Motley Fool Hidden Gems Investing - Apple's Approaching $3T

Episode Date: May 5, 2023

The biggest company in American led a packed week of earnings and macro data. (0:21) Andy Cross and Ron Gross discuss: - The Fed's latest rate hike, April's jobs report, and the latest banking drama - Apple's surprising 2nd-quarter results and $90 billion share buyback plan - Shopify shares rising 25% due to multiple company announcements - The latest from Marriott, Booking Holdings, and Starbucks (19:11) Andy and Ron continue their analysis, with a focus on: - Mercadolibre's continued growth and impressive runway - Warner Bros. Discovery posting a 1st-quarter profit in its streaming division - The latest from Uber, Lyft, Atlassian, and Johnson & Johnson - Two stocks on their radar: Nice and Oxford Industries Stocks discussed: JPM, PACW, WAL, FHN, AAPL, MAR, BKNG, SBUX, SHOP, UBER, LYFT, TEAM, JNJ, KVUE, MELI, WBD, NFLX, PARA, DIS, CMCSA, BRK, OXM, NICE Host: Chris Hill Guests: Andy Cross, Ron Gross Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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I'm Chris Hill. Joining me in studio, Motley Fool senior analysts Ron Gross and Andy Cross. Good to see you as always, gentlemen. How you doing, Chris? We've got the latest headlines from Wall Street. It is such a busy week. We don't even have time for a guest. But as always, we've got a couple of stocks on our radar.

and we begin with the big macro. On Wednesday, the Federal Reserve raised interest rates by 0.25%, as expected. Friday morning, the Commerce Department announced an additional 253,000 jobs were added in April, sending the unemployment rate down to 3.4%, all while the banking industry continues to be more exciting than most investors would like. Ron Gross, where do you want to start? Where to begin, Chris? How about that stock market on Friday? Pretty strong. Let's work backwards. Let's start with Friday. As you said, job numbers came in better than expected, although March was revised down. As you said, unemployment remains very low at 3.4%. Wages were up, which does have some economists scratching their heads. You probably wouldn't

necessarily predict that, but wages are up. From my perspective, it's really hard to root for a weak job market. And it's hard to root for wages to come down. But in a certain sense, that's what the Fed is going to be looking for in order to stop raising rates and eventually start decreasing rates. I think this strong number gives the Fed some cover in case they want to keep increasing. And I think the important part is that earlier in the week, working backwards after they hiked for the 10th consecutive time, some of the language indicated that perhaps they would pause. And you would have expected the market to shoot up on that, but no, Chris, it did not, because I think some folks were really focused on

Powell's speech, which is usually the case, where he made some more modest comments and said, you know, don't get too excited yet. We might not be out of this quite yet, but things are certainly moderating with respect to inflation, and perhaps good things are ahead. I'll just add that there is a price cut priced in to 2023, statistics would say. I think that's way wrong. I can't imagine we're going to see interest rate cuts in 2023. We might even see another hike or two. I'm not an economist. That's just my read of the data. Yeah. Andy, to Ron's point, what a difference two days make. Because on Wednesday afternoon, it was kind of looking like, oh, when we look ahead to June, the Fed's going to come out and

pause. We get the jobs report. We get the wage report. And it's like, OK, yeah, the economy is still just coming along nicely, which means we're probably getting another rate hike in June. And Chris, as I said on Fool Live this week, I don't know why the Fed felt like they had to get Now, ahead of the jobs report with that announcement, maybe they had some indication, some inkling of what the strong jobs number is going to look like. But as the chair said in his press conference, and as Ron alluded to, we've had 10 straight increases in the federal funds rate, and unemployment has just stayed at record lows. And they need to see unemployment and the hourly wages that are running at 4.5%, which by the way, I think now so many of us are starting to bake in

some of those increases knowing that the inflation numbers are still quite strong. And that's really what has the Fed concerned, that the wage increases are not going to moderate and that's going to keep inflation running hot. And that's why now it looks like, as Ron said, and I agree, you're just going to have this higher for longer and investors have to kind of recognize that. And that might just continue to put this volatility in the markets as they digest this expectation of, wow, the economy is actually, and this is what I think is driving Friday's numbers, the economy is actually still, and the consumer, relatively in good shape. Layer in the banking crisis, in case there wasn't enough going on. The banking crisis

