Mozilo, Countrywide and Personal Financial Management

A few weeks ago a gentle reader wrote in with some interesting stats about Mozilo really standing behind his firm. I haven't verified the figures but this guy is pretty good at math.

any guesses on a) how much countrywide mozilo sold since june 06 and b) how much he still holds?

according to yahoo finance, he sold ~$350M over that period. he currently holds a whopping $7.5M. that's faith in the company and the industry.

This led to a discussion of whether this might have constituted insider trading or not.

Looks like the SEC has some questions too..

Countrywide's shares have fallen nearly 56 percent since January, and the company may now be facing an investigation from the Securities and Exchange Commission into the timing of stock sales made by Chief Executive Angelo Mozilo.

North Carolina State Treasurer Richard Moore, in a letter to SEC Chairman Christopher Cox, claims that Mozilo "apparently manipulated his trading plans to cash in" as the subprime crisis was heating up.

Moore cited reports that Mozilo was unloading 4.9 million Countrywide shares worth more than $138 million between November 2006 and August 2007.

On Friday, Countrywide announced Mozilo plans to sell more shares under a prearranged trading plan that began Monday and ends Friday.

Regardless it tells you all you need to know about the short-term future of the mortgage space.

Jim Rogers on Bloomberg

I like Jim Rogers. He was right on commodities in 1999 (pretty much called the bottom), he was right on the dollar and right on the finance industry, right on China.

Here he is on Bloomberg - summary is that he is:

a) short on investment banks b) short dollar (worried about Fed printing money, worried about inflation) c) long renminbi d) long agricultural e) less long on other commodities f) neutral on China equities at these prices "incipient bubble"

SIVs, Subprime, Credit Market Volatility Explained in 8 minutes or less

If I had been drinking milk while watching this, I would have snorted out of my nose from laughter. Link to Youtube, in case embed gets disabled is here.

[youtube=http://www.youtube.com/watch?v=SJ_qK4g6ntM&rel=1&border=0]

Merrill cleaning house

So after you let them spend $1.3B on a late to game acquisition

At Merrill, Mr. Kim and his team had overseen the $1.3 billion acquisition of First Franklin Corp., which specialized in subprime mortgages extended to the least creditworthy borrowers. Merrill has become a top underwriter of such mortgage-backed securities because of that deal, which was completed in January.

and I am sure give them their 2006 bonus and after they have found other jobs and you have lost $4B (!) of shareholder's money, then, you remember to fire them.

Merrill Lynch & Co., which is expected to join other investment banks reporting steep losses on assets linked to risky subprime mortgages later this month, yesterday began a housecleaning of executives who have left the firm with an outsize subprime exposure.

In making the moves, Merrill didn't disclose the extent of any likely write-downs. But the size of those losses may equal or exceed a $4 billion estimate made by one analyst last week, according to people on Wall Street. That could erase most or all of the firm's quarterly profit and leave Merrill the hardest hit of any U.S. securities firm.

Merrill ousted its global head of fixed income, Osman Semerci, as well as his deputy, Dale Lattanzio, co-head of fixed income for the Americas, and also showed the door to their former boss, Dow Kim, the former co-head of institutional securities.

Mr. Kim had announced plans to resign in May on an amicable basis, with plans to start his own hedge fund in which Merrill would invest. But Merrill no longer plans to make such an investment, and Mr. Kim left the firm abruptly this week, according to people familiar with the firm. Messrs. Semerci and Lattanzio didn't return calls, and a spokesman for Mr. Kim said he has been focused since May on his new hedge-fund group, Diamond Lake Investment Group.

From WSJ