The largest shareholder in Countrywide Financial Corp. said late yesterday that it has upped its stake in the nation’s largest mortgage lender, adding intrigue to a pending acquisition by Bank of America later this year. Legg Mason Capital Management’s chief investment officer Bill Miller disclosed that the company has upped its stake in Countrywide from 11.8 percent to 14.9 percent as of January 18, and said he was looking for more. The Office of Thrift Supervision has given permission to Legg Mason to acquire up to 25 percent of outstanding shares, Miller said. He’s looking for an exception to a so-called “poison pill” provision at Countrywide that essentially prevents investors from obtaining more than a 15 percent interest in the lender. Miller expressed ‘surprise’ at the decision to sell:

We were quite surprised by the decision to sell the company at close to a seven-year low in the stock price, and agreeing to a bid that amounts to only 30% of book value and under 3x consensus earnings for 2009. What makes the decision puzzling is that the company was seeing solid deposit growth, has no apparent capital problems, was not forced by the regulators to seek a merger partner, and is in sufficiently sound condition to have declared its regular quarterly dividend at the end of January.

Miller characterized the purchase agreement as a “put option contract,” characterizing the planned merger as “protection to CFC owners from a worst-case outcome should the housing, mortgage, and economic situation worsen dramatically.” He said that while Countrywide has not published details of the merger, Legg Mason would “support the deal if we believe it is in the best interests of shareholders.” The Wall Street Journal’s Deal Journal said Wednesday that Miller could be “agitating for a higher price for Countrywide.” Legg Mason, however, wasn’t the only investor busy acquiring shares of the battered lender. A division of Capital Research and Management Co., which manages the American Funds family of mutual funds, disclosed Monday that it took a 6.1 percent stake in Countrywide at the end of 2007. And while some investors have been buying, others are still selling. Societe Generale sub TCW Group, Inc. said Monday in a SEC filing that it had divested its previous 5 percent interest in the lender. The BofA merger values Countrywide stock at just below $8.00 per share. Shares in the lender were trading at $6.92 when this story was published. Disclosure: The author held no positions in CFC when this story was originally published.