is interesting because everyone keeps saying there's nothing to worry about, and then a new bank folds every few days, the latest one being First Republic Bank, which eventually ended up being sold to JPMorgan. Friday, the strong market actually is more probably about the rebound in regional bank stocks than it is about anything in the Fed payroll report or in the interest rate cuts. So, we are seeing some people saying, OK, maybe things aren't necessarily as bad. Perhaps there seems to be an unannounced bailout available for anyone that needs one, and it has some investors feeling more calm. You used the word rebound. Broadly, you're correct about that. A week ago, we have First Republic being seized by regulators. Then,

as you said, it sold to JPMorgan Chase. PacWest is the next regional bank that everyone is looking at. This week, Andy, shares of PacWest down 60%. Western Alliance, First Horizon, both down more than 35%. So, broadly, it seems like things are OK, but we still have regional banks that are right there on the edge. Well, and the volatility in the stock prices, as I was listening to some other analysts talk, is, who wants to go long into this weekend owning one of these banks when just anything can happen over the weekend? So, it's like, get out right now, close your short position, and take whatever maybe little gains you may have had this week. But still, J.B. Morgan, the deal they got for First Republic, that is a very

good long-term deal they got. So, while the crisis might be going on for some of the smaller banks, certainly some of the larger banks are still in pretty good shape. It reminds me, when you think back to weeks ago with Silicon Valley Bank and the aftermath of that, and I remember asking someone on this show, where is Jamie Dimon in all this? Usually, the smartest person in the room, probably the most respected person in the banking industry, where is Jamie Dimon? Why isn't he talking? And the answer was, Jamie Dimon is watching all of this, and he's going to make his move when the time is right. 100%. Yeah, buying assets on the cheap. Let's get to some earnings. We're going to start with Apple. Second quarter results were better

than expected, but that took a backseat to Apple's announcement of a $90 billion share buyback plan. They also hiked the dividend another 4%, Andy. Yeah, a whopping 4%. I like to say that a little bit higher. But clearly, it was an earnings report that, on the expectations front, I think they exceeded some expectations of worsening iPhone sales. iPhone sales were up 1.5% to $51.3 billion, a Q2 record and ahead of some of the estimates. And that was the big concern. So, now you have the iPhone, which is so meaningful to Apple's business, even though sales overall were down 3%. There were a lot of currency impacts there. The real growth angle here, Chris and Ron, were the emerging markets. And you got a sense of that because Tim Cook has been talking more

about that, the CEO of Apple, traveling over to India and the impact of what India, soon to be, if not now, the most populous country in the world. They've opened up two stores now in India now. The emerging market growth was really impressive across the Philippines, Saudi Arabia, Indonesia, Mexico, UAE, Turkey. China was actually down, so we're still seeing some impacts from the China come through. Mac and iPad met expectations, but really tough comps for last year, so those weren't very impressive. Services continued to be the other side of the coin with iPhone, up 5.5% to $21 billion, another all-time record. And that was on top of 17% growth a year ago. Wearables was about flat at about $8.8 billion on the

sales side. 975 million paid subscribers now to services. I mean, that is just really impressive when you think about the ecosystem that Apple is building. Apple Pay later, they launched Shop with Video, the high-yield savings account. Partnership with Goldman Sachs, they said, was really incredible. Global manufacturing now supporting 13 gigawatts of renewable energy. gross margin was up 130 basis points. That was pretty impressive, even though product gross margin was down a little bit. Add it all together, you have net income down 3%. You buy back a bunch of shares. You put out an announcement that you're going to return shareholder to capital, and you have a stock that's up 4.5%. I'll take the other side of it. We're here.

We might as well chat about the other side of it. Don't tweet me. Apple is one of my favorite companies, and it's one of my biggest holdings. But what are you going to pay for a company with declining revenue and income, even though, yes, they reduced their share count significantly, and they'll pay you a whopping 0.6% yield. Are you going to pay 27 times? Because that's what you got to pay right now. Now, I'm not selling, so that means I am willing to pay 27 times. I'm not probably willing to pay 30, 33, 35 times. So, I want to see some growth, Apple putting up some growth numbers. Well, and Ron mentioned the impact of the banks to the market this week. Well, Apple is a $2.7 trillion company. The stock's up almost 40% year-to-date. They represent,

