Chris Hill: PG&E is filing for bankruptcy because
of the liability around the wildfires in California. Not surprisingly, shares of PG&E down
50% today. Again, this is not a surprise. I’m curious if you’ve ever
found yourself in this situation. This is a question we’ve gotten before from
not just investors in PG&E, but investors in a distressed business. You could look at
Sears at any point over the last 12 months. What’s your go-to move in
that situation as an investor? Even though I’ve got a couple of stocks in
my portfolio that are way down, they’re not on the verge of bankruptcy or
anything like that. I’m loath to sell them. I think if I were in this situation,
I would look to cut my losses. Dan Kline: First of all, if you’re
in this situation, forgive yourself. This isn’t bad prognostication. This isn’t, you really believed Sears’ strategy
of doing absolutely nothing would turn their business around.
This is liability in a disaster. Maybe, if you knew each member of
management personally, you might have known, but there was no way. Let it go.
Then, get out the best you can. Holding on to the stock…
there’s not going to be a turnaround. These assets will all be sold because this
company does need to still operate — at least, these services need to be provided. Hill: It’s a utility. Kline: But, three years from now, when they’ve
figured it out, when the last PG&E desk chair is sold and there’s a fund, the fund
is not going to pay back stockholders. You don’t want to be waiting
to get your $0.02 on the $1.00. Just get out. Call it a lesson learned. Hopefully,
you have some gains to offset those losses. Hill: Right. We were talking earlier, I was saying,
“Gosh, if you’re in this situation with PG&E, maybe one of the silver
linings is the timing of it all.” We’re a couple of weeks into the year. If you’re selling now, then you’ve got
11 months to look at your portfolio and think, “Is there something I want to sell at a gain? These losses will offset that and
I’m going to have a very attractive tax bill.” And by very attractive, I mean,
maybe you’re paying nothing for capital gains. Kline: You have to look on the bright side
because this isn’t good for anybody.