Motley Fool Hidden Gems Investing - Mergers & Surprising Acquisitions

Episode Date: February 17, 2017

Warren Buffett loads up on Apple. TripAdvisor stumbles. SodaStream sparkles. And potential mergers rock Wall Street. Plus, corporate governance expert and film critic Nell Minow talks Trump, Academy Awards, and the evolution of the movie business. Thanks to Thumbtack for supporting The Motley Fool. Hire local, skilled pros for just about anything at thumbtack.com today.      Learn more about your ad choices. Visit megaphone.fm/adchoices

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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. From Motley Fool Pro and Options, Jeff Fischer. And from Motley Fool Explorer, Simon Erickson. Good to see you, as always, gentlemen. Hello, Chris. We've got the latest headlines from Wall Street. We'll talk boardrooms and Academy Awards with our guest, Nell Minow. And as always, we'll give you an inside look at the stocks on our radar. But we begin in Omaha, where the latest filings from Berkshire Hathaway reveal what Warren Buffett has been buying and selling in the fourth quarter. More Apple, more airlines,

and Simon, I'll start with you, cutting almost his entire stake in Verizon and Walmart. Which one of those four is the most surprising to you? For me, the Apple stake is the most surprising, Chris. I think this is the evolution of Warren Buffett. I mean, he's in his 80s, but he continues to defy things that he once held sacred several decades ago. He used to hate airline stocks. Now he's taking a position in four new airlines. He used to say he didn't understand technology stocks, and now he's one of the five largest investors in Apple. And the biggest one, of course, as far as selling a stake, was reducing his stake in Walmart, as I think that he's seen competitive advantages there erode. Keep in mind,

And Warren Buffett likes a fair price on businesses with strong barriers to entry and strong competitive modes. Yeah, Jason, he's had that stake in Walmart for about a decade, and it looks like he's all but cut-bait. Yeah, I think a lot of the Buffett enthusiasts probably saw that and were like, whoa, whoa, whoa, stop the clock. This just doesn't seem like it's right. But actually, it is right, and I was encouraged to see that, because the market's been telling us for a long time here now, and we've talked about that a lot on this show, is that we're seeing

this tremendous shift as far as retail goes. What Walmart has done so well historically for so long is ultimately being disrupted by none other than Amazon. So, when you look at Amazon today, it's interesting to see the juxtaposition in the sales vs. the market caps. Amazon bringing in somewhere around the neighborhood of $130 billion in sales last year. The market has that thing valued close to, I think, $400 billion or something like that. Whereas, Walmart, on the other hand, bringing in almost four times the sales of Amazon, but the market cap reflects about half that of Amazon. So, clearly, we can see the shift happening. And honestly, I was sort of refreshed to see that first step in cutting

the Walmart stake. The only question I have remaining is, when are they going to take stake in Amazon? Because that business doesn't even want to go away. Yeah. And, Jeff, worth reminding listeners that, yes, it's Warren Buffett, but it's also his lieutenants, Ted Weschler and Todd Combs. That's true. But even so, Chris, it is striking. As Simon touched on, Warren had said he would never buy airlines again after a disastrous investment years ago, and now he owns four airline stocks and it's worth billions of dollars. He shied away from tech all his life because he said he couldn't understand it. Now he owns more than 1% of Apple, which

is a giant stake, even for Buffett. I think what this speaks to is, the industries themselves have changed so that they now fit better into what Warren Buffett likes to buy. He sees, and his people working with him, see that Apple have a moat that will protect profits for the long-term. Ditto with airlines, which have now consolidated and which are running profitably and, by all measures, probably will for a long time to come. And if that's so, then hey, it's actually a pretty good business. So, he's now buying into these industries because they've changed. So, is this a sign that Apple is that predictable as a business? Because Simon, part of his

reason for staying away from technology stocks, famously in the late 90s when everyone was loading up on tech stocks, part of his reasoning was, look, change comes too quickly in these industries. And when you look at how, I mean, my gosh, they went from 15 million shares to nearly 60 million shares of Apple. That tells me that, among other things, he sees a very predictable, sustainable business. Which is the ecosystem we always talk about with Apple, right, Chris? I mean, I just read that Apple Services is now doing more revenue every year than McDonald's does every year, which is amazing.