I think, somewhere around 7% of the S&P 500 of that index, and they have a big impact on the Dow, too, because it's price-weighted. So, you see the impact this large company with this kind of quarter. And also, just the flight to safety, I think, is also impacting there. You see it with Apple, you see it with Microsoft when you're going for quality, even though people are saying, hey, I'll pay 20 times earnings for that business. That is one of the most respected businesses in the world. For those who do want to tweet at him, at rongross144 is Ron Gross' Twitter handle. After the break, we've got the latest in travel stocks, e-commerce, and more. We're just getting started, so stay right here. You're listening to

Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Ron Gross and Andy Cross. Marriott's first quarter revenue rose 34%, fueled by higher consumer demand outside the U.S. Shares of Marriott up a bit this week, Ron. It's a strong report, and it's been a strong year, up 20% the stock so far for Marriott. I think you would expect that as things started to open up, and now, especially in China, you're really seeing that help their results in a pretty big way. First quarter comparable revenue per room, REVPAR, as we like to say, is up 34% worldwide, 26% in U.S. and Canada, and 63% in international markets. In greater China, REVPAR rebounded to 95% of pre-pandemic

levels, and mainland China recovered fully to 2019 levels. That's a big deal that will show up in the numbers. As you said, revenue was up 34%. U.S. and Canada, Marriott saw solid demand across leisure segments. Business demand continued to improve. That obviously will help the bottom line as well. CEO said the global economic picture is uncertain. Demand remains strong and we are not seeing signs of a slowdown. So, those that are worried about recession, one CEO's opinion. They added 11,000 rooms globally, adjusted earnings per share up 67%. Raised full-year forecasts. Trading around 21X full-year earnings guidance. not too bad for me, a little bit less than 1% dividend yield.

Did they provide any color on the Bonvoy program? Because it seems like, from a marketing standpoint, Marriott is pushing that program hard. I'm assuming it is paying off in terms of loyalty program members. Yes. I don't have the numbers in front of me, but the program is doing well and numbers are up, for sure. Sticking with travel, gross bookings for Booking Holdings rose more than 50% in the first quarter, but shares at Booking Holdings were already close to an all-time high before the report, Andy. So, it probably would have needed to be incredible results and amazing guidance to move the stock meaningfully higher. It would have to be beyond amazing, Chris, because this was,

like very much with Marriott, this was a very impressive quarter. Of course, a lot of this was expectation. The stock was up 26% to date so far. You mentioned the gross travel bookings up more than 50% if you back out some of the currency impacts. It doubled a year ago. So, So relatively, it's still very impressive, but compared to a year ago, it was down. But at 155% of the first quarter of 2019, so it's above where we were pre-pandemic, which is great. The real impressive thing we're seeing with booking now and with their platform is 45% of all bookings are booked through their payments platform directly with them versus

34% a year ago, and that really helps drive efficiencies. They see future bookings out now longer than before. So, people are planning their trips, corporations maybe even planning their trips, their bookings, whether it's flights or whether it's rental hotel stays. They're looking out further now, and that's a sign of confidence that that booking is seen. Asia had more than doubled when it comes to the room nights book. That is now at an all-time high total of $274 million.

That was up almost 40%. Rental cars were up 23%. Airline tickets up 73% versus 69% a year ago. So, you're just seeing this momentum with the travel industry. EBITDA, the operating profits were up nicely, up almost 90%. It was a little bit below expectations because, again, as people are planning those trips further out, booking will recognize that revenue later, but the marketing expenses happen right now. So, that might be a little bit of what analysts are paying attention to and investors are paying attention to right now. Share count down 8% over the past year.

earnings per share up almost 200%, free cash flow up 78%. And China still is not back to where it needs to be, and they're excited about what's going to happen in China going forward. I know that stock splits don't matter because it doesn't change the underlying value of the business, but a single share of Booking Holdings is $2,500. There are reasons that businesses have for splitting this. Is there any talk of that at the company or even around the company that maybe it gets them into other funds because the share price would be lower if they split it? That's right. And they don't pay a dividend for a relatively stable company. It can be very cyclical, too. But you have a business that sells less than 20 times this year earnings compared to

