Motley Fool Hidden Gems Investing - David Gardner: What's Next?

Episode Date: April 7, 2017

JAB picks up Panera. Amazon adds a new play. And Plug Power gets a big boost. Plus, Motley Fool co-founder David Gardner talks Tesla, Mercado Libre, and investing in 300-baggers. Thanks to Audible for supporting our podcast. Get a free audiobook with a free 30 day trial at audible.com/fool.     Learn more about your ad choices. Visit megaphone.fm/adchoices

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to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. quarters. 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 Million Dollar Portfolio, Jason Moser, and from Motley Fool Explorer, Simon Erickson. Good to see you, as always, gentlemen. Hey! Hey! Hey there, Chris! We've got the latest headlines from Wall Street. Motley Fool co-founder David Gardner is our guest, and as always, we'll give you an inside look at the stocks

on our radar. But we begin with a big deal in the restaurant industry. Panera Bread has been bought by JAB Holding for $7.5 billion. And if you're not familiar with JAB Holding, you probably know some of the companies they have already purchased, including Keurig Green Mountain, Krispy Kreme Donuts, Peet's, and Caribou Coffee. It is the biggest restaurant deal in U.S. history, and it caps an incredible run for Panera Bread, Simon, and, of course, for the company's founder, Ron Shaik. Yeah, and you have to like this acquisition, Chris, because it's so different than most of them that we've seen in food and in restaurants, which is we have companies go in and try to aggressively cut costs to boost profitability. Of course, you know, 3G Capital are going after

Anheuser-Busch, going after Burger King. We've kind of gotten used to them saying, how can I get the bottom line more profitable just by taking as many costs out of the business as possible? I say this is different because Panera is actually investing very heavily in itself. We've seen the Panera 2.0 initiative from the last couple of years where they're bringing iPads and kiosks into these restaurants. And it's really working, Chris. We've got now 25 million MyPanera Rewards members, and that's driving half of the company's transactions. So, this is a formula that's going to work really well for the company. Yeah. And Jason, you think back three, four years ago when Ron Shaik came out and issued

the famous mosh pit comment about how ... And you love to see that from a CEO saying, you know what? Our product isn't that great. The experience in the restaurant is not that great. We recognize it, and we've got a plan to fix it, but it's not going to happen in one or two quarters. Yeah. I mean, the first step is recognizing that you have a problem. So, I think that was really key to the actual turnaround here, and it did turn around. I had been tracking Panera sales and comps going all the way back to the first quarter of 2012, and you could see this sort of slow train wreck happening, because they really did fall off a cliff until this point at the beginning of 2014, where we started to see some green shoots,

some signs that maybe this was a strategy that was succeeding. And I think if you just go into a Panera today, you can see in many cases, like Simon was mentioning with the kiosks and the way throughput is working now, they're just much better restaurant experiences. And I think the food has always genuinely been pretty good. To me, this really is more about Ron Shaik wanting to be able to take this company to the next level and wanting to do it without perhaps having the scrutiny of the public markets. And he said as much. He said, I quote, I think increasingly in a public company model, it's very tough to focus on the long-term. I think companies like Panera have run so well when they have

made the right long-term bets, end quote. And I think he's right there. I mean, Wall Street is known for a lot of things. Patience isn't one of them. And this is going to, I think, give them the opportunity to run the business without really the scrutiny of the public markets. It is going to be interesting to see to what extent, if any, these restaurants change now that someone else is running the show. I mean, Shake is going to be there for the foreseeable future, but it will be interesting to see what JAB Holding has in store for them. You've got to think that they're going to continue that technology

platform that now Panera has already got in their stores. I mean, 25% of the transactions are now placed digitally and paid for digitally. It means the only association you have with a human being in the store is to pick up your food and say, hey, thank you very much. We all know traffic is kind of the holy grail for any restaurant out there. I think they've got this figured out. Yeah, companies like JEB, they're not buying this concept to lose money, right? I mean, they're going to try to eke out as much as they can. So, I think over the next few years, it will be interesting to see if the quality of the food takes a dive or if the menus change substantially. I think Shake will be in there for the foreseeable future, but he's going to

be answering to someone else. Just to wrap up on the stock, if you're a long-term shareholder of this business, you have been rewarded quite handsomely. Even if you're a short-term shareholder, just in 2017 alone, this stock is up more than 50%. But going back 20 years, this is the best-performing restaurant stock, better than Starbucks, better than anyone else in the category, a return of more than 10,000% over 20 years. If that That doesn't get you interested in long-term investing. I don't know what does. Well, I was talking to my dad a few days ago about this, because he got into Panera a number of years back, and it really worked out well for him. I'd like to think that maybe