If you buy a device, you're buying the device up front, but you're also continuing to buy everything on that device and the content that goes along with it. I think that's a predictable stream that he identifies as a competitive advantage for Apple for many years going forward. Yeah, and I think also it's important to note, we'd heard so long that Warren Buffett was really shot away from technology because it was outside of that circle of competence. And I think the circle is something

we all talk about and encourage investors to sort of identify their own circle. And if you're going to take a step into sort of unfamiliar territory, it's sensible to sort of take a baby step or a small step. And I think stepping into something like Apple, that's the most reasonable first step to make. Let's get to some of the earnings from the week. Shares of TripAdvisor hitting their lowest point in four years after a disappointing fourth quarter report. Jason, they are trying to become more than just a review and recommendation site. And I don't know how it's going, but it looks like it's not happening fast enough. Maybe not happening fast enough for some. I think the market's reaction to the year

was warranted. I think it's also worth noting the market's perspective, looking at this as a business, sort of the performance metrics quarter to quarter, versus plainly our management teams looking at it in the context of years, right? And so, I think that TripAdvisor, for the longest time, has been a very resourceful site to get information. But they realized, Stephen Coffer, the CEO, realized, in order to take that next step and really capitalize on this massive opportunity in the travel space, they had to become something more. There has to be a transaction tied to the platform. And that's what they're doing with this instant booking platform. Revenue growth is flatlined for the year, there's no question.

Profitability crimped. I mean, these are all things we knew that were coming, so there were no surprises. But we're looking for a light at the end of the tunnel. I'll tell you why I think there is one. There are two metrics that we really want to try to measure their success with, and that's revenue per hotel shopper, and then also the denominator of that equation, the actual hotel shoppers. The hotel shoppers, if there's growth there, that tells us that people are using the platform. That's going to be the leading indicator. Revenue per hotel shopper will come after that. Hotel shoppers were up 8% for the quarter, which is extremely encouraging. As someone who's used the platform a number of times

on the instant booking front, it's a good product. So, I have no doubt they made the right move. Whether it gains traction or not, that's yet to be determined. But 2017 is going to be a year where they continue to invest more in creating that awareness, trying to change consumer behavior. So, I've said it on Twitter a number of times already, if you're a TripAdvisor shareholder today, I know it can be a little bit frustrating, but there is light at the end of the tunnel here. I think you need to hang on to those shares. I'll just point out, it's been a costly five years for TripAdvisor to be stumbling. Sure, the stock is up 52% the past five years, but in that time,

Priceline is up nearly 200%. Expedia is up almost 300%. Orbitz as well, 300%. So, competitors are just taking share, you would think, by looking at the share prices. And then you have things like Airbnb coming in and taking massive market share, too. So, it's a tough time to stumble at all, and unfortunately, that's where TripAdvisor has been. And instant booking. I mean, we've got to look at the transaction volume on instant booking, which has been one of those investments that they have been making for years and years. You have to retrain your customer group from booking things on Expedia and those

other travel agencies to actually start doing the booking directly on TripAdvisor. So, in terms of the travel industry, when you think about Priceline and TripAdvisor, Orbitz, Expedia, all these, where are the hotels in all of this, to the extent that anyone is in the driver's seat? Is it the platforms that are in the driver's seat in terms of determining the prices, or do the hotels have a stronger hand? I think, typically, the hotels have a pretty strong hand. We've actually been to Marriott's headquarters up here in Maryland before, and spoken with leaders there, and asked them about their relationship with companies like TripAdvisor, Priceline, and whatnot.