Marriott about 21 times. So right in that same ballpark, the market pays about 18 times. And this business can grow, I think, in the 10% to 20% range. So I think the deal is pretty good, whether it splits the stock or not. Starbucks' second quarter results were highlighted by higher profits, same-store sales in the U.S. rising 12%. And for the first time in nearly two years, positive same-store sales in China. And despite all that goodness, Ron, shares of Starbucks down 6% this week. Yeah, I was scratching my head. It's definitely because investors were not impressed with the guidance. The guidance was cautious, which I don't blame them. There's still a lot of moving pieces here. But they were able to

pass through prices. China, as you said, operations are becoming more efficient. That did lead to a solid report. I wouldn't have been surprised if the market had taken the stock higher. Revenue up 14%. Same-store sales up 11%. That was driven by a 6% increase in transactions and a 4% increase in the average ticket. U.S. same-store sales up 12%. International up 7%. Now, only 3% in China. But growth is growth. We'll take growth. And we're seeing that as we discussed with Marriott as well. So, that will continue to increase. Employee turnover in the U.S. has declined in recent months. They had some issues there. New equipment in stores is helping the workers become more productive. Adjusted earnings

up 25%. First time the new CEO was on the call after Howard Schultz had stepped down in March. They reaffirmed guidance. That wasn't that exciting, as we said to investors, though, and the stock sold off a bit. 27 times not cheap, so people are willing to take money off the table if they don't like what they hear. Shopify's first quarter results were better than Wall Street was expecting, but the report was overshadowed by Shopify's announcement that it's cutting 20% of its workforce. Altogether, investors did like what they heard, and shares of Shopify rose 25% this week, Andy. Well, almost more importantly, Chris, they are selling their fulfillment business and

their logistics business that they just bought a year ago this week when they made an acquisition of Deliver for more than $2 billion. They are now selling that all over to Flexport. Port, a 10-year-old logistics company that they already had an equity investment into. They will now get 13% of that business for selling to Flexport. They are offloading a business that they were very excited to invest in. Logistics, as we've talked about, very expensive, very complicated. There are a lot of players in there. Amazon, the big player, and Shopify felt they had to build out a logistics business. Now, they're getting out of that. On top of a very good quarter with gross merchandise volumes of the stuff that's sold across the Shopify platform, up 15%.

That was far better than analyst estimates at about 10%. Revenue was up 25% ahead of estimates by about $70 million. Their merchant solution sales was up 31%. Gross payment volumes was 56% of that gross merchandise volume versus 51% a year ago. And that payment business is very valuable. Now, the big question for Shopify is, they talked a lot about artificial intelligence and AI and the investments they're making there that they are no longer making in the fulfillment business. Will that be enough to continue to propel the business forward? And investors clearly are excited about what they're seeing in Shopify. They've been bidding this stock up for the past six months. You got to respect CEO Toby Lutke for cutting bait on an acquisition just one year

later. Absolutely. They recognize that this was not a kind of business they wanted to be in. They talk about different investments they want to make, and logistics is not the investment that they thought it could be. And now they're going to focus on much more of their core offering for e-commerce solutions. After the break, Earnings Palooza rolls on. So stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Ron Gross and Andy Cross. Despite being in the same industry, Uber and Lyft continue to perform as very different businesses. Both reported first-quarter results this week, but the reaction was much more positive towards Uber than Lyft. Ron, it really seems like it largely comes down

to the guidance when you consider Lyft forecasting a weak Q2 and Uber's CEO basically saying, by the end of this year, we're going to be gap profitable. Uber is really in control at this point. They have a diversified model with Uber Eats and Lyft is focused. Uber now controls 70% of the U.S. rideshare market. I don't think that that's going down, let's just say. Lyft had been cutting prices in order to gain market share. I don't think that can continue because the business model won't support it. This is Uber's game and they're putting up pretty strong results as a result. Revenue up 29% and gross Bookings grew 19%. Increased the number of consumers and trips and the value of the

transactions on the platform. Trips were up 24%. Mobility, which is the ride share, up 43%. Delivery, Uber Eats, up 12%. They had been having trouble finding drivers. That had been a challenge across the industry. They added more than one million active drivers during the quarter. That's a 35% increase. Good to see them making headway there. Uber won their membership deal, now accounts for 27% of total gross bookings. That's pretty good for the business model as well. CEO indicated that growth no longer takes a backseat to profitability, speaking the music of Wall Street, which is what we want to hear nowadays versus a couple of years ago. Although they did report a loss, they had adjusted EBITDA of $760 million,

better than expected. Guidance is for that to improve. Then you contrast that with Lyft, whose guidance is weak, stock getting smacked, not profitable, and likely to lose share in the future. It remains Uber's game to lose. Shares of Atlassian taking a hit this week, despite the fact that third quarter profits and revenue came in higher than expected for the software company. Andy, this is something that we've seen from companies bigger than Atlassian, where the slowing cloud growth outweighs what, on paper, looked like pretty nice results. Yeah, Chris, that's exactly right. The slowing of the expected growth for their cloud business, they're looking for this last quarter, they just reported their third fiscal

