Motley Fool Hidden Gems Investing - Abacus: Small Enough to Jail

Episode Date: May 12, 2017

Retailers stumble. Electronics Arts scores. Snap gets slammed. Whole Foods gets a refresh. And Marriott hits a new high. Plus, award-winning filmmaker Steve James talks about his new film, Abacus: Small Enough to Jail. Thanks to Harry's for supporting The Motley Fool. Get your Free Trial Set - go to Harrys.com/Fool .   Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill, and joining me in studio this week from Hidden Gem's Seth Jason, from Million Dollar Portfolio, Jason Moser, and from Total Income, Ron Gross. Good to see you, as always, gentlemen. Hey. We've got the latest headlines from Wall Street. Award-winning director Steve James is our guest. And as always, we'll give you an inside look at the stocks on our radar. But we begin

with the retail sector. Bad earnings reports from a cross-section of mall-based retailers had investors asking about the future of the entire industry. Macy's, Nordstrom, Kohl's, JCPenney, all reporting this week, Seth. And we're not going to go through them one by one. But when you look at this from the proverbial 50,000-foot view, this does not look like a bump in the road. This looks like a shift. If you're in the mall, you're in trouble. People aren't shopping in the mall, and it costs a lot to rent pieces of the mall, especially when you're one of those big anchor tenants. But the smaller retailers and malls are also feeling the pinch. So, Ron said it best during

the production meeting, so I'm just going to paraphrase him here. We had a production meeting? So, I mean, most people know this. How much stuff, you who are listening, how much stuff are you ordering online? The answer is a lot. And restaurants are seeing the same thing. People want to blame millennials, but it's everybody, especially millennials, don't want to talk to people face-to-face. They want to order takeout.

They want to order lots and lots of stuff. Takeout. I know. You know, from online stores. And it may be a giant one like Amazon. It may be smaller specialists. but if you're not if the stores aren't being filled you're getting crushed right now and this is this is what's happening and there's really not a whole lot that's going to change it i think that

in some places like here you've seen a shift to town centers so somebody like target who's willing to move into in a town center for folks who may not have them is almost like an inside out mall it's got maybe a couple of big anchor stores it tends to have some nice smaller specialty places nicer restaurants but they also mix in townhouses and stuff so that the tenants the business tenants who are there can count on foot traffic and those are doing really well across the country and in the dc area anybody who who can adapt their model to online sales or town centers is probably going to survive anybody who's stuck in the mall is going to be gone well since seth paraphrased me let me paraphrase seth paraphrasing me no um of course i agree with that we're in the middle of a

a change in consumer buying patterns. And as you said, it's not a trend. It's a permanent shift. And as a result, as a result of technology slash Amazon, there are just too many retailers out there, especially when you look at the department stores, but specialty retail, too, in certain sectors. Some will go out of business. It's just the way it goes, sorry to say. Some need to go out of business. The rest need to pare down their footprint. They need to focus on what's called four-wall profitability. Each store, in and of itself, needs to be profitable, otherwise it needs to be closed. And then these companies also need to invest in their online experience, because some of these huge, multi-billion dollar department stores have terrible online

experiences. Well, I'll tell you what all this begs the question is. I do agree, there's a surplus of retail out there, and there are plenty of operations that the world just doesn't need. If they disappear tomorrow, our lives would not really change. But what is going to happen to all of that real estate? That is, I think, the big question. We've talked about Radio Shack before, and how perhaps Amazon would jump in there and use that as some type of piece in their fulfillment puzzle. I think more and more, we'll probably see stuff like that happen. The smart retailers figuring out ways to perhaps use the physical presence to help evolve their logistics in

getting products from point A to point B. Now, Amazon, obviously, is really the king out there as far as it goes in logistics. But I think there are a lot of businesses out there that are learning from what Amazon has done. Wayfair, I think, is the easy example. And we've seen where Amazon is looking to make this big push into furniture. And the question, is that going to be the death blow for Wayfair? I mean, I don't know that it necessarily is, because Wayfair is a business that was built on that e-commerce model. And I think more and more businesses that start with that in mind are going to be okay. It's these businesses that have been around, really, for our entire lifetime. They are still married to very old-school thinking,