I've settled the score with him, and we're all square now from any trouble I caused growing up. But he's the ideal Foolish member, right? He can buy stocks and then just get on with life. And I think that's what most people who did that with this stock are feeling pretty good about this deal. Amazon is getting into live sports this week. Amazon agreed to pay the NFL $50 million for the rights to live stream Thursday night games this fall. That is five times what Twitter paid last year, Jason. But something tells me Amazon just wanted this, and so they were going to pay up for it. Yeah, I think my money actually was on Facebook, to be quite honest with you. I was a little surprised they didn't get it. But video is a massive opportunity here. But it's really

the exclusivity that's going to drive meaningful return on investment when it comes to this stuff. I actually respect that the folks at Twitter didn't try to overpay for something that really wasn't going to have a material impact on their business. Right, the games are still going to be on television. And that's just it. It's not exclusive. It wasn't exclusive with Twitter, it's not going to be exclusive with Amazon. It served as, I think, a great opportunity for Twitter to learn how they might be able to integrate live video into their platform. This is going to be something that I think Amazon is going to use to advertise itself

a bit more, because it is going to be behind the paywall. You're going to have to be a Prime member to get this stuff. But again, you can watch it a number of different ways. CBS, NBC, NFL Network. If you're a Verizon Wireless customer, you can stream it. So, there's not any exclusivity here. I think that's ultimately where the real value lies in live sports. Is it a brand building or a merchandising play? Because I would think you can buy a whole bunch of football merchandise on this small company called Amazon, I've heard about it. Yeah, when I saw the news of this deal, I thought to myself, okay, so they're going

to get, I think it's 10 weeks of NFL games. I think they can sell $50 million worth of NFL gear just in that time alone, probably. I mean, Amazon spends a lot of money to build that business, to grow that business. This is another investment in that Prime platform, and I think it'll work out fine for them, because their numbers are closer to the vest. And ultimately, we kind of know how they run the business anyway. One of the best performing stocks on the NASDAQ this week is Plug Power. Shares of the fuel cell company rose more than 50% after Plug Power announced a deal with Amazon that could reach $600 million over the next few years. And

that's pretty incredible if that happens, Simon, because Plug Power's market cap isn't even $600 million. It essentially doubled their annual revenue just in working with Amazon for this one deal. So they're big game hunting. Everyone knows Amazon. For reference, by the way, Plug Power is making hydrogen fuel cells. You're going to be using these in the forklifts that Amazon will be using in their warehouses across the country, replacing battery-powered forklifts. So they're more environmentally friendly. A lot of people like that they're more efficient than batteries. And so if you're a short-term trader, Chris, this is your dream come true, right? This is a micro cap that pops on the news of a big customer that everybody knows who they are.

But still in the back of my mind, I've got to go on record and say that the economics still suck. For Plug Power? Yes. This is a business that still, I mean, we saw the same thing back in February 2014. They signed a deal with Walmart. Same kind of specific stock popped up to about $9 a share. Every year since then, the company has still lost in net earnings. I said negative net earnings, negative operating earnings, and negative cash flow every year since then. It's still only about 75% down from its highs back then. I'm seeing another story play out here. They've got to figure out and demonstrate that they can make money in this business before I'm going to buy

into the hype. Shares of Staples up more than 10% this week after the company said it is looking into selling itself. Staples tried to merge with Office Depot last year, and that was shut down due to antitrust concerns. What do you think, Jason? You got $7 billion in your pocket, you want to buy staples? Well, I think any retailer not named Amazon is probably pretty easy to make fun of these days. But I can actually see some attraction here. It's not an easy task, mind you, but there are some signs, at least, that this is a pretty successful business that is growing into a 21st century retailer. If we look at the metrics that they've turned

