It has been nearly 10 years since I last talked about Michael Dell. It was the summer of 1992. That June, Dell Computer Corp (DELL:Nasdaq - news - boards) shocked Wall Street by admitting it was not immune to the vicious price wars that ravaged the boxmakers. Analysts gasped, and the stock plunged in response. In the darkest hour, Dell, already known for his persistent selling, purchased 275,000 of his own shares at $17.50 and $18 per share. If that doesn't sound like much, adjust for six, 2-for-1 splits and that's more than 17.5 million shares at around 30 cents per share!

At the time, Dell's foray into the open market seemed bold. Dell shares where getting clobbered -- with reason, it seemed. Awakened giants IBM (IBM:NYSE - news - boards) and Compaq (CPQ:NYSE - news - boards) were planning their own special lines of mail-order "clonebusters." Meanwhile, Dell was getting pressure from a second wave of even cheaper direct-mail vendors. Dell's timing, however, couldn't have been better; the shares more than doubled in the ensuing 12 months and the rest is history.

What the Dell Is Going On? Michael Dell is purchasing shares for the first time since the summer of 1992, when he acquired 275,000 at $17.50 and $18 per share.

Source: Baseline

Fade to the present. After years of systematic selling, Dell is acquiring shares once more, this time through the exercise of options. All told, in December and January, Dell exercised to acquire just over 18 million shares. For the record, that accounts for virtually every in-the-money option at his disposal, and none were anywhere near expiration.

Here things get interesting. Because the options were nonqualified stock options, by holding the underlying shares, Dell incurred a tax burden on the difference between the exercise price of the option and the prevailing market price at the time of the exercise. To make matters worse, this difference is taxed at ordinary income tax rates. In light of this burden, I generally assume insiders exercise these options when they perceive the stock price is as near the exercise price as it is likely to be (i.e., a bottom).

Adding to the sense of urgency in this case, Dell exercised more than 6 million of these options (not incidentally, those carrying the highest strike prices), in December last year. That action invoked a roughly $30 million taxable gain for the last month of 2000. This tells me one of two things: 1) Either Dell had a big capital loss to offset or; 2) He urgently suspected that the bottom was in.

The more than $170 million taxable gain on the options exercised in January will be dealt with in this year's taxes. But think about this: Even if exercising all his options was some sort of wacky New Year's resolution, Dell didn't have to exercise them all in January. He had all year to do so. What's the rush, unless he had a pretty strong inkling the stock was headed north?