And they see those as places where they can throw that extra inventory. But these big hotel chains, Marriott, Hilton, and whatnot, they are investing a lot in their own platforms in order to be able to build those loyalty programs. And that was, I think, part of the deal between the acquisition of Starwood by Marriott, really to grow that scale, to sort of enhance that platform, to grow that loyalty program. So, the hotels are doing very well on their own, but by the same token, information platforms like TripAdvisor are serving as wonderful places to get that inventory out there where travelers might not see it otherwise. Yeah, we've talked about that here before, too, Chris, how hotels are trying to

drive you directly to their site, and even offering discounts and loyalty rewards if you do that. But as Jason said, for many people, they're not so brand-conscious, and they want to go to the aggregator and find the best deal that day. And I think it's also worth noting, there's more than one way to get your rewards, right? I mean, I, for example, would tend to go book a room on TripAdvisor, having used the instant booking platform. And while I may not get the hotel's reward program, I'm using my American Express card, and I'm getting the rewards that way. So, I think it's worth noting there's more than one way to actually get the rewards.

That Netflix is hiring is not exactly news, but one new position is making headlines. Netflix is hiring for a director of licensing, merchandising, and promotion. Jeff, they are finally getting into merchandising. What took them so long? This seems like one of those business lines that's not going to make a ton of money, but the money that they make will just go straight to the bottom line. Yeah, they have some Disney envy, and they should, but now they're going to finally get into it with anything from games to coffee mugs to t-shirts, but books, comic books, collectibles, soundtracks, and apparel related to their big hits. It makes sense to get into this,

and not so much for the money, at least not initially, but to drive increased awareness about these Netflix-branded shows to then get people onto Netflix again. But, I mean, the money's part of it, right? Money's part of it, because it can be highly lucrative, but Netflix, not to my knowledge, has put out anything like Frozen or Star Wars or anything where the merchandise will be a huge driver. You know, it's drug paraphernalia. What can Netflix do? I guess we'll see when they hire their new director of licensing, merchandising, and promotion. Up next, Earnings Palooza is going to roll on right after this break.

Stay right here. This is Motley Fool Money. I've got five dollars and it's Saturday night. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Jeff Fischer, and Simon Erickson. Our man Steve Broido is on the other side of the glass, and also sitting in this week, some of the students from St. Albans School in Washington, D.C. Thanks for being here, guys. Go Bulldogs. Friday morning, Kraft Heinz proposed a $143 billion deal with Unilever, the European consumer products conglomerate. Unilever rejected the offer, but Kraft Heinz made it clear they want to make the deal work. And if this goes

through, guys, it would be one of the biggest mergers ever. Jeff, I want to start with you. When you are looking at stocks, to what extent, if any, are proposed mergers part of your thesis? Do you ever look at a company and think, one of the reasons I like this company is because they have the ability to go out and make themselves bigger and more profitable? The No. 1 rule for me, Chris, is I have to like the company independent of any possible merger or acquisition. So, If it's a strong business on its own, and then there's a possibility of a merger at a premium, that's just a cherry on top. But it's never the deciding factor. You never

want to buy just on speculation of a merger. Yeah, I think it captured downside in a lot of cases. I agree with Jeff totally. In any business in which you invest, you want to make sure you actually like that business first and foremost. We tell everybody, don't use acquisition as a thesis. But you can sort of say, hey, well, worst-case scenario, it's it's hard to see this business just disappearing off the face of the earth. Worst case scenario, maybe there's an acquisition. Then you have to do some valuation work and really identify where you think the company could be most reasonably valued, even in downtimes. But you tend to stay away from that as a thesis.

Yeah, a lot of people have said for months, if not longer, that Twitter would be bought out at a decent price, at a price much higher than it's since fallen to. So, a lot of people have lost money on that idea so far. Yeah, Simon, it does seem like the sort of thing where you always want to see a pretty good track record from management. If they have proven that they know how to make mergers work, then, okay, you give them credit for that. Or the opposite, Chris. If you're in the tech industry, you actually probably want to have the lead husky that's out in front of everybody else and not playing catch-up. I mean, let's look at Mark Zuckerberg and the acquisitions that