from 2011 to today, delivery has become a more substantial part of their business. They're relying less on people going to the store and relying more on getting that product to their customers. And that's playing out on the bottom line there, as delivery accounts for a full 75% of the company's operating profit. And it's the No. 5 e-commerce player in the space. I know that's a bit surprising, but it's the No. 5 e-commerce company behind Amazon, Apple, Dell, and Walmart. So, clearly, they're doing something right. On the flip side, there are challenges, and the top line is shrinking. Margins are getting squeezed. But again, they are doing some good things in investing in the 21st century, new retail space. And I could see

how perhaps private equity might see some attraction here. I think there are some people that agree with you, because earlier this week, you had Panera that was in play before the JAB deal was announced, and then this news from Staples. And both those companies had roughly the same market cap. And I just looked at them and thought, well, gosh, one is a restaurant that's turned itself around quite nicely. Staples has been struggling. This seems like a no-brainer. If you've got $7 or $8 billion, you want to buy one of them. I put that out on Twitter, and a bunch of people are like, no, no, no. Put me in for Staples, because they've got the office businesses kind of locked up.

They've got a pretty good hold on it. And again, it's just a matter of taking that big physical footprint they already have and just using it in a different way. Instead of getting people to come there, they're just using it as a way to get product from point A to point B. And we know that today it's more about convenience, it's more about value. Customers now, it's more about how they value their time versus just saving at the end of the day with what you're paying at the store. And so it sounds like Staples is playing into that a little bit, and it's working to an extent. Up next, Coca-Cola has a new strategy for boosting sales in China, and we can't wait to see if it actually works. Details next. 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 Jason Moser and Simon Erickson. Shares of Costco up this week after same-store sales in March rose 6%. That was higher than Wall Street was expecting. And Jason, net sales in March also up 9%. And I know you were a little, dare I say, bearish on Costco on a recent episode of Motley

Fool Money, but they're looking pretty good, at least in terms of what they were doing in March. Yeah, I think this is good news. I like Costco, the business. I'm a little bit less enthused on the investment. But consumers are on a bit of a stronger footing today, and Costco's strength has always been in its loyal membership base, and really taking care of their members first and foremost. And they continue to do a very good job with that. I think the bigger question remains, how much more can they expect to grow that membership base over time here as e-commerce becomes more and more the norm? Again, I think it's a good business, but I

think when you look at the direction people are headed, they value their time more today than perhaps they did 10, 20 years ago. And that's where Costco, I think, could run into a little bit of a problem. And they're also trying to figure out ways to upgrade that membership base to get more executive members. Executive members, we've talked about this before, they represent 36% of the actual member base, but a full two-thirds of the company's total sales. So, those are very valuable members, and they've got to figure out a way to grow that membership base, that existing base, because I don't see that existing subscriber base really growing much more from today's numbers.

I'm just a fan of the free samples. Going to Costco, you can make a day out of that just going for the free samples they give out. Well, I mean, I don't mean to offend Mac Greer here, because I know Mac is just a Costco fanatic. And I love that about you, Mac. Don't get me wrong. But I think, again, you've got to separate the business from the stock, right? I like the business. I'm not even a member there, but I respect the business. But you have to look at the stock and the valuation. They're still trading at better than 30 times earnings. And this is a company that over the past three years has grown its earnings at an annualized rate of about 7%. So, that's

a huge disconnect. And what the market is saying is, they respect the fact that Costco is a very strong business with a strong membership model. But again, I think the stock, it's going to be very difficult to perform from today's prices, given what we know about the forward-looking picture. Maybe boost profits by cutting back on the free samples. Or get Mac there one more day a week. Berkshire Hathaway owns more than 9% of Coca-Cola's stock. And to help Big Red with the recent launch of Cherry Coke in China, Berkshire is pitching in by lending one of their assets. Warren Buffett special edition cans of Cherry Coke will feature Buffett's likeness and will be available in China as long as supplies last.

