The Smartest Dealmaker on Wall Street

The smartest dealmaker on Wall Street is 73-year old Countrywide Financial’s Angelo Mozilo. He is also one of the best market timers on Wall Street. Before the subprime mortgage crisis hit, Mozilo sold a substantial portion of his Countrywide stock holdings while he told everybody there is nothing wrong with Countrywide to merit those sales. Here is a summary of Mozilo’s insider sales:

1. During the last two months of 2006 Mozilo sold nearly 900K shares of Countrywide for more than $35 Million.

2. During the first quarter of 2007 Mozilo sold 1.6 Million shares of Countrywide for nearly $65 Million.

3. Between April 2007 and early July 2007 Mozilo sold another 1.7 Million shares for $66 Million.

4. Between July 2007 and October 2007 Mozilo sold another 1.3 Million shares for $34 Million as Countrywide’s stock price started to collapse.

Overall Mozilo gained more than $200 Million from these insider sales. He didn’t stop there though. Even though he owned only 2 Million shares, or 0.35% of the outstanding shares, he sold Countrywide to Ken Lewis’ Bank of America for $4 Billion. At the time he made the following prophetic statement:

“We believe this is the right decision for our shareholders, customers, and employees.”

He was right. It was the right decision for Countrywide’s shareholders but it wasn’t the right decision for Ken Lewis and Bank of America shareholders. The worst dealmaker on Wall Street, Ken Lewis, suggested that he was aware of Countrywide’s troubles and said the following:

“Countrywide presents a rare opportunity for Bank of America to add what we believe is the best domestic mortgage platform at an attractive price and to affirm our position as the nation’s premier lender to consumers”

Indeed, it was a rare opportunity to lose nearly $30 Billion to clean up all the mess Mozilo dumped on Bank of America shareholders.

Mozilo received only $14 Million for his remaining 2 Million shares which is infinitely better than zero and going to jail. He executed his brilliant plan without a glitch. Well, maybe there was a small glitch. In 2009, the SEC charged him with insider trading and securities fraud. Unfortunately back then, Preet Bharara wasn’t in charge. The SEC wasn’t smart enough to record Mozilo’s conversations. So as usual the SEC settled another insider trading case for peanuts. Mozilo paid $67.5 Million without admitting or denying guilt. So, technically he wasn’t even guilty of all the things he did.

Now we know that Countrywide was on the verge of an Enron-like crisis, facing nearly $30 Billion in future liabilities for their actions. Mozilo not only sold most of his holdings at sky-high prices but also avoided going to jail. He is definitely the best dealmaker on Wall Street.

There is one question left that we haven’t answered. How could he sell millions of shares without any inquiries from the SEC for more than a year? Simple. SEC’s Rule 10b5-1 allows insiders to buy or sell whenever they want as long as they do it under a 10b5-1 plan. You can read the details about 10b5-1 plans and how you can imitate insiders who use them and beat the market by 9 percentage points per year here.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!