Understanding PG&E’s Dividend Cut

Today, Pacific Gas and Electric (PCG) is down in after-hours trading to $46 per share on the news that the Board of Directors has elected to suspend the $0.53 quarterly dividend. A PG&E press release blamed the California wildfires for the dividend cut, as California law does not shield utility companies for they damage they cause during natural disasters even if they are in compliance with the applicable health and safety laws.

Initial estimates suggest that PG&E’s liability could be in the $1.0 billion to $1.5 billion range. Presently, Pacific Gas maintains an insurance policy covering natural disaster damage up to a maximum amount of $800 million. Assuming that Pacific Gas triggers this cap, the California wildfires stand to cause $200 million to $700 in losses to shareholders. Considering that there are 515 million shares, this could be a maximum hit of $1.35 per share (with the lower end ranges causing about $0.38 per share in damages).

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Seth Klarman Compares Bitcoin to Trading Sardines

In his recent letter to Baupost Group investors, Seth Klarman compared bitcoin investing to the allegory of the sardine trader. To wit, he wrote:

“There is the old story about the market craze in sardine trading when the sardines disappeared from their traditional waters in Monterey, California. The commodity traders bid them up and the price of a can of sardines soared. One day a buyer decided to treat himself to an expensive meal and actually opened a can and started eating. He immediately became ill and told the seller the sardines were no good. The seller said, ‘You don’t understand. These are not eating sardines, they are trading sardines.’

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How Religious Institutions Manipulate Charitable Giving

C.S. Lewis lamented the use of hyperbole and superlatives like “awesome”, “most magnificent”, and “greatest ever” being used in ordinary discourse because it leaves no elevated terms remaining to use when the elevated term would actually be appropriate.

That came to mind recently when I concluded that nauseating is the appropriate term to describe the difference between donors and recipients of large charitable contributions in the United States today (especially religious institutions).

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The Way Frankenstein Makes You Feel

There is an old saying: “Years from now, people will not remember specifically what you said to them, but they will remember how you made them feel.”

That sentiment is the entire reason why you are able to conjure up a picture of a monster when you hear the word Frankenstein.

In 1818, Mary Shelley wrote “Frankenstein; or, the Modern Prometheus”. She was a teenager when she wrote it, and it contained many of the errors that you would expect from an unexperienced writer. It was written with a frame story that contained an exchange-of-written-correspondence format, and despite having three different narrators, they all shared a similar voice. As far as depth of character development and analysis, this was not Faulkner.

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Monetizing The Video Game Industry

Peter Drucker once argued that a small business has its greatest opening to compete with a much larger competitor when the competitor is more concerned with monetizing some aspect of the business rather than innovating and improving what the customer receives.

This opening is now apparent in the video game industry.

Up until the past two or three years, video games offered the greatest entertainment value per hour spent. If you spent $60 on a video game, but played it 2-4 hours per day for three months, you would receive 270 hours of total cumulative value from the game (I use these numbers as an example because the average video game purchase results in approximately 267.4 hours of use).

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