Coca-Cola's chairman and CEO, Mutar Kent, said, and I quote, I can't think of a better way to launch Cherry Coke than with its best-known fan on the package. Really, Simon? That's the best way? Hey, I'm not guaranteeing this, but I've heard that it makes you smarter if you drink the can that has Warren Buffett on it, right? You know what? I can think of a few fools around here who are big enough fans of Warren Buffett that they'd pick up a few limited edition cans of Cherry Coke. Sure. And China loves Warren Buffett. The Omaha World Herald reported there were 3,000 Chinese

investors. We were at Berkshire's annual meeting last year. He's a great public figure, great for the brand, and probably going to sell some more Cokes out there in the country. I mean, in all seriousness, we've seen Buffett's likeness being used in China in other promotional effort. So, maybe not all that surprising that he's on the cans of Cherry Coke. And I thought it was a flattering depiction of him on the Coke can as well. Yeah, I think if you're Warren Buffett, you're probably fine with that drawing that they've done up there. I've certainly seen worse. It makes him look a little bit younger. My rule of thumb, if it makes you look a little

bit younger, then everything's OK. Alright, let's get to the stocks that are on our radar this week. And we'll bring in our man Steve Broido in from the other side of the glass to hit you with a question. And we've got enough time. You can hit him with a question back. Jason Moser, what are you looking at this week? Sure. A little company that probably not many have heard of. It's called Home Depot. Ticker is HD. And as you know, we just went through a big property sort of switcheroo here, selling a house, buying a house. And in the process, Home Depot got a lot of our money, for good reason. But this is really, I think, when we talk about retail and how the retail

space is changing so much, Home Depot is really evolving with it. They've done a great job over the course of time, becoming sort of that omnichannel retailer, utilizing that big physical footprint of stores to become an e-commerce player, order online, pick up in store. It is a big market that they're addressing. They estimate it to be a $550 billion total addressable market here in the U.S. between the do-it-yourselfers and the professionals. They're targeting $5 billion in share buybacks alone this year. So, while it's not a stock that is going to really double anytime soon. I think it is a pretty low-risk holding that should continue to benefit from good weather and bad, whether mortgage rates are high or low. You've got to

have a place to live, and typically, people want it to look somewhat nice. Steve, question about Home Depot? Is it just me, or does everyone just spend far more in there than they intend to? I just walk in there, I'm like, I just need a wrench. No problem. It's a $100 bill, and I've gotten paper towels and all sorts of other stuff. Is that just how it works? Yeah, I think that's exactly how it works, and that's where they really try to score, because every time I go in there, I basically lay the law down and tell myself, I'm not going to spend more than $100. I'm not going to spend more than $100, and it never works.

I'm the same way. I walk in there, and I'm like Steve. I walk in, I have one thing I'm looking for. I'm not saying I'm spending $100 every time, but yeah, I'm definitely spending more. All right, Simon Erickson, what are you looking at? Chris, I'm going back to Ambarella. Ticker is AMBA. Reason is, the year is 2021. That is the unofficial year that I think we're going to start seeing self-driving cars make it out to the market. And the computer vision aspect of that, which is taking in all of the information from around the car and feeding it to the processors, is very, very important for the companies that are racing to meet this unofficial deadline. All of the OEMs are looking forward to this Ford and

GM. We just saw Intel pay $15 billion from Mobileye. And I really think that Ambarella is definitely an acquisition target as everybody's scrambling in this race to self-driving cars. Steve, question about Ambarella? What exactly does Ambarella do? I've owned it in the past, and I don't think I've ever really known. Sure, yeah. It's high-definition video capture and processing for that too, Steve. So it's making sense of everything that's around it. Increasingly, that's going into the automotive industry because they made some acquisitions there. So, it's making sense of things for computers to process off of. My question for you, Steve, is if self-driving cars hit the market in the year

2021, what year would you be tempted to buy one? I think right off the bat. By the time they come to market, I suspect they will be very, very safe. Safer than you as a driver? Absolutely. Ambarella and Home Depot, very different businesses. You got a stock you want to add to your watch list, Steve? I'd probably go Home Depot.