I think, in a lot of cases, which is really going to cost them. But to go back to something that Seth touched on in terms of the town centers, I mean, we live in the Washington, D.C. area. If you live in a small town, or not even a small town, a smaller city, you're still dependent on a lot of bricks-and-mortar retail. And it's going to be, I think, one of the many things to watch in all of this is, when does the shift take place for the smaller towns? And to your point, what does happen to all of that real estate? Well, I think in the smaller towns, probably Walmart has already taken out a lot of the

really mom-and-pop stores. It's kind of the mids and the suburbs where they're really having these growing pains. And one of the other things that can happen to malls, and I think it's happening, is that Landmark here in Alexandria, isn't that one just going to be knocked down and turned into a town center? I mean, they're going with this completely different model. And one thing we saw earlier this week, Coach buying Kate Spade for almost $2.5 billion. dollars. I'm curious, Ron, for investors who are looking at retail, is this something we should expect to see more of? Yes, some of these are going to go out of business. But in the case of

Kate Spade, I think Coach looked at that and saw a pretty good value. And I'm wondering if we're going to see more consolidation. I do actually like that acquisition. I agree with you. And yeah, usually when you see paradigm shifts, two things happen. Some go out of business and then the rest consolidate. The investment bankers love it. And then five, 10 years later, we go through another shift and they get to break them up again. But I would expect to continue to see, especially the little guys, get gobbled up by some of the bigger folks to kind of shore up the business, drive profitability and growth. Yeah. And you might have a little more hope for specialty retailers with a decently strong brand. But if all you are is, I mean, Sears and everyone knows who these

are, but they really don't have their own stuff, JCPenney, I don't know what the future is for them except, bye-bye. This week, Snap issued its first quarterly report as a public company, and the reaction from Wall Street was one of abject horror. Snap lost more than $2 billion, and user growth was weaker than expected. And Jason, CEO Evan Spiegel, finding out this week something we've said on the show before, running a public company, harder than running a private company. Sure. Cue the ephemeral profitability jokes. I guess, really, that's not applicable here, because there was no profitability to begin with. Not that that's any real surprise. I think they have ways to go to actually get there. I think the good news for Snap at this point in

time, this was the first call, and they have an opportunity to learn from their mistakes and to get better. I think the bad news is pretty much everything else about that call. I mean, and I listen to it. I really, this is one where you don't want to read the transcript. You want to listen to it and see sort of how these, how this team sounds, how they, how they work together, what they're talking about. And I don't know that, I don't know that Evan Spiegel does himself any favors by trying to hold his cards so close to the vest. And that ultimately is kind of what you got from this. Number one, I think that he's probably fallen a little bit for his own hype. And number two, he's not really willing to give up so much information as far as plans for the company, a roadmap to profitability, products they have, features, whatever it may be. And so the market, essentially, everybody's kind of stuck here wondering,

okay, what exactly is this business and what kind of growth can we expect from it? because certainly the numbers were less than everyone was expecting, I mean, when it comes to revenue growth, when it comes to user growth. I mean, there are some big questions here, and it's reasonable to assume that they're going to have some issues getting there, because Snap or Snapchat is sort of a niche platform. And so, the really bad news for investors, even after this big sell-off this week, is that the stock is still absurdly overvalued by virtually any measure. I mean, if you look at it just from a price-to-sales perspective, And we can't look at it from a price to earnings because there are no earnings yet.

I mean, the stock is still trading at 41 times sales. And to put that in perspective, Twitter is trading at less than six. Zillow is trading at less than nine. And these are two businesses also very, very much internet-based, non-profitable businesses. So I think those are pretty good apples-to-apples comparisons here. The expectations on Snap right now are just absurd. And so I fear that investors who are thinking, oh, we'll just wait this out or maybe buy on this dip, I really don't see a scenario where this stock doesn't get cut in half from today's level.

Snap doesn't really, I don't think, pass the what would happen if it were gone tomorrow test that we talked about with some of these stores. My kids would be a little upset. Yeah, but then they would just start pasting stickers on Facebook or in chat on their iPhone or whatever. I mean, yeah, they've got a pretty big user base, but what they're selling is not really anything all that differentiated. I hate seeing them miss and report disappointing numbers so close to an IPO. I mean, the roadshow was just like a minute ago, and the guidance to the street was a minute ago. And then to come out and say, yeah, I guess our visibility wasn't that good, it's just disgusting to see the stock get hit like this, which is appropriate. It should have never went out at that valuation in the first place.