Facebook has famously made of WhatsApp and Oculus. He was criticized. He was hated for those acquisitions, and the multi-billions of dollars he was throwing around. People aren't saying that today, because a forward-looking leader. And I think that everyone else is trying to catch up with him still on both of those. Yeah, Instagram, too. Going back to this Unilever-Kraft-Hines merger, I'm a little skeptical that Europe would let it go through, because it's such a giant merger, and Europe is even more critical of these things than the U.S. lately. Restaurant Brands is the parent company of Burger King and Tim Hortons. Shares hitting

a new high this week after fourth quarter profits came in higher than expected. They're executing pretty nicely, Simon. Right. And let's take speculation off of the table and go back to mergers and acquisitions that are predictable in the restaurant industry. Typically, brutally competitive, as we already know about this as investors. You've got rising minimum wages. You've got rising rents. It's a very difficult business to be in. And so, this enters the role of financiers like 3G Capital, who's got the majority control of restaurant brands. And they come and they cut non-strategic costs, and they're making moves to save on other costs, like taxes. And restaurant brands, of course, Chris, we just saw, was looking at purchasing Popeyes recently.

And I think that that was another one of the, they like the predictability of the cash flows, but there's also a price that they will shy back away from if it goes across the number that's on the piece of paper. Yeah, but in the same way that Kraft Heinz is not backing away from the Unilever deal, you get the sense that the people at restaurant brands are clearly looking for another brand to add to their portfolio. Yeah, absolutely. And I mean, we talked previously about Tim Hortons. That was one of the big acquisitions. A Canadian company could get away from a lot of U.S. taxes. Popeye's Louisiana Kitchen is from Jason's beloved state of Georgia. So it's not as obvious about the taxes on that one. But they are seeing something

they like, and I think it's a different chain. Signs of life at SodaStream as fourth quarter profits tripled. CEO Daniel Birnbaum said he was, quote, very pleased with the company's performance. I'd hope so, Jason. They just tripled their profits. Yeah, this has been a fascinating turnaround here. I mean, SodaStream for a long time was more or less left for dead. And the real beauty to the model has always been the razor and blade nature. You sell those machines, get them on the countertops, and then you just keep selling the consumables of the CO2 containers and the flavors. And I think the North American opportunity was a real sort of big opportunity we still thought we saw a couple of years back. Hadn't really

materialized. But this quarter, perhaps it was a little holiday bump. They saw 37% growth in machine revenue, and actually 22.4% unit growth. So, they saw some good pricing on the machine side. Only 5% growth in consumables, which is a little bit more concerning, because that makes me wonder, are these machines just sitting on counters and collecting dust after 30 days or so? Again, I think the one challenge they face is, the world is trying to move away from soda, little by little. And the name, I don't think, is helping so much, Chris. Well, along those same lines this week, we also saw Pepsi's first quarter results. They weren't amazing. But I was struck by the fact that 45% of Pepsi's revenue in this latest

quarter came from healthier drinks and healthier snacks. Right. And this has been a shining example of a company that has taken itself in a new direction based on changing facts, right? And I think that you look at the diversity of the business model with Frito-Lay and Quaker Foods, that makes up more than or almost half of the company's operating profit. And like you said, they're introducing healthier brands into not only the beverage side, but those food sides as well. So, I mean, you look over the last five years, you compare this thing to Coca-Cola, Pepsi has won hands down. And I think a lot of that is because of that diverse menu of offerings that they have.

On last week's show, we talked about Hasbro's latest earnings report. And a few weeks before that, we talked about one of Hasbro's most famous brands, Monopoly. In an effort to update the classic board game, Hasbro held a contest to select a new token. Guys, the voters have spoken. The thimble is being ditched to make room for the new token. The new token is going to be revealed on March 19th. Thimble, I'm a little misty about this. This is one of the original tokens going back to 1935.

Well, don't worry. I mean, if you really, really need the thimble, I'm sure you can just go buy one at like a Jo-Ann's or something and just replace it. Go to eBay. Any betting favorites on what the new thing is going to be on March 19th? They've got a rubber ducky, emoji, hashtag? Chris, I'm definitely going for the hashtag, previously known as the pound symbol. Yeah. What do you think, Chris? I still wish they'd surprise me to the upside and come forth with a strategic relationship, make it a Starbucks cup or an Amazon Echo or something like that.