I know. Jason Moser, Simon Erickson. Guys, thanks so much for being here. Thanks, Chris. Motley Fool co-founder David Gardner is next. Stay right here. You're listening to Motley Fool Money. All right, before we get to my conversation with David Gardner, I've got to say a quick

thanks to Audible for supporting this episode of Motley Fool Money. Audible has an unmatched selection of audiobooks, original shows, news, comedy, and more. Audiobooks are a great thing to listen to when you're driving, if you're stuck in traffic, if you're doing stuff around the house, if you're working out, doing some shopping. And for our dozens of listeners, Audible is offering a free audiobook with a 30-day free trial. If you want to listen to it, I'm pretty sure Audible has it. Just go to audible.com slash fool, and you can browse their unmatched selection of audio content. Download a title for free and start listening. It is that easy. If you've listened to Motley

Fool Money for years, you've heard me talk to people like Charles Duhigg, Nate Silver. Their books are available in audio form on Audible. And I loved interviewing those guys. Phenomenal thinkers, such great books. When I got the chance to kick the tires at Audible, I went with something a little different. I went with A Load of Hooey. That's the title of the book by Bob Odenkirk, who is probably best known as the character Saul Goodman. Better Call Saul is going to be starting up the brand-new season on AMC. Odenkirk is a fantastically funny writer. I've been listening to his phenomenal book, A Load of Hooey. Check it out for yourself. Check out the whole selection. They've got so many books that you can listen to. You

can get a free audio book with a 30-day free trial at audible.com slash fool. That's audible.com slash fool. Welcome back to Motley Fool Money. I'm Chris Hill. David Gardner is the co-founder, co-chairman of the board, and chief rule breaker here at The Motley Fool, and he joins me now in studio. Thanks for being here. David Gardner Thank you. I think it's also fair to include in my introduction a sometime guest on Motley Fool Money. About once a year. O'Reilly Occasional guest.

I love it! You've been doing this for years. So, this is 2017. Let's go, Chris! It's a little tough to fit on a business card, though. Let's talk about a few of the companies that are making headlines this week that are businesses that you are familiar with. We'll start with Amazon. The stock hit an all-time high this week. That's not really a headline in and of itself, because it's been hitting new highs for a while now. But You've owned shares of Amazon for 20 years. Let me start with just the stock itself. It broke through the $900 mark this week. What do you say to an investor who looks at Amazon, one of the biggest public companies out there, a $900 price tag on the stock and says,

you know what, I've missed the boat on this one? So, I think that it's always about what happens next. It's never about a boat that you missed. and it's natural, we all do it. You do it, I do it. I haven't added to Amazon recently, which is too bad, because it's been great, and part of it is probably because I think I have enough, or my initial cost basis is $3.21. So, when the stock is at $963, that will be my first $300 bagger. But it really isn't about that. All that matters for each of us as an investor is what we're doing with our next dollar. I always encourage every capital F Fool, every investor, to seek out excellence. I can't think of many more excellent

businesses over the next 30 years than Amazon and its potential. You may have seen that Jeff Bezos is apparently going to be selling about $1 billion worth of his Amazon stock in a programmatic way over the coming years in order to start funding his space race. It's interesting, but that's just a drop in the bucket for Amazon's overall valuation. It doesn't, to me, represent a lack of faith or belief by the CEO and the company that he's running. It's just a tremendous ... I think it's my favorite company, it's the best company of our time. When you look at all of the different areas that Amazon is going into, live sports with the NFL this fall, they're getting into

advertising in a significant way, shipping. Last month, I saw my first Amazon 18-wheeler on the road. When you look at all of the different pies that Amazon has its fingers in, is there one in particular that excites you the most, either just from a curiosity standpoint or from an investing standpoint, where you look at it and you think, you know what, that's something that could really pay off for shareholders? Well, I mean, I love their focus on logistics, and so the potential for drones and drone deliveries I think is very profound. It still seems otherworldly and a little bit of sci-fi today, but these shipments are going to happen, and I think the convenience and

savings are just really cool. But I almost want to be a politician, Chris, and not answer your question and go a different direction very briefly, because if you really love what Amazon is and its potential, but you feel like, wow, they're so big today. Is there a smaller version of this that might multiply faster or bigger for me as an investor from the starting point of today? I like MercadoLibre, which is M-E-L-I, on the NASDAQ, has been a longstanding Motley Fool Rule Breakers premium service pick. It's sub $10 billion, not multi $100 billion-plus, which is where Amazon is today, sub-$10 billion, and is really singing off Amazon's song sheet, is copying a lot of what it's doing from the leading poll position

