PCG - Pacific Gas & Electric

[changegonnacome]

Tepper, Loeb, Klarman.........all taking a big slug in Q3 @~$10 joining Oaktree/Marks.......enjoy 13F following and not too often you get alignment like that with each taking a big enough slug (~5% positions) with Tepper at 13.5%.

 

Any further color from anyone here on the challenges facing PCG equity holders?

[kazzam]

I was digging into PCG a lot these days. I am trying to understand why Tepper, Klarman, and Loeb have place such large bets on PCG recently.

 

According to gurufocus I found the following information:

Tepper : PCG is 13.41% of portfolio @ avg. buy price of  $12.79

Klarman : PCG is 3.12% of portfolio @ avg. buy price of  $22.68

Loeb : PCG is 8.02% of portfolio @ avg. buy price of $9.95

 

All 3 have bought a significant amount in Nov 2020. If you see attached PCG's 5 year projection of earning are on pg 12 which states by 2024 the GAAP earnings will be $2394 billion. However, last Quarter, PCG PCG has issued around 1500 million shares totaling to about 2 billion shares outstanding. So by 2024, EPS = $2394billion/2billion shares = $1.19 per share.

 

If you look at the Module5 Chp11 plan overview. https://investor.pgecorp.com/PGE-Progress/default.aspx

PCG trades around a PE ratio of 18 on the high end.

 

So by the end of 2024 the share price should be around EPS*PE = 1.19$* 18 = 21$. PCG is currently trading around 11$ leaving it a possible chance to be a 1.9X in 4 years.

 

But in my opinion, I feel like I am missing something here. For Tepper, Loeb and Klarman (and Klarmans break even price 22$)to make such large bets that the risk for investing in PCG for just a 2X in 4 years seems too low of an upside.

I know tepper invested in PCG in 2000's when it went emerged from bankruptcy and went from 10$ to 50$ to by 2006.

 

I was expecting based on these Gurus bets that PCG to 5X if everything goes correct by 2024, but I cant seem to understand how that could happen? Am I missing something here? 

 

 

PCG5yr_proj.pdf

[rogermunibond]

You can't see their debt positions in PCG.  They sometimes buy equity to have some say in the POR but own much larger distressed debt positions.

[winjitsu]

 

According to gurufocus I found the following information:

Tepper : PCG is 13.41% of portfolio @ avg. buy price of  $12.79

Klarman : PCG is 3.12% of portfolio @ avg. buy price of  $22.68

Loeb : PCG is 8.02% of portfolio @ avg. buy price of $9.95

 

 

Info is likely very wrong. +1 roger's comment. These guys were heavy in the debt and other claims during bankruptcy and their equity holdings are from holding the fulcrum security. Spoke to a restructuring friend from the NYC hedgie world and he thinks Klarman did very well.

[kazzam]

 

According to gurufocus I found the following information:

Tepper : PCG is 13.41% of portfolio @ avg. buy price of  $12.79

Klarman : PCG is 3.12% of portfolio @ avg. buy price of  $22.68

Loeb : PCG is 8.02% of portfolio @ avg. buy price of $9.95

 

 

Info is likely very wrong. +1 roger's comment. These guys were heavy in the debt and other claims during bankruptcy and their equity holdings are from holding the fulcrum security. Spoke to a restructuring friend from the NYC hedgie world and he thinks Klarman did very well.

I see, thanks for the clarifications roger and winjitsu for the replies. I think this is way outside my Circle of Competence then... :)