You think Starbucks would pay out for that? Hey, why not? It's a monopoly. Jeff, what do you think? I think they should make it a smartphone. Let's bring in our man, Steve Broido, in from the other side of the glass. Steve, first, you're old school like me. How do you feel about the thimble getting shown the door?

I'm devastated. Do you have any thoughts on a new replacement for the thimble? As long as it's a thimble, that's all that I care about. You're saying like a smart thimble is what you're saying? That's right. Internet of Things thimble. Is that possible? Sure. Anything's possible, Chris.

Do you think somewhere at Alphabet, where they've got the moonshot division, someone is pitching the idea of a smart thimble? How do we disrupt the thimble? That they're going to land on the moon at some point. Drop us an email, radioatfool.com. Please weigh in on important issues like this. Simon Erickson, Jason Moser, Jeff Fischer. Guys, we'll see you a little bit later in the show.

Up next, the business of movies, and we'll get a preview of the Academy Awards from Nell Minow. Stay right here. You're listening to Motley Fool Money. All right, before we bring in Nell Minow, we've got to say thanks to our friends at Thumbtack.com. Thumbtack makes it easy to find skilled local professionals for any project on your to-do list, and there's no cost to search. Thumbtack has pros offering more than 1,100 different services nationwide for your home, events, anything in between. Just think about all the things that you need a little bit of help with. We've got tax season coming up. Maybe you've got a big event. Maybe you're planning a wedding. You want to get a little healthier, get a personal

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Welcome back to Motley Fool Money. I'm Chris Hill. The Academy Awards are just around the corner and let's face it, there's always something going on in the corporate boardroom. So of course, the only guest we turn to is our most popular guest here on Motley Fool Money and that's Nell Minow, corporate governance expert and the film critic known as the movie mom. Nell, always good to talk to you. Thank you. I'm very much looking forward to this conversation. All right. Before we get to the movies, we got to talk about President Trump and the stock market. And we're not a political show. That's not what we do. There are plenty of political shows. And yet, when you look at the criticism around Donald Trump and proposed policies that have to do with economics

and the stock market continuing to hit new all-time highs. Are you surprised that the market has this kind of performance in a political climate that is as polarized as it is right now? Well, I learned a long time ago not to believe in event studies because the stock market is kind of like stubbing your toe. It takes a little while for the pain to reach your head. And so I think one reason the market is so high right now His people are thinking that they better make him, well, the sun shines because it's not going to last,

that the policies that he actually puts into place may not be so good. So I think that it's a very volatile situation. You know, during the campaign, he got almost no endorsements from the business community, which he touted as a strength, showing that he was on the side of the little guy. But his appointments since he's taken office have been very much on the side of the big guy. and wealthy people, and so we'll see what happens then. I'm very concerned there was a story that came out in MarketWatch today that is the kind of thing that I think we'll see more of.

It's not so much about what Trump wants. It's about the wish list that corporate types are trying to get through as fast as possible, figuring that he will sign it without reading it, which he seems to do. And there's just one tiny little provision that no one has reported on until Francine McKenna discovered it at MarketWatch that would make it much easier for companies to hide problems in their accounting from their investors and their creditors and their suppliers, taking the exemption right now from $75 million up to as much as $500 million.

And she ran the numbers to see how many of the companies who reported these problems would not have to report them if this was changed. And it's basically 90%. Now, I think we can argue about what materiality is, but I think $75 million is material when you're talking about an accounting problem, and I think that that's the kind of thing that should be reported. And nobody's saying there's a penalty attached to it. It's just that this is the opportunity for a company to come forward and say, we have this accounting problem, and here's how we're dealing with it, and here's what we think the consequences will be. So I think those kinds of things people are worried about. So last time you were on the show, I asked you about what investors should be watching when Donald Trump takes office, and you said, keep an eye on who takes over at the SEC.