of e-commerce in Latin America. So, there's the end of my brief political rant, the only one you're going to get from me on this week's Motley Fool Money. But let's not over-focus on this one stock. It's natural to talk about it, it's amazing. But there are companies somewhat like it, that have learned a lot from it, that are a lot smaller, and may well outperform it over the next 10, 15 years. Let's move to another company then, and that's Panera Bread, which got bought out this week. This is a stock you've recommended a couple of times in 2010 and 2011. I don't know about you, and I don't own shares of Panera, but from a news standpoint, this was a story that seemed to move pretty quickly.

the span of about 48 hours, it went from, hey, someone may have made an inquiry into buying Panera to the great mentioner tossing out names of who might buy Panera to, Panera has been sold. What went through your mind when you saw that it had been sold? Because I have to guess that on some level, you were a little disappointed that a company that's doing well was being taken off the public markets. Well, I always am. I almost always am. A lot of our companies and stocks have been bought out by others over the years, and part of being an investor, by definition, somebody acting and thinking long-term, part of doing that is that you are going to have some of

your companies called away from you. Sometimes, for me, thinking back, Disney picked off Pixar from us, Disney took away Marvel from us, but we just converted our shares over to Disney and we can't really, as Pixar or Marvel shareholders, complain about the performance since. But In this case, it's a private company, so Panera will disappear from the public markets. Initially, the first rumors I was hearing is that it might be Starbucks. I was just trying to imagine what that would look like. But Ron Shaik, the CEO, the founder of Panera, just a great American story about starting this one small shop decades ago. Their commitment to digitally focusing their business and spending money to make it more convenient to order and get

delivery over the last couple of years, no doubt has helped them a lot. The only other thing that I can think of when we think about this buyout is that this is the same private company that also bought Keurig Green Mountain Coffee away from us. That was a tremendous rule breaker and a multibagger for us over there. Panera has been a really interesting stock. It does close out as a multibagger for us and for Stock Advisor members. We did sell it this week. We did say, Stock Advisor members, go ahead and sell, because going to be $315 a share later this summer, but it's already at $313, and it's not really worth hanging around for that. But this is a stock that was very volatile over the last

few years, and I'm really delighted to see a well-known brand, and I think a good business, find a buyer, and we'll take the 20%, 25% premium that surprised us all this weekend, as you said, 48 hours. Tesla is now bigger than Ford Motor, which is probably stunning to some investors. I'm guessing it is not stunning to you. I think the last time you were here, one of the things we had talked about was, so this was in 2016, Elon Musk said, in 2018, we're going to deliver 500,000 vehicles. They made news in that in the first quarter of this year, they delivered 25,000 vehicles, so on a run rate of 100,000 for the year. So, clearly, they have some production increases they need

to hit. I am curious, though, because you're a shareholder, you are a very satisfied customer of Tesla Motors. I know you enjoy driving the car. But is there a number that you have in your mind that you think, OK, you don't have to hit 500,000 in 2018, but you've got to hit 400,000 or 300,000? I'm just wondering if there's a number that makes you, as an investor go, ooh, something's not right in the house of Musk. So, it's not enough for Musk to put a number out there, Gardner has to have his number too, the whisper number, Chris? No, by the way, did I briefly refer to myself in the third person? That is not a habit, I'm going to get it. David Gardner is not going to get

into that habit. So, from my standpoint, I don't think of Tesla in that way, I don't have a number. And I respect people who do, and a lot of them are Wall Street analysts are people who are much more numbers-focused than I am. What I see is a company that dropped the motors from its name in between when you and I last talked and today. And that's because it's a company that is also SolarCity. It is a very ambitious battery. It's going to have the largest single-building footprint in the world when the Gigafactory is completed. It's a remarkable company. It's very hard to value. It's certainly not going to be valued off of a number of cars. Clearly, when it only is selling tens of thousands of cars,

