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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Bill Wexler who wrote (28346)	10/1/2007 6:42:22 PM
From: Wallace Rivers	Read Replies (1) \| Respond to of 78735

If one believes CFC will be a big winner, a more conservative way to play that upturn is to buy BAC, which negotiated a huge convertible deal a month or so back with CFC. Conversion price of $17, plus it has a yield of 7.5%, if memory serves. Obviously you won't get the same bang as straight equity in CFC, but you eliminate a lot of risk, and pick up a high quality bank itself yielding about 5%. Disclaimer: I own BAC.

To: Bill Wexler who wrote (28346)	10/7/2007 12:34:39 PM
From: Madharry	Read Replies (1) \| Respond to of 78735

FYI: Countrywide issued a press release today announcing that Angelo Mozilo will sell a large number of shares as one of his 10b5-1 plans. The 10b5-1 plans allow corporate executives to sell shares on a defined basis, triggered by stock prices and other events and set well in advance of the actual sale. The rule was set up to allow executives to diversify out of large stock positions in their company while keeping them from leveraging insider information to their benefit. This is, in theory at least, how it is supposed to work. The shares remaining in his plan will be sold in equal 20% chunks next Monday to Friday. From the press release: One of these 10b5-1 Plans, which was entered into almost a year ago on October 27, 2006, is set to expire this month and covers stock options previously granted to Mr. Mozilo. It provides that a pre-determined amount of Countrywide’s common stock issued upon exercise of these options is to be sold on a monthly basis in specified increments. The 10b5-1 Plan also includes a provision that sales trades cannot take place if the Company’s stock falls below a designated floor price. During the months of August and September, 2007, the stock price declined below the designated floor price and no trades were executed. Another provision in the 10b5-1 Plan stipulates that if any shares subject to the Plan remain unsold on October 8, 2007, then those shares will not be subject to any price floor and will be sold in 20 percent increments, commencing on October 8, 2007 and ending on October 12, 2007. … “The upcoming sales are driven by rules within the 10b5-1 Plan that were established long ago, and should in no way be viewed as any indication of my future outlook for Countrywide,” Mozilo said. “As one of Countrywide’s largest individual shareholders, my interests are firmly aligned with those of our other investors. I recognize that the Company’s stock is currently under pressure. However, the terms of the 10b5-1 Plan that I established in October 2006 require that these sales be executed.” Mozilo has come under attack lately because the typical practice for executives is to design a 10b5-1 plan and then leave it alone. However, as the housing market has deteriorated Mozilo has tinkered with plans to change when shares are sold. This is highly unusual activity, according to legal experts who regularly handle 10b5-1 plans. From a LA Times article (now behind a paywall, important parts here) “This raises a slew of red flags,” said Andrew Stoltmann, a Chicago-based securities lawyer. “Anytime you have revisions or modified plans. . . it is extremely suspicious.” … “There are circumstances where the plans could be amended, but you better have a good reason because it’s defeating the basis of the rule,” Carroll said. “If a guy is changing his plan around, I would think that would send up a red flag. I wouldn’t allow my clients to do it.” For the conspiracy theorists out there - this share sale is rumored to be huge and could put big pressure on the stock (which is now at about $20). If Mozilo does dump a ton of shares via this plan next week the stock could be pressured below $18, which is Bank of America’s trigger for their $2 billion cash investment made in Countrywide last month. Is this the hand over of power? Is this the sale of Countrywide to Bank of America? Depending on the amount of shares involved it could very well be…Stay tuned.