President Trump has nominated Jay Clayton from Goldman Sachs. What are your thoughts on the appointment and what it might mean for investors? Well, it could be worse. I think people were worried that it was going to be somebody who was very much in the pocket of entrenched management. and that does not seem to be the case, but, of course, we'll have to wait and see. I thought it was interesting that he brought Carl Icahn in as kind of his overseer on domestic regulation, and I'm hoping that that will mean that shareholder interest and the interest of activist shareholders in particular will be important, but we will see.

I think that one other point I would make about the impact of his tenure is that you'll see a lot more private action. In other words, large investors, large institutional investors will not count on, say, EPA making sure that climate change is being addressed by corporations, and you'll see a lot more pressure on companies. I just attended a 10th anniversary meeting of the Council on Audit Quality, and they put this as their absolute top of the list, that you're going to see more investors asking for more disclosure around climate change and strategies for coping with it. Snap, the parent company of Snapchat, is going public next month. It is expected to be the biggest tech IPO since Alibaba in 2014. And as a result of that, the company is getting a lot of attention as they go on the roadshow with investors. directors. And one of the things that has bubbled up is the fact that Joanna Coles,

who is the only woman on Snap's board of directors, makes significantly less money on the board than her male counterparts. She is the chief content officer at Hearst Magazines, and presumably, if you're Snap and you're in the business, among other things, of looking to create sticky content, then Joanna Coles is the type of person you want on your board. And I'm interested in this for a couple of reasons, one of which is I've talked with women who have had very different reactions to this news. Some saying, well, that's outrageous that she's paid so much less. A couple other women I've talked to have said, you know what? That's up to her to negotiate that. And it leads me to this question, which I think for all the conversations you and I have had,

I don't think I've ever asked you this before. How does someone get to be on a board? What is the process like? Because I just assumed that if you're asked to be on the board, there is an expectation up front of this is what is required and this is what the job pays, period. Well, you're kind of right. And the answer to your question has changed a lot in the last 10 years. But before I answer it, I'm going to address the issue as though you had asked me how I felt about her getting paid less. And my answer is that both of your categories of respondents are wrong. They're both completely wrong. The issue is that there is standard payment for directors depending on what committees they're on. So the audit committee members may get more,

the lead director may get more. And it's not unusual for somebody who doesn't have that audit expertise, who isn't on a particular, on one of the more sort of business-heavy committees, not to get paid that way. Presumably, if she went on the audit committee, she would get paid that way. So I'm guessing that that's what goes into it, because board pay is generally completely standard, and it depends on what position you're in and not on what your tenure is, say, or how many meetings you go to. Okay, now how do you get on a board? That's changed very dramatically. It used to be, I'm not exaggerating, say 25 years ago, that after a day on the golf course, they'd be over at the 19th hole having some drinks and saying, you know,

we kind of need a new board member. Who do you think would be good? And it was a very insular, very inbred, very cozy system. Investors really objected to that. And then after the Dodd-Frank and Sarbanes-Oxley laws put much more of a premium on independent directors, you saw companies relying a lot more on headhunters. And I would say that Julie Dahm, who used to run the women on boards practice, where Spencer Stewart now runs the board practice, is the kingmaker and queenmaker when it comes to board service. If you want to be on a board, your best bet is to go through her.

And so it's a much more formal process. We like to see it conducted by the nominating committee with the CEO brought in only at the end. That would be ideal. I think it is still a long way, though, from being that way. I think the CEO generally plays a very active role. All right. Before we get to the Academy Awards, I have one question about the business health of the film industry because it was four years ago that both Steven Spielberg and George Lucas made public comments about the film industry imploding.

And they sort of laid out the scenario for – and it wasn't a crazy scenario. It was something that you could envision where if enough studios have enough big John Carter-esque bombs of $250 million write-downs that the movie industry really has to change completely. But I'm curious, when you look at this industry, what grade do you give the health right now? I give it an A+, but I look at it very expansively. Let's look at Amazon for a moment. Amazon, which has been a disruptor over and over and over. In 2015, they produced one film, which I thought was my number one of the year. I thought it was a great movie, Chirac.

