Check out this story that was recently published on Yahoo! Finance.
Some CEOs spend their cash bonuses on yachts, midlife crisis-level sports cars, and donating to universities so their kids can get admitted. But, General Electric CEO Jeff Immelt is bucking the trend: spent his entire 2013 cash bonus – all $2.6 million of it – buying stock in the company he runs.That's quite a vote of confidence for a company down nearly 9% in 2014 and up only 8% in the past twelve months.
Thoughts? Would you follow Jeff Immelt's vote of confidence, or wager against it?
Immelt has got to be worth at least 9 figures by now so 2% investment in the company he runs isn't going to sway me one way or the other.
And one might think that he probably didnt accumulate his net worth by being careless with $2.6 million
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Hugely positive signal as far as insider trades are concerned. A rare sight indeed. According to Celebrity Net Worth , he's worth around $60 Million. It should be noted that many more affluent CEOs don't put their entire bonuses into the company, so it's a relative statement... not the fact that it may or may not be insignificant in comparison to his overall net worth.
$60 million strikes be as a bit low. He owns about 2 million shares of GE stock in total, so at $26 a share he's worth $52 million right there. Regardless, it's certainly not a negative sign, and Immelt may indeed believe the stock is undervalued at these levels. My point is that it is not a large enough sum to make me run out and buy GE shares on that information alone. He already owns a large stake in the company so I don't know how much can be inferred about the fundamentals of the company based on this relatively small investment. If I was being cynical, I'd say that he got a pretty good bang for his buck considering the amount of media attention this move got him. The stock was up over 2% the day he announced this, which alone made up for half his investment on paper.
For comparison, I remember when JPM hit a rough patch after the London Whale incident in 2012, Dimon bought around $20 million in shares. I interpreted that as a meaningful signal worth considering
I hear what you're saying. But I think its worth mentioning that Dimon's net worth is in the $400 million range. So his $20 million investment, about 0.5% of his total net worth, was even lower than Immel'ts investment.
Hmm.. You sure about that?
$20M/$400M = 5%
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