quarter for the fourth quarter, cloud to be 26% to 28% on the revenue side. That still is about 37% for the year, which is what they guided before. But the deceleration from that growth of what it was this quarter, up 34%, along with their data center business, which was up 47%. Very impressive. That's really the concerning, because they are spending a lot of time and money and energy on making this transition over to the cloud for their clients moving away from on-premise into the cloud for their tools. That is starting to show that, wow, maybe this change is a little bit more difficult. They talked about this on their call. The team talked about how they're having still challenges on expanding their seat licenses for the cloud business and

for the subscription business in this macro environment as companies, including Atlassian, which laid off 500 people. Companies aren't hiring as fast, and that doesn't equal as many licenses as it did before. Some of the guidance for Atlassian is a little bit weak, and that's hit the stock this week. This week, Johnson & Johnson spun off the consumer health part of its business under the new name, Kenview. The company is now home to well-known brands like Tylenol, Band-Aid, Listerine, and more. Shares of Kenview rose more than 20% on its first day of trading, resulting in the company having a market cap of $50 billion. Ron, we were talking about this before we started recording. This is a little unusual

because it's not exactly a spinoff and it's not exactly an IPO, it's sort of both. It feels more like an IPO with the spin to come later. They took the company public. They generated cash as a result of that. J&J, the pharmaceutical business, will retain that cash as a result of, in a sense, selling Kenview. And then, as they say, they'll distribute the remaining shares of Kenview to shareholders later this year. I searched and searched and searched for a little bit more meat on the bones there, and I could not come up with it. So, that's a little bit different than perhaps a typical spin where you think, I'm going to get a half a share for each share or one share for each share.

So, a little bit different. But I think if investors are patient, this will pay off. Kenview is a strong business. It's not the biggest growth business in the world. It'll be a moderate growth business. But they have a billion dollars in profits, a billion and a half, actually. And as you said, very strong brand names. The dividend will likely be the reason most people flock to this stock, I would think.

Indications are that the yield will probably be around 3% when all is said and done. I think for a stable company with strong brand names and a strong balance sheet, that might be a nice place to put some money in your portfolio. But it's going to be interesting to see what happens in the fall. Because as you said, there are still these details to come out. We don't know exactly how many shares J&J shareholders will get. We don't know exactly what the dividend will be. If you think about the IPO that happened this week, there was a lot of built-in enthusiasm, in part because we hadn't had a big, splashy

IPO in a while. And this was not some young startup going from being a private company to a public company. This is an established, well-known business, a lot of transparency, and a very experienced management team. In this market, that's probably the perfect IPO for this market. I'm not sure how investors would have received something more on the risky side. But J&J retains 90% of this company. We'll see what happens down the road later this year. We'll see what the float looks like. We'll see what liquidity in the market looks like. But it's a solid, mature company, and I think investors will do fine. Another strong report for MercadoLibre. First quarter reports for the Latin American

e-commerce company were much higher than expected. Their payment system continues to grow. After a rough 2022, shares of MercadoLibre are up more than 50% year-to-date, Andy. It sure was a strong quarter, Chris. When you look at the gross merchandise volume of products sold across the market, it was up more than 43% to $9.4 billion. That was off a 35% increase just a quarter ago, so sequential growth. Seeing the acceleration an increase in the take rate, which is the revenues they get off of what's sold to 17.8% from 16.7% driven by shipping fees. They do have a very logistics-heavy business, and they spend a lot of money on their logistics and shipping as well.