It's just not appropriate. I don't want this to be just some kind of a gang up on Snapchat and let's just call this thing done. I do think that there is potential there. Obviously, they've built up something that a lot of people out there like to use. Its core function, though, as a messaging app, is very replicable. We've seen Facebook put up copies of that and do pretty well with it. I think the key for Spiegel is, number one, learning how to behave as a CEO. He's 26 years old. I remember when I was that age. You think you know it all. Obviously, he doesn't. He's going to figure that out as he goes along. But I think the other sort of question that

needs to be answered is, what else are they going to become? Because it can't just be Snapchat. They've got to figure out a way to be special, to be unique, to offer something that no one else does. Glasses. The camera glasses. Nice move. Whole Foods' second quarter results weren't nearly as interesting as the company's shake-up in the boardroom. Whole Foods announced five new independent directors, and that private equity exec, Gabrielle Sulzberger, will become the new chairman of the board. CEO John Mackey

is on our board here at The Motley Fool. And Ron, I'm not saying Whole Foods couldn't benefit from some fresh thinking, but I wasn't expecting this. Well, they were under attack by Janna Partners, Barry Rosenstein over there, activist investor. Pretty good guy, actually, and a good investor. So, they took this move to kind of combat that. So, I wasn't that surprised. They put some good guys, Panera CEO on the board. I think it was necessary, right? The business is just not doing well. Seven consecutive quarters of negative comps. I do like the move to that smaller concept, the 365 concept, but there's only four of them. But they're hopeful, and we'll see how the rollout goes. New blood on the board

is great. Jana is saying we could have used some grocery experience, however, and that we did not get. You got Ron Shake, who just took Panera Private. You have a private equity chairman of the board now, do you think this increases the likelihood that Whole Foods is going to put itself up for sale in the next year or so? I think, also, the founder of Morningstar is on the board. They'll help facilitate offers and look around out there. I don't think we'll see that anytime soon. I think they stay independent. TripAdvisor's profits came in nearly 30% lower than a year ago. It sounds bad,

Seth, but it's also kind of what everyone was expecting. Yeah, the stock didn't seem to move much the day of the news. I haven't seen it for the next couple of days. But the story there doesn't look great if you're talking about a tech company. You've got revenue up just 6%, hotel revenue up 4%, click revenue up 12%. But it's really the trajectory you need to look at. And a lot of the metrics that investors have been worried about, like average revenue per hotel shopper, are finally sort of trending back up. And the reason they were down in the first place was that TripAdvisor has been reinventing itself over the past couple of years. They started a new search project called Metasearch a while ago, and now they're doing instant booking, and they have hotel partners. I think most or all of the major hotel chains right now. And so this is actually new business for them, and it cannibalizes the old business. And in the beginning, it monetizes less. And people are also moving to the phone, which is a platform that's much more difficult to monetize.

And the moves TripAdvisor is making, I think, are the right ones to monetize the mobile platform. But there are growing pains. And so it looked actually like they had made some meaningful progress on that. But it's tough when Wall Street would sort of rather see the profit levels that you were making a few quarters ago. But they are, in hockey terms, skating to where the puck is going to be. Coming up, we've got a couple more earnings reports and a few stocks on our radar. This is Motley Fool Money. All right. Got to say thanks to Rocket Mortgage by Quicken Loans. When it comes to the big decision

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because nobody likes waiting. Go completely online at quickenloans.com. Equal housing lender licensed in all 50 states, NMLS, consumeraccess.org, number 3030. As always, people on the program may of interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio with Seth Jason, Jason Moser, and Ron Gross. Shares of Marriott hitting a new all-time high this week after a strong first quarter that featured higher room rates and higher occupancy rates. These people really seem to know how to run a hotel, Jason.

Yeah, and I've got to say, I'm a little disappointed because we've got this on the watch list in MDP. And we're hoping to be able to add to it this quarter, but it's just not working out for us. We were thinking there may be some reasons for caution there, given the volatility here and potential travel restrictions and whatnot. But their rev power growth, revenue per available room, still firing on all cylinders, as Ron would say. And it looks like the rest of the year is going to be that way as well. They're going to spend about $7 billion here over the next three years and repurchases, giving a lot of money back to shareholders. These guys really know what they're doing. It's, I think, a good holding.