and Ford is selling millions and millions of cars just over a single given year, for it to be worth more than Ford tells you, and I thought you and Jason covered this pretty well on MarketFoolery earlier this week, but the market's always pricing what's going forward. It wouldn't be smart for us to bury our heads and only look backwards at what's in the 10-Qs and 10-Ks. No, the stock market, especially for Rule Breaker-like companies, companies that come along, break the rules, disrupt industries, like Amazon, as you mentioned earlier. I wouldn't say Panera was ever that kind of a company. It's just a good old-fashioned American brand and well-run business. But Tesla clearly is one of those classic rule

breakers. From the day Elon Musk came to speak at Fool HQ in 2011, I think two weeks later, I said, we're going to make that a recommendation, and rule breakers, we just patiently held that all the way through. We're going to keep doing that regardless of whether it's 500,000 vehicles, $250,000 or $100,000. And there is a little bit of, you know, do we trust this guy, and is he being too ambitious? I thought Evan knew, the talented Motley Fool tech writer, if you read his column about how he's not been able to get his Tesla repaired by the company, you start seeing a little bit of the downside of the other side of the coin of a company that is so focused on cranking out new vehicles that they're not really allocating

resources if you're a Tesla owner to getting your car fixed. That's a problem. If they have more metal panels, they have a choice. Do we put these in new cars that we're desperately trying to sell and please Wall Street, or do we give them to Evan so he can repair his car, which is not their focus? So, let's certainly not look at Tesla as the greatest of American companies, or Elon Musk as faultless or blameless, and he regularly misses his numbers. But, kind of like Amazon regularly didn't, quote, have profits, end quote, and yet over the course of a decade or more just trounced the market and grew and grew and grew. You can see that

there's a lot of value placed when you see ambition from somebody who's proven he can do special things with it. You mentioned Amazon and the profits. That was something I was thinking about earlier this week when I started to see some comments from different analysts and market commentators with regards to Tesla and just saying, yeah, but they're not profitable. I just thought, I think I've seen that movie before. It was the Amazon movie in the late-90s and early-2000s. And the sequels to that movie have been really good. Every company is different. By no means are we saying here that Tesla will do what Amazon did. They're completely different businesses. But we do develop pattern recognition

over the course of time. And all of your work at The Motley Fool, you've had so many different roles, but just in the last few years, just covering and watching companies. And I know you're an investor yourself, you're an Amazon shareholder. So, we do, over the course of time develop some pattern recognition. We can start slotting some things in and say, that one does look a little bit like that Amazon movie to me. And maybe, therefore, I would be willing, whoever you are listening to us right now, maybe I would be willing to buy some Tesla even today, even though it looks like it's already done so well. Maybe, looking forward, the future is brighter than even we would imagine right now.

Coming up, more with David Gardner, including what investors can learn from March Madness. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio talking with Motley Fool co-founder David Gardner. Several weeks ago, the world of business media lost a giant when Paul Kangas died. He was the longtime anchor of Nightly Business Report, the show on public television that, for a very long run, was the most watched business news show on television. I had the chance to meet him very briefly at an event probably 15, 16 years ago. He could not have been more gracious with his time. I know that he had a positive impact on The Motley Fool

way back when. He did. I mean, we really appreciated Paul, because we were on the show, Nightly Business Report. Back then, Chris, one of your roles at The Fool was to help do booking and to help build relationships with other television shows, magazines, etc. That was really your initial focus at The Fool, and so we did. We built up relationships with various people in the media. And some of them would be really great people that we would enjoy spending lots of time with, and others wouldn't necessarily be. Paul was the former, as you well know. He was a gentleman, he was an enthusiast. He was an entrepreneur. I mean,

what they did at that show, that was kind of homegrown in Miami. I think it came from the Miami PBS station. But it was a tight-knit group that really built the vision for that show and delivered it. And I know you and I have talked about this off-air. I really appreciated it back in the day, especially before the internet. You couldn't just check and see how your stocks are doing. I remember dialing Schwab and just having the voice read out to me my stock quotes, and if you're a long-time investor, you know what I'm talking about. During that era, how much of a delight was it to have a show that, at the end of the day, summarized the big movers and shakers up and down on Wall Street that day, and was

