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The Art of Bailing Out


Countrywide's Angelo Mozilo seems to have the science of bailing out down to perfection.


Some people claim that Bailing Out is an art. Others think it is a science. I think it is a bit of both.

Regardless of what it is, if you are in a doomed relationship, it is best to get out of it as quickly as you can.

This advice applies not only to personal relationships, but also to the stock market.

If a stock is not loving you, why should you love it back?
When it comes to stocks, the sane way to get out of a doomed relationship is to sell and never look back. The stock won't be looking back either so there really should be no hard feelings.

I am not sure if Countrywide (CFC) CEO Angelo Mozilo has read the book or not but he sure has the art as well as the science of bailing out down to perfection.

The following table will help explain what I mean.

Mozilo Bailouts For October

Click on chart to enlarge.

Symmetrical Bailout Recap

  • On October 9 Mozilo sold 139,918 shares
  • On October 10 Mozilo sold 139,918 shares at 13:25:49
  • On October 10 Mozilo sold 139,918 shares at 15:50:37
  • On October 10 Mozilo sold 139,918 shares at 16:10:29
  • On October 11 Mozilo sold 139,918 shares
  • On October 12 Mozilo sold 139,916 shares

Say what you like about Mozilo, but you have to admire the art and the symmetry of that October bailout. He has this stuff down pat. Click here for a Historical Table of Mozilo's Bailout. Please remember that he has to bail with both hands because stock options are pouring in nearly as fast as he can bail.

For more on Countrywide Financial, please consider Countrywide Reaps What It Sowed, Countrywide Mortgage Restructure Free-For-All and Mad Dash For Cash.

Inquiring minds might also be interested that Countrywide was Sued by Workers Over Retirement Losses. However, when you are bailing as fast as Mozilo is (to the total tune of over $1 bln dollars over the years), why should he care? After all, he has bailed out to perfection.

Arrogance and Greed

Here's one more for the road because it is about the same thing that did in Enron and Worldcom. That thing is arrogance and greed. Please consider S.E.C. Asked to Investigate Countrywide Chief's Trading.

In an Oct. 8 letter to the S.E.C. chairman, Christopher Cox, the state treasurer of North Carolina, Richard H. Moore, questioned changes Mr. Mozilo made to his arranged stock selling program, adjustments that allowed him to increase significantly his sales of Countrywide shares.

After starting a plan in October 2006, Mr. Mozilo twice raised the number of shares that could be sold: once in December 2006, when Countrywide stock was $40.50, and again in February, when it hit a high of $45.03. He has had gains of $132 million since starting the October 2006 plan and expects to sell his remaining shares by the end of the week, a move that will generate millions more.

"As an investor and a Countrywide shareholder, I was shocked to learn that C.E.O. Angelo Mozilo apparently manipulated his trading plans to cash in, just as the subprime crisis was heating up and Countrywide's fortunes were cooling off," Mr. Moore wrote. "The timing of these sales and the changes to the trading plans raise serious questions about whether this is a mere coincidence."

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No positions in stocks mentioned.
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