Ad revenues, they've been spending a lot of effort and resources on building out an ad platform tied to the MercadoLibre platform, and they are really excited about that. That's having some marginal improvements, and they had some minor price increases to help offset the cost. So, really, revenue strength across the entire board, up 58% when you back out the strong U.S. dollar, up 62% in Mexico, up 26% in Brazil, up 39% in Argentina. Chris, you mentioned the payment volume. That was up 46%, or almost a double when you back out the strong dollar. Off-platform payment volume more than doubled for the six consecutive quarters. So, when you think about the real value that MercadoLibre is building in their platform, you're seeing both the sales

growth, but what's really impressive is that's starting to show up into the profit picture. And I think that's what's really getting investors excited. What do you think the runway is like for this business? Because it's a $60 billion company. And when you think about years ago, when MercadoLibre was a smaller business, Amazon essentially tapped out and said, we're not going to compete in this region of the world. And MercadoLibre often considered the Amazon of Latin America. I mentioned the strength they have, but they really are building up this strength and this brand and this leadership position in a part of the market that is very unique and requiring lots of different unique skill sets. And so I think the runway just in that Latin American market where so much

consumer activity continues to migrate online really speaks well to the growth avenue for MercadoLibre. Warner Brothers Discovery posted a loss in the first quarter that was bigger than Wall Street was expecting. But the streaming division was profitable. And CEO David Zasloff says Warner Brothers Discovery is going to keep focusing on their balance sheet run. Well, they should. They ended the first quarter with $2.6 billion in cash and almost $50 billion in debt. So, that makes good sense to me. That's a fair amount of debt. And just a reminder, the company was formed last year as a result of Discovery's merger with AT&T's WarnerMedia and the resulting company does have a lot of debt on the balance sheet. So, certainly

something to focus on. But the highlight was really management's comments that the direct to consumer business, the DTC business, which includes HBO and Discovery, should be profitable for 2023, all of 2023. That's a year ahead of guidance. So, a pretty big deal. I think investors certainly were happy to hear that. The rest of the report, not so impressive. Revenue was down 5%. The studio segment, which includes Warner Brothers, 7% decrease in revenue. Network segment, which includes CNN and TNT and networks like that, had a 10% decrease in revenue. But direct-to-consumer was the big deal here, with adjusted EBITDA of $50 million. So, profitable-ish. There are some adjustments in there, and it's not net income, it's EBITDA.

But still, that was a $700 million year over year improvement, and on their way to profitability. They're going to launch their max streaming service on May 23rd, which is the combination of HBO, Warner Bros. Library, and some unscripted Discovery shows. Harry Potter content will be in there. No discussion on the call about the writer's strike. CEO David Zaslav did talk about it a bit on CNBC's Squawk Box show, said all the right things. Obviously, everyone wants to come to a resolution here, but they are way, way far apart, the writers and the studios here. I don't see this happening, getting resolved overnight.

Well, and let's be clear, Warner Bros. Discovery is not the only business that is dealing with this. When you look at Netflix, Paramount Global, which had a rough week and a rough report, Disney, NBCUniversal. For context, the last time there was a writer's strike, it lasted three and a half months. The challenges they were dealing with then, Andy, seem almost quaint by comparison to, hey, we have this new world. It's all about streaming. We need to figure out how we're going to get paid. Say what you want about the old era, but there was more transparency in terms of television ratings and box office receipts. Yeah, 100%. You also have just the the generative AI and how people are going to create content and how many people are going to

be involved in creating these amazing shows or anything, really. And that's just putting a whole cloud over the entire industry, I think. Coming up after the break, we have a couple of questions for Warren Buffett. We also have a couple of stocks on our radar. So stay right here. You're listening to Motley Fool Money. As always, people on the program may have 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 Ron Gross and Andy Cross.

You can hear the show every week on radio stations across America, including our brand new affiliate, KAOI in Maui, Hawaii. Time for a road trip, guys. You can also listen to the Motley Fool Money podcast seven days a week on your favorite podcast app. Earlier in the week on the podcast, our colleagues Deidre Willard and Matt Frankel were talking about the Berkshire Hathaway meeting, which is happening this weekend. and obviously one of the highlights is the marathon Q&A session that Warren Buffett and

Charlie Munger do. Matt Frankel submitted a question, as hundreds if not thousands of people do, and I wanted to get your thoughts on this, guys. The question he submitted for Warren Buffett is actually the question I have as a Berkshire Hathaway shareholder, which was essentially, and I'm paraphrasing what Matt said on the show, walk me through the Activision Blizzard stake that you took, which was a year ago. It was right before last year's meeting. Matt wants to know, was that just an arbitrage play, or was there strength in the underlying business that you were seeing? That sort of thing. That's his question. Ron, let me start with you. You get to ask Warren Buffett a question. What are you asking him?