The transition to digital downloads of video games appears to be going well for Electronic Arts. Fourth quarter profits up big on Wednesday. And for that matter, Ron, so was the stock. You like profits, Chris? I do. Stock's up 640% over the last five years, and they keep getting it done. 60% of revenue now comes from digital downloads. Pre-tax income up 36%. FIFA 17, doing great. Battlefield 1, first-person shooter game, doing great. Increased guidance, $1.2 billion share buyback. Stock's on a roll. You know, Ron rattled through that stuff like, you play those games.

My son plays those games, and I sit there in awe. Alright, let's get to the stocks on our radar this week, and our man behind the glass, Steve Broido, will hit you with a question. Ron Gross, you're up first. What are you looking at? I got a recent total income recommendation, Oaktree Capital, OAK. They're an investment management firm founded by Howard Marks back in 1995. A really enviable track record. They operate in alternative markets. Nice upside to the stock, I think. And they have a 6.3% dividend yield. That looks pretty safe to me. Nice and juicy yield there. Steve, question about Oaktree Capital?

How would I describe Oaktree to a friend? They manage money for big pension funds, insurance companies, through closed-end funds, open-end funds, and different investment vehicles. Seth, Jason, what are you looking at? Okay, everyone likes yoga, Pilates. Wait, wait, wait, wait. Everyone likes yoga? Working out, right? Going to the gym, doing the soul cycle kind of a thing, or the spin or whatever it is I'm saying.

All these names are going to get sued. Anyway, the company is MindBody MB, and they provide a cloud-based solution for people in that business to run the businesses, to book the appointments. And in addition to providing kind of the software, they also have a marketplace that lets you sort of get rid of the appointments that you're not filling. do some marketing. They've got a partnership that just came online with Google to help fill these slots. They're not yet profitable, but they're sort of on the cusp and they're growing pretty quickly. Steve, question about MindBody. Is there a one-stop shop for this service for all businesses in this? I mean, hair salons where you're booking people. Does anyone own that space? That's the thing. Nobody really does. And these folks are making an attempt at it. There's a lot

of smaller and bigger companies that kind of own pieces of it. They're one of the first ones to try trying to do it all. Jason Moser, what are you looking at? Sure. Looking at WageWorks, ticker is W-A-G-E. They just reported a pretty good first quarter here. This business administers consumer-directed benefit programs like flex health spending accounts and commuter benefits and whatnot. They have a good first quarter. They have a good pipeline of business here coming down the line for the rest of 2017. Big contracts with the U.S. government, which never really hurts. They've developed some very interesting partnerships with Lyft and with Uber to really help stoke some growth in their commuter benefits

line of business. So, generally speaking, it looks like they do a pretty good job at what they do. Pretty healthy margins, profitable, cash flow positive. A lot of reasons to like this business. Steve, question about wage works? It seems like corporations are always trying to spend less on things like employee benefits. I think corporations are trying to figure out ways to get their employees to prepare for things like this more so. And that's why employers will tend to offer these types of programs. I think that's one of the bigger challenges, though, Steve, is getting the employees to actually sign up for them and understand how they work.

Got a stock you want to add to your watch list, Steve? I'm going with a yoga one. Oh, come on! Fixed. When was the last time you were in a shop like that? A few weeks ago. I tried yoga, it was pretty cool. Oh, life. Not a lie, true story. Alright, guys, thanks for being here.

I hope you had those seats and pants. Thanks, Chris. Thanks for being here. Up next, the director of Hoop Dreams is back with a brand new documentary every investor is going to want to know about. Stay right here, this is Motley Fool Money. Alright, got to say a quick word of thanks to Harry's for sponsoring this episode of Motley Fool Money. I love Harry's. I've been a customer of Harry's for years. I love their products. That's why I'm a customer, because I love what they do. And Harry's is

