In Review of Insider Sales at Countrywide

So, I ran into this old blog from January 25, 2007 on Herb Greenberg's site at marketwatch.com.

Curious Tale: Countrywide Insiders Bail

In the wake of chatter of a possible Bank of America (boa) buyout of Countrwide Financial, something that bears watching -- especially if there is NO deal at a big price and/or if earnings released Tuesday are terrible: Whether anybody asks Countrwide (cfc) on its earnings call tomorrow about insider sales by top execs, most notably CEO Angelo Mozilo, who has been an unusually active seller in recent months. Since the company's announcement in October of a plan to repurchase up to $2.5 billion of its shares during the fourth quarter (using borrowed funds) Mozilo has created three different 10b5 plans, which calls for a routine sales. Since November 11 he has sold more than 1.2 million shares valued at more than $40 million. These are options-related sales, which by itself is irrelevant, with one twist: The options wouldn't have expired for four to five more years.

The beat goes on...

We need to take into context of all the spin that the media and the Wall Street has put on this stock. The reason for this stock holding up so well despite growing evidence of malfeascence of its insider is the following:

1. Many Mutual Funds, Hedge Funds, and institutions own sizeable percentages of this stock.
2. Countrywide is a loved stock on Wall Street.
3. Media propaganda and public denial of problems with mortgages and its implications.
4. "Phantom Buybacks" with borrowed money while the insiders dump like its going out of style.

Just look at what Angelo Mozilo is doing by exercising and then selling his stock options that are no where near expiration. Insider dumping was pronounced even today as Sandor Samuels testified in front of congress. More on that on my next blog.