I think I would say, Mr. Buffett, your ownership of Apple notwithstanding, your views on technology are pretty clear. I'm wondering what you think of artificial intelligence and Chad GBT, and whether you think it's good for business and society. What I really want to know is what Munger thinks, because he'll go off. Or maybe he won't. Maybe he thinks it's really interesting, and as long as it's positioned correctly and has regulations associated with it, it will be a positive thing for society. But I would actually love to hear what both have to say. Well, and beyond that, you have to believe that they're at least looking at the question of what's the best way to invest in this. Andy, what about you?

Well, the banking crisis and the industry will get a lot of conversation. But what I'm really interested in is, I want to know, is Mr. Buffett's phone ringing more or less than it was during 2008 crisis? And maybe even poll the audience, what is the over-under on how many times and how many calls per day the Federal Reserve or the Treasury Department or just any bank may have called Warren Buffett and asked him for some help, or asked, more likely, Berkshire Hathaway for some help? Let's go back to earlier in the show. We were talking about Jamie Dimon at JPMorgan Chase. For context, Dimon made very clear at the beginning of the week that the government called him about buying First Republic. Warren Buffett, you think about how he pounced on those shares back during the Great Recession 2008-2009. You have to believe he's getting calls about some of these retail banks. I'm sure he is. I'm guessing back then,

he was almost more as a U.S. citizen, save the financial industry and perhaps even the U.S. economy at that point. And we're just not in that spot right now. Yeah. He's more interested in injecting capital for some sweet deal, like some convertible preferred or some deal that is good for Berkshire. I don't think he's interested in actually buying assets or buying a whole bank to put into the Berkshire fold. But yes, I'm sure he was consulted. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Ron, you're up first. What are you looking at this week? Dan, I've got Oxford Industries. OXM owns a number of high-end apparel brands.

The most well-known, probably, is Tommy Bahama. They've got Lilly Pulitzer, Johnny Waz, and Duckhead. The company was founded in 1942. It's paid a dividend every quarter since becoming a public company in 1960. 20 years ago, they were focused on their Oxford brand. They've divested, they've acquired, mostly beginning in 2003 when the Tommy Bahamba brand came on board. That now accounts for about 60% of revenue in the most recent quarter. They have 2.3 million customers. Sales were recently up 24%. Their dividend payout has increased by 261% over the last 10 years, and they currently yield 2.5%. I will caveat this by saying, apparels are a rough business, inventory levels are high, as is their debt.

Dan, question about Oxford Industries? Ron, I've got to imagine you've got some Tommy Bahama pieces at home in the old closet right now. You would not be wrong, Dan. Andy Cross, what are you looking at this week? Dan, I'm looking at Nice Limited, an Israeli-based company, and here's the deal, Dan. If you have integrated or if you've talked to a Fortune 100 company through a chat system or an email or anything that's tied to customer service, you likely have dealt with Nice's system. NICE is a symbol, provides cloud customer service platform and tools through its suite

called CX1 that does all kinds of omni-channel contact-centered software, AI chat, analytics, automation, 27,000 clients, including 85% of the Fortune 100, generates more than $2 billion in annual sales. The market cap is $13 billion. The stock is actually kind of flat year-to-date, still has $1.5 billion of cash, generates nice return on equity. You're paying 23 times forward earnings. They report earnings next week. What I'm really interested in is just their conversation around generative AI, chat, GBT. They've been very aggressive in investing in artificial intelligence over the years, but I really want to see what they are doing for those investments going forward. Dan, question about Nice?

Andy, whenever you're in a customer service situation, how quickly are you trying to get to talk to an actual person instead of one of these chatbots or phone trees or whatever else. Dan, if I had one of those old dial phones where you dial zero to get to a person, I would be hitting it constantly. You would see my fingerprint in there. I am very actively trying to get to a person, yes, but that's not always going to be the way, my friend. Two very different businesses, Dan. Do you have one you want to add to your watch list? All right. Listen, I know that AI and chatbots and stuff, there's no avoiding them. I know that they're here, they're here to stay, and somebody's going to be making money off of them. But I'll

tell you right now, boys, when I am involved in a customer service situation, I just want to talk to a real person. So I'm going with Ron this week with Oxford Industries. Do you own any Tommy Bahama, Dan? I have a couple of pieces myself, Ron. There you go. Hey, I'll just say, Dan, that's nice. They provide lots of help for very nice people to be able to talk to people just like you. Lots of curmudgeons out there who want to talk to people. Wow. Ron Gross, Andy Cross, guys, thanks for being here. Thanks, Chris. That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks

for listening. We'll see you next time. Thank you.