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years. And you can surprise him with a little something from Harry's. To get your free trial set, including a razor handle, five-blade cartridge, and shave gel, go to harrys.com slash fool right now. That's harrys.com slash fool. Welcome back to Motley Fool Money. I'm Chris Hill. In the wake of the 2008 financial crisis, only one bank in the United States was charged with mortgage fraud. It was not one of the big Wall Street banks whose names are commonplace for investors. Instead, charges were brought against Abacus Federal Savings, the 2,651st largest bank in America. Abacus serves the immigrant community in Chinatown in New York City. The charges and subsequent trial are the subject

of the new documentary film, Abacus, Small Enough to Jail. And it is the latest film from award winning director Steve James, who joins me now from Chicago. Steve, thank you so much for being here. Great to be here. I think, you know what, they just dropped a notch this year. They're down to the 2,652nd largest bank. We're going to get to the bank size in a minute, but that is one of only a large number of amazing things in this movie. I mean, this is a legal battle,

but it really is the story of Thomas Sung, a Chinese immigrant with a wife and four grown daughters. Thomas Sung started Abacus Federal Savings. In many ways, it's him and his family that are on trial here. And I'm curious, how did you come to meet Thomas Sung? Yeah, well, that was fortuitous. My producer, one of my producers on this film, Mark Mitten, who worked with me on other stuff, just happened to be friends with the family going back 10 years. And Mark called me one day right before the trial was beginning and said, you know,

the family I know in New York runs a bank in Chinatown. It's got this crazy trial about to start. And as he explained it all, it just sounded too crazy to be true. And he said, what do you think? I think they would be game for us to come and sort of document what they're going through for this trial. And so we went and did it. If you think back, and I suppose there are remnants of this feeling today, almost a decade after the financial crisis, but certainly you go back to 2010, 2011, 2012, there really was a drumbeat for someone to pay for what had happened. And largely that was pointed at the big Wall Street banks. I'm curious, since you spent time with the district attorney in New York City, you spent time with the prosecution team,

did you get any sense when you were filming this that there was almost an over eagerness to shine a spotlight on this case because that's one of the more interesting part of the films for me is just how how big a spotlight the da decided to shine on this case and i'm wondering if on some level the da's office said you know what it doesn't matter that this is a tiny bank we're going to make someone finally pay. Yeah, I think you're right. I mean, you know, when Cyrus Vance Jr., the DA of Manhattan, announced the indictments, he said that this was the first prosecution of a bank by their office since 1991. And he went on to say that this bank, that the abacus that they were indicting,

was connected to the mortgage fraud crisis of 2008. And the thing is, when you look at this, and the film does, what went on at Abacus had nothing to do with what went on in 2008. And, you know, as you learn in the film early on, is that Abacus discovered some low-level, very petty fraud going on in a couple of their branches, and they dealt with it and reported it. So in so many ways, it's the opposite of the big bank. So, you know, I think Vance would tell you when I interviewed him, you know, he just said, look, we saw fraud and we went after it.

There was no other calculation going on here in terms of what dictated our decision to bring this to trial. But I find that hard to believe when you look at the way in which the indictments were announced, where they chained together low-level bank employees, the current and former employees, and paraded them down the hall in front of the media. And he made a big statement of prosecuting this bank in connection with the mortgage fraud crisis. It sure seems pretty clear that they were looking for a trophy here. You know, as you said, it's clear that things went wrong at Abacus. They self-reported. They went through the process the way they were supposed to.

But one of the things that comes to light is that in some ways this is a crime without a victim. that one of the people you interviewed sort of compares this to the financial equivalent of jaywalking. Is jaywalking illegal? Well, technically, yes, it is. But is that a great use of resources? And again, it goes to the question of, boy, they really seem to dig in here on the DA side. And I'm wondering if they had any sense, because this is one of, for me, for lack of a better word, one of the more joyful parts of the movie is Thomas Sung's family, and in particular, his adult daughters, three of whom are lawyers. Like, I'm just wondering, did anyone at the DA's office realize what they were going up against? Because

at least some of them had to think, well, this is open and shut. This is going to be easy. Yeah, I think, and again, they won't admit this, you know, I mean, I talked to Polly Greenberg, who was the head of economic crimes in the DA's office, who oversaw the case, and Vance, as mentioned earlier. They weren't going to admit this, but I think that they really thought that the bank would fold and not take this to trial, that they would plead guilty to a felony, which, you know, and that's another way in which this differs from the big banks. The DA's office did offer Abacus the opportunity to plead and get a fine, but they insisted that they plead to a felony. You know, none of the big banks got that deal. The big banks were offered

