The Great Recession and Second Downturn – Video Transcript

Female Narrator (00:02):
The country was headed into the Great Recession of 2008. Hall had challenges during this period, but also, made some important investments along the way.

Don Braun (00:16):
The .com era had sort of been peaking, and at that point, we felt maybe there might be an opportunity. And we put together a business plan, that said we were going to go out and try to accumulate various software companies that became available on a distress basis.

Craig Hall (00:34):
In the early two thousands, we bought a small company called SkyWire, which was a software company. It was tiny. It had very little revenue. It didn’t grow much. What changed it was acquisitions, and we bought, I think, 12 or 13 smaller acquisitions and put them all together.

Female Narrator (00:54):
At the same time, Hall was also investing in the stock market, trying to be opportunistic.

Dick Hyman (00:59):
There are two things about his investing style. He’s a contrarian, and he also is a gut investor. So both of those two things led him to American Airlines. Craig had a spectacular idea in buying American very, very low and increasing his position and rode it from something like $6 to something over 40. And I think, at one point, he was the largest individual shareholder of the company.

News Anchor (01:24):
And to our United Insiders we go, Craig Hall, founder of the Hall Financial Group, one of the largest individual shareholders in American Airlines. Have you been inclined, Craig, to sell any of your AMR stocks?

Craig Hall (01:34):
Recently, if anything, I feel very, very positive about it. I think that a number of airlines will do well, but American, I still feel very confident about. I was borrowing money against American Airlines and was using that cash for other assets. Ben Bernanke gave a speech that subprime wasn’t going to be a big problem for the overall economy. When he gave that speech, I knew that was wrong. That got me thinking about how to increase our liquidity, because I knew we had a huge amount of debt.

Don Braun (02:11):
He ended up selling SkyWire to Oracle, and we were able to close that transaction in July of 2008 for 240 million dollars, which was a significant amount of money for us at that time, and still is today, of course, but a very significant amount of money. And the world financial markets were collapsing at that point in time, like we’d not seen it before. Had we not closed the sale of SkyWire to Oracle in July, result of the company would had been dramatically affected.

Craig Hall (02:45):
Sadly, American Airlines didn’t turn out so well. Actually, it was kind of a disaster.

Dick Hyman (02:50):
When the recession started to hit, that $40 went back to $6 and finally insolvency.

Craig Hall (02:56):
Essentially, it went bankrupt. I sold out at $1 or something.

Dick Hyman (03:00):
Everybody thought Craig was wrong. Well, fundamentally, he was right. He just wasn’t right at the right time.

Don Braun (03:06):
The Great Recession was a difficult time and difficult for the company, but it was a worldwide event. It wasn’t an isolated situation for an industry or a company and didn’t really, in my mind, wasn’t nearly as difficult as the late 1980s.