Mozilo Cashed Out at Top of Market

When you're considering whether to buy shares of a company, beware if the CEO is selling. I don't care what reason the CEO gives for the selling in public; they always have an excuse, but executives rarely sell a share because they think it's going higher.

Case in point: Angelo Mozilo's Countrywide Financial(CFC Quote).

And if you're an investor in Countrywide, one figure must be sticking in your throat right now.

Eighteen bucks.

That was the kicker in last week's $2 billion deal with Ken Lewis' Bank of America(BAC Quote).

Not only did Lewis negotiate a sweet 7.5% interest rate on the loan he made to Countrywide, but he also got the right to convert the loan into new Countrywide stock, at just $18 a share, if he wants to.

Eighteen bucks.

Trust Ken Lewis to get the sweet end of the deal.

In recent years, Mozilo has been selling ordinary investors his own shares. Millions of them. And they didn't get anything like these terms.

How much did they pay?

In total, company filings show Mozilo has sold a staggering $425 million worth of Countrywide stock to outsiders over the past three years.

Average price: $36.50 a share.

Ouch.

Yes, it's better to be Ken Lewis.

I hate to imagine how those investors feel now. Countrywide stock fell Tuesday to just $19.41 in the deepening gloom about the housing market.

Everybody likes wealth creation, and everyone celebrates a self-made man. Mozilo started Countrywide and built it up over many decades into an industry giant.

In a statement, Countrywide spokesman Rick Simon said Mozilo still owns about 1.5% of the company. (That should be worth around $170 million at current prices.) As for the $425 million in stock sales, Simon observed that Mozilo, who is 68, has been diversifying his portfolio as he nears retirement.