stock-focused at a time where America didn't have a lot of shows like that. Let's close with sports. Your alma mater, the University of North Carolina, congratulations for winning, not the prettiest college basketball game in the world, but it was the national championship. It was a really exciting end to that game, a shocking end, when North Carolina went an 8-0 run in the last two minutes to win. It was a really fun tournament. Of course, I love it when my school infrequently wins it all, especially one year after losing at the buzzer in that very same game against Villanova last year, as you know, Chris. But I just love the tournament every year. I had

so much fun. I watched almost all the games. I mean, I literally was down in front watching either TBS or TruTV or whatever from the first four. I was there Tuesday, Wednesday night. You were watching the games in Dayton, Ohio. That's it! Right through to the end. I loved the tournament every year. And there were so many great games. The final was a sloppy game. But if you're a North Carolina fan, that North Carolina-Kentucky game was a remarkable contest of really exciting teams that had a totally different game played earlier in the year. Anyway, it was so much fun. And why are we talking about this? Just so I can say, go Tar Heels?

Well, I think that when we look at businesses that endure over time, when we look at brands that endure over time, it seems that while there's always some elements of of Cinderella showing up at the big dance every March. We also consistently see the basketball programs over time, the Kentuckys, UCLA, Kansas, UNC, Duke, they're always there, they always endure. And that's a great investment point. And as we are wont to do, it's nice to pull investment points out of general or cultural, or in this case, sports observations. And you're absolutely right, Chris, and that's something that I've thought about over the years is that college basketball, if you're a fan,

I realize not everybody listening is, but if you are, you'll recognize some good, old-fashioned dynamics that work just as well for investing. And that is, it seems like the same winners will win from one year or decade to the next. And I think in the end, it's about the power of brands. So, whether we're talking about Panera or Amazon or Tesla, which are all in their own right, very powerful brands. Forget about their founders, their core businesses, or their financial statements, and look at the power of their branding relative to their competition. Same thing happens in college basketball, as you mentioned. UNC Kentucky, a school that's in Durham, whose name I won't say, but these schools tend to come back over

time. And it's very instructive, especially when I'm speaking to kids or young investors, potential investors, just pointing that out. Why is that the case? Because the same thing they need to know happens in business. Alphabet, Amazon, these are just incredible brands. What they do is, they attract customers because they have brands people trust. Starbucks, they attract customers who just keep coming back. And then those brands usually are premium brands. They can charge up a little bit, so they make more money than their competitors. Then they have more money to hire better people, so then their employees keep upgrading and their stocks follow suit. And it's very hard to crack that dynamic. And the same thing

happens with college recruiting. You want to go to one of those schools, if they'll let you, because of all the great players that are already associated with those schools and their brand names. So, yes, there's a great investment lesson in college basketball. Real quick, before we wrap up, since in this past week we also had opening day for baseball, you're a big Minnesota Twins fan. How are the Twins looking this year? So, the Twins are 2-0 as we tape, and they beat the Royals 7-1 on opening day, then 9-1, second game, they have a run differential of plus 14. That is the first plus run differential for this organization in quite a while. And while I don't actually harbor many illusions

that the Twins, even though it's a week of great hope for all of us, that the Twins will be a great team this year, it's an awfully fun way to start the baseball season. And I think that baseball is, at the end of the day, my favorite sport. What I love about it is that it happens every day. And there's no other sport, for Americans anyway, where that's true. I mean, even NBA and NHL or college basketball, every few days, games are played. I just love the six-month, crank-it-out-every-single-day nature of the game that's been done for more than 100 years, and all of the lore and all of the stats. And of course, we're not talking about Moneyball this week, but what Bill James has done and how instructive that was for

me as a young baseball fan and investor. There's so many things wrapped up in baseball, but let's just finish with the fun of green grass and blue skies and big hope. Big hope. You don't have to wait for him to show up on Motley Fool Money. You can get a weekly dose of David Gardner's insights and observations by subscribing to his podcast, Rule Breaker Investing. It's on iTunes, Stitcher, Spotify, Google Play. It's everywhere you find podcasts, so just click the button and subscribe. David Gardner, always a pleasure. It is always a pleasure. Thank you, Chris. That's going to do it for this week's edition of Motley Fool Money. Remember,

you can always drop us an email, radioatfool.com. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.