that wasn't working.
- There is a plan in place to improve conditions.
Warren Buffett is known for admitting the mistakes he's made throughout the year in his annual shareholder letter. He also provides that a plan is in place to improve the conditions of the problem, thus improving performance. Mr. Buffett says that a CEO that can admit mistakes of himself or the company and then provide a plan for improvement is a CEO worth keeping. CEOs that deny there are problems or that they were caused in any part by them run the company (and its investors) into trouble.
The single most important aspect about insider trading is that executives that have more of their money invested in their company are more likely to run the company better. It sounds like simple common sense, but you would be surprised at how many investors forget that and how many minimally invested execs perform poorly.
If you put all of the pieces together about the Dell story, it is painting a picture of a rebound in Dell stock. My investing advice on this trade would be if you are going to buy this stock based on this recent news, put a stop to limit your losses should something go wrong with the tech industry or the stock market as a whole.
Why Invest in Stocks?Find Out On Zecco.com Free Blogs, Forums & Trade.
Priceline.com Hotels - save up to 50%
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