fines in lieu of any kind of right conviction, which is another way of telling you that they wanted this conviction, that that was what was important, you know, to have to make the mark. But yeah, it's, you know, it's just, it kind of boggles the mind when you think about what was going on at abacus um and the da's persistence here because they started looking into this back in 2010 they brought the indictment in 2012 that trial happened which we covered in the film in 2015 this was a five-year ordeal that the sung family had to go through and as you say they really are the heart and soul of this film they are this incredible family they're courageous they're determined

and they're also very funny I think one of the things that surprises people when they see the film is how much humor there is in this in this film because the family has just such a remarkable personality it's really fantastic you're absolutely right I'm glad you mentioned the humor

because it's interesting to see that even though these are grown women dealing with their 75 to 80 year old father throughout the film the dynamics of childhood still play out you know the youngest daughter even though she's a lawyer and she's an adult woman she is there are scenes where i just and maybe it's because i'm the youngest of four in my family but i just found myself both laughing

at and sympathizing with her where she's talking and nobody's listening to her yes exactly and and you know when we started the film we hadn't met mrs sung yet uh thomas's wife uh Uh, and, um, when, when, when she finally, you know, she wasn't sure she wanted to be in the film because of this whole, this whole situation was so distressing for all of them. And she felt like she had really lost face, uh, you know, which is a very important thing in Chinese community. Um, but when she finally consented to be in the film, then she, you know, she pretty much steals the movie with her sense of humor. You mentioned the five years that this takes place over from the time that the investigation begins through the trial. Over that five-year period, the bank

is still making loans. I think somewhere in the neighborhood of 3,000 loans and only nine default in that period. I mean, at any point, did someone in the DA's office acknowledge, you know what, maybe things would be better off in our overall financial system if the big banks on Wall Street operated on the same level that Abacus is. Absolutely. I mean, we didn't put this particular fact in the film, but Abacus's default rate on loans is 1 20th the national average for banks. I mean, they know how to make loans, you know. But the DA's office decided because because there was no real defaults to focus on in this trial, they decided that the real victim in this trial was to be Fannie Mae. And Abacus did and now, again, does a lot of business

with Fannie Mae because of the nature of a lot of the loans they do, which are to people of more limited economic means. And so a lot of their loans end up at Fannie Mae. And Fannie Mae, the alleged victim couldn't wait really for this trial to be over so they could get back in business with abacus because they were such good clients for them so it i mean you know if you made this up and put it in a fiction film people would sort of laugh and say oh come on you know that's not plausible but you know it did happen and one of the things that was so remarkable to me and and our team on this is that this is a story that no one was really reporting on in the mainstream media at all, including the venerable New York Times. They did exactly two articles on the entire

trial, the spectacle of the indictment with the employees chained together and the verdict, which, you know, so it is one of the pleasures, I think, of watching this film is that most people who come to it have no idea about this case and what happened. And I'm just so glad that we had the opportunity to tell it. Coming up, we'll talk with Steve about hoop dreams and the business of filmmaking. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio talking with Steve James, director of the new documentary, Abacus, Small Enough to Jail. Now, film consumption has gotten easier over the last 25 years with DVD players and then the rise of streaming video, Netflix and Amazon Prime and Hulu and all that sort of thing. What is filmmaking like over the last 25 years?

Has your job gotten easier? Is it harder? Is it about the same? Well, I mean, for me personally, it has gotten easier to make films than when I started out, and some of that is a function of when anybody is starting out in a field, and certainly the field of film, when you don't have much of a track record, it's hard to get yourself established, it's hard to find funding. um so that that's changed for me i've i'm one of those fortunate people independent documentary filmmakers who have had pretty good luck with funding uh although i've raised money in every conceivable way imaginable over the years um so in that regard it's easier and it's also from a technological standpoint it's easier because when i started out um you know the

the technology wasn't so affordable and if you didn't have money you had to have someone who had that technology the expensive cameras the edit suites and such to to help you make it even if you had no money so a lot of that's changed which is why there's an explosion i think of filmmaking that's going on in this country um you know both documentary and you know fiction filmmaking. So, you know, so in a lot of ways, yes, for me personally, it's gotten easier. I think for the industry as a whole, there are aspects about it that are definitely easier, but because so many more people are competing for the dollars and for the screens and the opportunities to show your work, it's hard. You know, it's still very hard because there's just