It didn't do all that well. In 2016, they produced 24 and got some Oscar nominations. That's pretty awesome. And I think that speaks to a very, very robust, very expanding market in film production. You have to remember that we have more outlets than we've ever had before. I don't think there's a person alive who can keep up with all the binge-worthy series that are on streaming and on Netflix and on Amazon. So I think in terms of telling stories through the medium of film, we have never had a better, wider, more open system than we have now. And the fact that, say, Hidden Figures, a movie I highly recommend to everybody, just became the first movie to make $100 million with all women of color as the lead characters, that shows you that anything is possible and that the audience is growing, is very eager to support films that are good.

Well, and you think back to Warren Buffett saying that the thing he likes to see the most in a business is pricing power. You look at the average ticket price at a movie theater, and it has steadily ticked up year over year. And it seems like, at least for now anyway, movie theaters still have that pricing power. They do. And they've been very good about making the movie-going experience worth leaving your house for. So there are movies that are in IMAX 3D and have fabulous sound systems, and you just want to be part of a group when another Star Wars movie comes out. You want to be part of a group when a horror movie comes out and share that experience with other people. So, yeah, I think it's definitely – I'm very bullish on the movie business.

All right, let's get to the Oscars. And as we do every year, I'll give you the category. You tell me who should win and who will win. Okay. And we'll start with Best Actor, which seems like a two-person race between Denzel Washington and Casey Affleck. Well, in my opinion, it should be Denzel Washington. I thought that Fences was my number one film this year. I thought it was absolutely tremendous.

Denzel Washington, who also directed the film, gave the performance of a lifetime from a man that I think is the finest actor working in movies today. Casey Affleck gave a beautiful performance. Ryan Gosling, wonderful. Everybody was great. But I think it should be Denzel Washington. And I think it will be Denzel Washington. Best actress category, another strong group. Who's your money on? That is a tough one. I think it's going to be Emma Stone. You know, it's a strange category. They left off Amy Adams, who everybody thought was very, very strong. I would love to have seen Annette Bening get it for 20th Century Women, but of that group, assuming they're not going

to give Meryl Streep a zillionth Oscar, she deserves it every time. I think it's going to be Emma Stone. Do you think on any level Meryl Streep gets tired of being nominated for an Academy Award? Well, she actually addressed that when she won the Oscar for the Margaret Thatcher movie, and she was hilarious about it. She said, I know, I know, I get nominated all the time. Too bad. I like it. Best picture. Again, a lot of great nominations. But in this case, I mean, you mentioned Emma Stone. I haven't seen La La Land. But if I had 20 bucks to put down at a sportsbook in Vegas, I think that's the movie I'm betting on. Yeah, you probably get even odds on that one. And you'd probably win. You know, I think that when in doubt, remember how self

involved uh hollywood is and there's nothing that they like better than a love letter to themselves if you look back at the number of hollywood-centered movies that have gotten oscars uh most recently the artist uh you'll see what i'm talking about so i think la la land um the fact that it brings back a beloved genre that nobody has figured out how to uh to do over the past few years just an original musical the fact that it is set in hollywood and that it it's bittersweet, but basically a very positive movie. And it has all these young people behind it. I think it's probably going to win. And that's fine with me. I would give it defenses, but you can't argue with La La Land. Aside from the big three categories there,

is there any major award that you look at and you just think, that's a lock? If that person or that film doesn't win that category, I'm going to be stunned. My favorite category every year are the supporting actors, and I think they're both la-la-lock this year. Mahershala Ali in Moonlight is absolutely tremendous. He's also in Hidden Figures. He's also in House of Cards, and he is the heart of that movie. I thought he was great, so I think he's going to win. and Viola Davis just gave one of the best performances in history in Fences. The fact that she had worked with director Denzel Washington in the Broadway remount of the show for 10 weeks, they had that trust, they had that chemistry, that the scenes between the two of them just sizzle right off the screen.

All right, we'll wrap up with a quick round of Buy, Sell, or Hold. This is coming out in March. Buy, Sell, or Hold, the live-action remake from Disney, Beauty and the Beast? You know, it won me over. I had been a hold, and I think I'm going to go with a buy on that because the clips that they've released so far are genuinely enchanting. I think it's going to be a big hit. Speaking of Disney, he's recently said that he is open to this.

