When all the CEO’s and corporate officers are lumped together for playing down the sub-prime mess in the summer and for all the sub-prime loans that were made, one CEO is thought of as the proverbial poster child. This is Angelo Mozilo of Countrywide Financial Corporation (NYSE: CFC).
Before you think that we are just calling for him to leave openly, we are not. In fact it is the opinion of 24/7 Wall St. that he has dodged the biggest bullets already and that the board of directors won’t try to fire him nor that they will be pressured to. This is even sort of his show as far as we are concerned because he’s not only Chairman and CEO. He’s also the founder.
This is actually a prediction piece, and 24/7 Wall St. thinks that at some point in 2008 when and if the dust settles in all the mortgage soup that Mozilo will announce his retirement and succession plans. But…. we think that the retirement may only be as CEO and it is possible that he’ll stay at Countrywide as non-Executive Chairman. We also believe that he’ll be able to take basically as long as he wants to name a successor and it may be 2009 before he is out. He’s roughly 68 years old, so he isn’t at any crucial age in today’s world.
All things being equal, it is also the belief of 24/7 Wall St. that Countrywide will survive and likely thrive again in the future. That may of course change if there are more insurmountable developments that come across the news tape, but that is our opinion as of today. It’s obviously not entirely out of the woods but it isn’t in the graveyard either. Shares are down almost 75% from 52-week highs of $45.26, but they are also up almost 50% from lows of $8.21 in recent weeks.
- While the criticisms have been harsh, we do not actually hold his personal stock sales as anything we’d raise much of a stink about like many others have. These sales were all under a planned 10b5-1 sale program and he was never a serial stock seller before. His case to the SEC inquiry should actually be easy to prove that he didn’t get to sell out at the top and leave everyone else holding the bag.
- He didn’t do Bank of America (NYSE:BAC) any favors when he came out the day after their $2 Billion equity stake and predicted on CNBC that the U.S. economy is almost certain to go into a recession.
- Press about Countrywide paying large bonuses to their mortgage brokers when the mortgage was a bad deal for the home buyer didn’t help.
- Analysts are still well above current stock prices with their older price targets that haven’t been fully updated.
- Some have called for the axing of Mozilo. They were also hit quite hard for the harsh wording in their SEC Filings
- Mozilo in an interview yesterday with CNBC’s Maria Bartoromo said he had discussed this current mortgage bailout package with Paulson, so if this actually comes to pass it will likely be the stabilizing act that keeps the company easily intact and out of the public spotlight like it had been in recent weeks and months. But the sub-prime rate freeze may help him as long as there are not waves and waves of foreclosures.
because everyone ran for the hills.Once again, we do not believe that Mozilo can’t survive nor do we believe that he has to leave the company as of today. We just think he’s going to announce a quasi-retirement that won’t really be a full retirement.
GUIDELINES FOR CEO’s THAT NEED TO GO
Jon C. Ogg
December 6, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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