Motley Fool Hidden Gems Investing - Mid-Year Review & the Business of Extreme Sports

Episode Date: June 10, 2015

On this week's show, our analysts review the first half of 2015 and talk about some of the stock market's biggest surprises. And CNBC's Carl Quintanilla talks Apple, GoPro, and the big business of extreme sports. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Money radio show. I'm Chris Hill. Joining me in studio this week from Million Dollar Portfolio, Jason Moser. From Motley Fool Income Investor, James Early. And from Motley Fool Deep Value, Ron Gross. Good to see you, gents. It is our mid-year review. We're going to hit some of the big stories of 2015 so far and look at which companies need a strong second half of the year. We'll talk about the business of extreme sports with CNBC's Carl Quintanilla. And as always, we'll give you an inside look at the stocks on our radar. But Ron, let's get a jump on the competition by not actually waiting. That's what we do here. But, no, we're not going to wait for the actual middle of the calendar year.

But so far, your headline for 2015 when it comes to business and investing? For me, it's that the economy, I've got to go big macro again, it's that the economy hasn't shown the promise or the growth that I think was widely expected at the end of 2014. We've had several factors that have been going on to contribute to this underwhelming performance. We've had weak spending in the energy sector, the problems in the West Coast ports that we've talked about quite a bit, and we've had a very strong U.S. dollar. And I think those three things combined have really

constrained growth. In fact, GDP contracted in the first quarter of this year. We have seen unemployment come down nicely. I'm a big fan of that. Wage growth is not where the Fed would like it to be, so that's another negative factor. And estimates for the full year are coming down. We're probably somewhere in the mid-2% range now. I think folks would have liked to see something 3% or higher. We're going to have to see how the rest of this year turns out. Ron going negative right out of the gate, James. Sounds like a guy on CNBC, just the way he's like Mr. Macro over there. What's your headline, James?

As a dividend investor, I'm going to say that the dividend stocks have been kicked surprisingly hard below the waist by this possibility of rising interest rates. Now, interest rates haven't even risen yet, but it's sort of like if I tell Ron I'm going to hit him in the next 30 seconds. That's almost worse than just doing it, right? I dare you. And we've had rates that have been so low for so long that just the talk of them for investors is sort of like Gollum coming out of the cave, right? The sunlight is, oh, my God. So, they're freaking out. I think it's unwarranted.

The rate rise is going to be slow. It's going to be much more gradual. And it's going to accompany a strengthening economy, which is actually good for stocks. How many analogies did you shoehorn into that one soliloquy? That's probably two or three. I'm paid by analogies, you know. I do my best. Ron brought the negative.

I mean, you're talking about getting hit below the belt, apparently. That's, man, you don't want to, eesh. What about you, Jason? I'm going to get a little bit more granular here on the company level. I think that the story that's unfolded for Lumber Liquidators has been just really unbelievable. I mean, you couldn't have written this thing. The CEO leaving, the chief compliance officer leaving, now the CFO is gone. I mean, there are questions, obviously, with the formaldehyde levels in the flooring that they sell, sourcing issues.

So this company has taken a tremendous hit to the brand. And now what you have ultimately left here is the founder, Tom Sullivan, kind of trying to pick up the pieces here and salvage the reputation of the company. And on top of all of this, now we have questions on the testing kits that they're sending out to customers so they can test the air quality in their homes. It's a story that's not going to go away anytime soon. And this is going to be really, I think, a good example for better or for worse to see how these guys actually recover. Because the biggest thing right now for them is to get that brand reputation back. so that when I do a Google search on hardwood floors, I don't immediately see a litany of bad press for lumber liquidators. You've probably got a great deal on some flooring from them now.

Heck of a deal. Now's the time. Ron, I'll start with you in terms of the biggest surprise so far in 2015. And I'll just preface this by saying I'm personally surprised that the big M&A story so far in 2015 is in the technology industry. I really would have thought that by this point we would have seen a lot more mergers and acquisitions in oil and gas. But what about you? Well, I happen to agree with you, and it's not over yet. We'll see how the second half goes. For me, the biggest surprise was the announcement that AOL was being acquired by Verizon.

I fully expected AOL to be gobbled up by someone, but Verizon wasn't really on my radar. And to be honest, I didn't really understand that AOL had this highly regarded advertising platform. They kept that a secret, didn't they? Well, clearly it's worth $4.4 billion to someone, and that someone is Verizon, and I wasn't expecting it. So, you know, competing with Google and Facebook and those folks is an uphill battle. We're going to have to see if $4.4 billion was worth it, but it did take me by surprise. James? I'm going to talk about Hong Kong's Hanergy stock.