Buy, Sell, or Hold, Bob Iger staying on as CEO of the Walt Disney Company past June of next year. I think that's a buy as well. I think he has done an amazing job with that company. Remember, he came in, everybody was mad at everybody else, and he restored the credibility and the class and the elegance of that company. I think he may just not want to leave. She trades at a pretty rich valuation,

and she just cleaned up at the Grammys. Buy, sell, or hold Adele. Adele is a long-term buy for sure. You cannot go wrong betting on Adele. She is fabulously talented, and also what a lovely, classy person. Her acceptance speech at the Grammys was one for the history books. And finally, he's hosting this year's Academy Awards. Buy, sell, or hold Jimmy Kimmel.

That is the toughest gig in the world, and I think Jimmy Kimmel will do a very, very good job. I think he's going to be great. He's not going to irritate anybody. He's not going to infuriate anyone, and it won't be particularly memorable, but he'll do a, I'd call it a hold. I think he's good. Corporate governance, movies, and so much more. Nell Minow, always a pleasure.

Thank you, Chris. Coming up next, we'll give you an inside look at the stocks on our radar. This is 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 once again with Jason Moser, Jeff Fischer, and Simon Erickson. You can check out past episodes of Motley Fool Money and all of our podcasts, just go to our podcast center, podcast.fool.com.

You can also test drive our flagship service, Motley Fool Stock Advisor. The brand new issue just came out. Two new stock recommendations from David and Tom Gardner. So, go to podcast.fool.com, scroll to the bottom of the page, and you can check it out. Alright, let's get to the stocks on our radar. Jeff Fischer, you're up first. What are you looking at? Alright, Pool Corporation, ticker POOL. They are really the country's largest distributor of swimming pool supplies and equipment and related products. They also have a service business that helps you keep your pool clean all summer long. So, it's a great recurring

revenue business. Once you have a pool, you have to invest in maintaining it, or you're in trouble. It's been an outstanding stock, one of the best performers of any stock, actually, the past decade or so. It's still only a $4.9 billion company, so it has a lot of long-term room to run. Steve Broido, question about pool? Are swimming pools generally a local business? I always think of the local pool maintenance company. Are you saying this is a bigger thing? That's part of the attraction, Steve. It's a very fragmented business, but pool was the leading company in combining this nationwide, fragmented business into one national

chain. Jason Moser? Yeah, going back to IDEXX Laboratories again, ticker IDXX. These guys are the global leaders in the companion animal diagnostic and veterinary software market. Just reported a very nice quarter. We talked about a razor and blades model there earlier with SodaStream. This is very much the same thing. They are installing more machines into more animal hospitals and selling all of the consumables that go with all of the testing. So, again, I think this is a very resilient market. Everybody loves their pets. This is one that we've got on

the watch list in MDP. Steve, question about IDEX? How many cats is too many cats for me to own? One. Simon Erickson, what are you looking at? Chris, I am test driving BMW. Ticker is B-A-M-X-F. That's for the American Depository Shares. This is a German company that's not traded on the U.S. exchange. We're looking at it for Explorer on our self-driving cars mission this month. A company seems to be stuck in neutral lately, only 5% sales growth, but they're still pulling in. Sorry, guys. A consistent 11% operating margin and 15% returns on equity. It's selling at eight times trailing earnings right now. I think that's simply too cheap for this luxury

band. Steve? Will my two-year-old son be able to drive a car at some point in his life, do you think? I think he will be able to be in a car, Chris. Or I'm sorry, Steve. I'm not sure he'll be driving it, it might be driving him, actually. BMW, pool, IDEX, you got one you want to add to your watch list, Steve? Let's go swimming. Let's go pool. All right. Let's think summer.

All right. Jeff Fisher, Jason Moser, Simon Erickson, guys, thanks for being here. Thanks, Steve. Thank you. That is going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill.

Thanks for listening. We'll see you next week.