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

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 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 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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