I don't know if you guys are familiar with it, but the owner, a Chinese guy, was briefly the richest man in China for a couple of months, and it was just kind of out of the blue. This is a thin-film solar company, which is a declining market share business. It's just sort of an outdated technology, and nobody has any idea why the stock just shot up and shot down, basically. And his entity in the British Virgin Islands was apparently using the Hong Kong shares as collateral to borrow hundreds of millions of dollars

and come to find out most of the sales were to the parent company who sold the product back to the listed company. So it's this big, weird mess. Wasn't he shorting and buying at the same time? I vaguely recall something about that. I think he had a lot of, he was just trying to get out.

It's very convoluted. It's very strange. So just to recap, financial shenanigans in China, that's a big surprise to you? It's not a surprise, in fact. Jason? Yeah, in line with Ron,

I think there was a merger and acquisition there that surprised me. I was not expecting to see Under Armour make this deal in February to buy MyFitnessPal and Endomondo, these apps that are basically working on trying to build the world's largest digital health and fitness community. This was not a small acquisition by any means, about $550 million. Under Armour is obviously not a small company at this point in the game. Nevertheless, it was a bit surprising. I think it's interesting. It's certainly playing into that wearable technology, the future of wearable technology. Kevin Plank, the founder and CEO, is certainly a big believer in that. And while it was a big upfront investment, it gave them what is now a fitness community with

more than 130 million users. I think a very robust suite of apps that can help you from watching what you eat to tracking your exercise. And ultimately, this is just a big investment in the brand that I think over the years, I think it will pay off. But it was a surprising acquisition. Do you use these apps yourself, Jason? I do, as a matter of fact. I don't really use the one to track what I eat because I feel like I eat pretty well. Because that would be so depressing. But I do use the fitness app to track whenever I run or walk or use the treadmill, and they're actually very good. Tracking what you eat is so hard because how do I know exactly how many ounces of this I'm eating or how many grams of broccoli?

It's really hard to know, right, unless you carry a scale with you. I will say one of the things is it does fire off a lot of great recipes. So instead of tracking what you eat, maybe you don't do that, but they will give you a lot of good recipes for healthy eating, and I like that too as the cook in the house. I have time to cook once a year, so I could pass on that. That's why my strategy is just to eat the entire bag of Cheetos. You have the measurement on the bag? It's right there on the bag. Amortize that out over time, right?

No division necessary. Some companies have done pretty well in the first half of 2015. Others really need a strong second half, whether it's the business or the stock, Ron. Who needs a strong second half? Boy, does LeapFrog need a second half. That is going to knock the cover off the ball. Stock's down 72% over the last year. where the business is a disaster, competition is fierce, its assets are likely going to

be written down, but the company's products actually do get very high marks. They're highly reviewed and with a market cap of $142 million, the company does have $94 million in cash. The second half of this year obviously includes the all-important holiday season. I feel that if they don't get it done and we don't see some positive momentum during that, this could be lights out for leapfrog, and then they're either a really cheap acquisition for someone or it's just over. That's the Michael Milken company, right? I don't think it is. He's on the board. I think he's a big funder of that business, actually. I kind of wonder why it wouldn't have

been acquired already. At this point in the game, with the stock price that's been hammered so hard, and with much of the market cap represented by the cash on the balance sheet, I hear the argument of Hasbro or Mattel, this would be an attractive acquisition target. I'm not terribly sure that it is, because I think regardless of who owns it, the competition It's still out there in the form of your Apples and Amazons of the world that are already building offerings for families and kids. It's going to be tough. James, who needs a strong second half?

Just about anybody in the oil-producing business, at least in the U.S. One income investor stock that certainly does is called Brightburn. B-B-E-P is the ticker there. Those have sort of become my four scarlet letters. An income investor. This stock is just way down. They kept saying, oh, we're not going to cut our dividend, not going to cut our dividend. And they cut the dividend.

No, no, no, we're fine, we're fine. And they weren't so fine. And finally, after it was so obvious, they did a big cut, which is actually realistic. Their last cut has finally put them into sort of normal territory. I think it's an undervalued stock now, ironically. It does have a 9.4% yield after all the cuts, which says a lot right there. But they could definitely benefit from a good second half. Do you consider that a slap in the face when they say,

we're not going to cut the dividend, and then they do? It's just a sign of incompetence. I mean, they really shouldn't. I mean, it's my recommendation, but I think they played it wrong. I mean, they're a public company, they need to learn to do better than that. Jason, what about you? Sure, yeah, Keurig Green Mountain has had a tough year. Stock is down about 36% year-to-date, and it's just a couple of interesting decisions here

that I have to question leadership there, Brian Kelly, the CEO. You know, there was this one issue with the new machine and pod compatibility that you couldn't use the old pods with the new machine, and so that caused a lot of consternation among loyalists there. And then the other thing, you know, we're hearing about this new cold machine that they're going to be coming out with serving individual sodas in the home. And in the pricing, the rumors out there on the pricing for this machine, it's going to be upward of $300 for the machine, which I find to be utterly absurd. I don't know how that gains any traction. I mean, SodaStream can't gain traction selling their machines at $75 here domestically.