so many more people trying to do it. You're probably best known for Hoop Dreams, but you've done other sports films, No Crossover, The Trial of Allen Iverson, the film Head Games, which is about head-related injuries in sports. And while you do capture the drama within the games themselves, so much of your films with regards to sports are about the off-the-field stuff, the relationships between coaches and players, parents and their kids, teammates, the relationship between teams and communities. I'm curious, when you are not working on those types of films, what kind of a sports fan are you? Do you actually enjoy sports? Do you just kick back and enjoy watching a Cubs game? Or does the work that you've done over the last 25 years make you go,

you know what, I'm going to spend my time, my leisure time doing something else? Well, that's a really good question. You know, I am still a sports fan, for sure, but the impact of doing the films I've done has certainly had an impact on my fandom, if you will. The most acute example I can think of is when I did Head Games, the film that looked into the concussion crisis in sports. uh you know i've always been a football fan i've really enjoyed watching football but i it it definitely impacted my enjoyment of that game and in in just this past football season and it wasn't totally due to uh these issues but i didn't watch a single football game last year except the super bowl which i was really sorry i watched um so it's you know i i i have a hard time watching football these days without thinking about just how dangerous the sport it is and it's definitely

impacted me when it comes to basketball which is always my first love and my most um still remains the the sport i enjoy watching the most i just don't watch as much anymore because i don't have the time it takes a lot of time to be a sports fan um and i just don't have the time and so i tend to be much more selective about when i tune in and it tends to be like right now with the nba playoffs, I'm watching now. Because, you know, to spend the time watching an NBA season just seems like, you know, kind of a waste of time, frankly. I'd much rather read the sports page, and in a matter of minutes, I get the gist of what's going on, and I don't have to spend two or three hours in front of a television. One of the things that I think Hoop Dreams did for a lot

of people, not just basketball fans, but I think just viewers in general did, was it sort of you shined a light on not just the off-the-court stuff, but in particular the sometimes unseemly world of recruiting when it comes to high school and colleges. And I'm curious if you think that has gotten better since you made that movie, or if it's the same or even worse. Oh, I think it's way more of a business now than when we made Hoop Dreams. I think when we made hoop dreams it was it was a bit of an eye-opener uh for a lot of people including me and my colleagues on the film uh as much as we had played and enjoyed basketball we we'd never been part of that um that business aspect of it so yeah back then it was an eye-opening uh revelation you could

say but um with the rise of the shoe company au team sponsor teams um and the fact that colleges are now recruiting players as young as freshmen in high school and getting at least oral commitments from players as freshmen in high school. They're not binding, but still. It's, I mean, it has exploded. And it is, I mean, it makes the time when we were documenting it in Hoot Dreams look like a pretty Pollyanna time. Last question, and then I'll let you go. Your previous documentary was entitled Life Itself. It's about the life and work of Roger Ebert, the late film critic. I'm curious, when you think about Roger Ebert now, what comes to mind? I'm sure you have any number of memories, but just whenever he pops into your head, what do you think of?

you know i i think about him often and uh what i think about is you know as as he recedes you know at least in terms of the fact that he passed away back in 2014 he recedes from public view clearly although he has a very robust website that his wife chas ebert has maintained um you know there's a real loss there uh there's a loss in the world a film because he was, you know, such a remarkable critic, a critic who possessed that ability to write brilliantly, yet in a populist vein that anybody could read and appreciate, no matter their level of sophistication about film. His love of film, and he kind of symbolized, in a way, you know, I think he symbolized

the the film when it was the most sort of powerful and meaningful at least in the broadest sense art form uh you know going and that may be changing now i think television has grown um i think there's real question about the future of art cinema you know especially in this country so his passing also marks a passing of a torch in a way that that's kind of unfortunate and then the other thing about Roger is that he wasn't just a film critic. He was a true social commentator, both in his reviews and apart from his reviews. And I think we just, we missed that voice. Abacus, Small Enough to Jail opens next week in New York City and rolls out nationwide after that. Steve James, such a pleasure talking. Thank you so much.

Real pleasure talking to you. That's going to do it for this week's show. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.