Judging from the terms it gave Bank of America (NYSE: BAC) for its infusion of cash, Countrywide Financial (NYSE: CFC) is pretty desperate. Word on the Street is that the company is in negotiations with Leona Helmsley's dog for another $12 million.
There's another way that the company could raise money, though it's doubtful that it will ever happen. As Brett Arends pointed out recently, CEO Angelo Mozilo sold $425 million worth of his company's stock in the past 3 years -- at an average price of $36.50. The stock is now trading under $20.
But don't worry -- a Countrywide spokesman has said that Mozilo was diversifying his portfolio for retirement. $425 million? Is he retiring to the Moon with Lance Bass? Mozilo has continued to dump more shares, even in the past few weeks, as part of his 10b5-1 plan.
Mozilo can drop all the optimistic platitudes he wants. But what he should do is invest $100 million or so of his own cash -- cash he acquired by selling stock right before stuff hit the fan -- in his company. That would be a display of confidence that would inspire Wall Street to stand by the company. It would inspire a lot more confidence than going on CNBC and chastising an analyst who had the nerve to downgrade his stock, as Herb Greenberg discussed recently. But hey, if I needed to dump $400+ million worth of stock for retirement, I'd be upset about downgrades too.
Given how little faith Mozilo has shown in his company, I think investors should display the same lack of faith for now.
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Reader Comments (Page 1 of 1)
8-30-2007 @ 3:52PM
John said...
I have followed this whole senario. Mazillo is a smart, very aggressive person, who has played the system to the hilt though the whole cycle. He is not going to change and whatever he says he is only out for one person and that is Mazillo.
8-31-2007 @ 12:03AM
CHRIS said...
The company might not make it. The Lay offs have started. The company is sinking, run don't walk to cover. Angelo made a great company and has a great stash for retirement. Way to GO!!!!