So I have to believe that if they're selling that machine at $300 a pop, they are going to witness tremendous failure here domestically. And then it's back to square one again. So, just a lot of questions with the decision-making there. And they really need to do something here special the second half of this year. How much would it help Kerr Green Mountain if Ron Gross bought several of these machines and gave them as gifts? Well, I mean, I think that would definitely be a start. I mean, it can't hurt, right, Ron? I use it every day. Hey, I'm a fan.

Coming up, the business stories we can't wait to watch unfold. Stay right here. 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 with Jason Moser, James Early, and Ron Gross. Alright, guys, when you think about the second half of 2015, what's the story you're dying to watch unfold? Because I think there are a lot of great stories evolving out there, Ron, that I don't have any interest in as

As an investor, I don't have any stake as a shareholder, but I want to watch the carnage. Well, my guilty little pleasure, I have to admit, is I love watching the drama unfold in the Herbalife-Bill Ackman fight. Ackman is really betting a significant part of not only his capital, but his reputation on this. He's calling it a pyramid scheme and a criminal enterprise, and Herbalife is fighting back with its own website called therealbillackman.com. You've got the FBI and federal prosecutors involved.

It's really down and dirty, and I just like to watch. James, what about you? Mine is not as exciting as Ron's, actually. I'm going to go the boring macro route. But I'm watching interest rates and what happens with the U.S. dollar. If the U.S. is paying more, the U.S. stock market, by the way, is sort of near a seven-year high. So if we raise our interest rates, that's going to make our stocks, our economy, even more desirable from a foreign investment standpoint. They're going to want to put more money here.

So that could propel the U.S. stock rally even more at a time when everyone's saying, oh my God, stocks are so expensive. Jason? Yeah, so in the beginning of the year, we heard some talk about these live video streaming apps, and in particular, we heard a lot about Meerkat, and it was kind of like, okay, what is all of this? Then we heard Twitter had acquired Periscope, and lo and behold, we have this whole new sort of concept out there of live video streaming via your smartphone with these apps, Periscope

and Meerkat. But I think the big aha moment was the quote-unquote fight of the century, Floyd Mayweather, Manny Pacquiao. Who were you rooting for in that? Honestly, I was rooting for Periscope because I watched the entire fight play out on Periscope. I didn't care, but I actually went to see if there were people actually streaming it with Periscope and sort of sticking it to the cable companies. And there, in fact, were, and some of the cable companies dropped the ball there as well. But I think it really spoke to the implications there of this technology. And it's been a lot of fun to watch.

We've actually been able to periscope some market fooleries, as you know, and some of the comments that we get there are just brilliant. I think one compared Steve to the giant in Game of Thrones, which I think that's apropos. Absolutely. But I think that's going to be a really interesting technology to watch it progress and develop. And, you know, Twitter owns Periscope. Meerkat is still on its own. I don't know that Meerkat will be on its own much longer.

I wouldn't be surprised to see Facebook or something like that come take it. I remember after that fight talking with our colleague, Mark Brooks, who's one of the leaders in our tech and business intelligence groups, and I asked him what he thought about all this, where it was going, and he thought for a moment, and he just said simply, I think this is going to be very ugly. And that's why I love it. Because you mentioned the cable companies. This is going to be a really ugly battle, and I just can't wait for it. Let's get to the stocks that are on our radar, and we'll bring in our man Steve Brito from the other side of the glass to hit you with a question. And we've got time. So if you

want to hit him back with a question, you go right ahead. Ron Gross, you're up first. What's on your radar? Steve, Hertz Global Holdings, HTZ. It's a recommendation from our friends over at our special ops service, obviously the well-known car rental company. Opportunity exists because the market is waiting for results from an audit that's reviewing three years worth of accounting and financial reports. So we're going to probably see some revisions of the financial statements there. The investment thesis also relies on a spin-off transaction of the equipment rental business. Buy back some stock with the cash flow that gets freed up. You've got a big new shareholder in there, the State Teachers Retirement System of Ohio, 10% owner of the

stock. They joined Carl Icahn and Jaina Partners. So, my friends over at Special Ops thinks we have at least a 30% upside here, and I think it looks interesting. O'Hare. Hertz Global Holdings, Steve. What do you think? Steve Broido. What do you think about Hertz Gold, where you get to be that your name's on the billboard and you walk into your car? Unbelievable. I feel amazing. I love it. Do you have a question for Steve?

Yeah. Do you rent cars? Do you Uber? Do you Zip? I don't Zip. I will rent cars if I'm staying somewhere for a while, or I will Uber as well. Uber's great. James Early, what's on your radar? I am going boring with Verizon. This is a stock. It's 4.6% yield, by the way, 33% upside. I'm reluctant to talk about it because it just seems so unoriginal, you know, like, where's my Honda Accord? But it's a perfectly good stock. I mean, it's just really, really solid. It's actually an income investor buy first.

The price has been pushed down. Obviously, they've been doing acquisitions lately, but they've also been a price war in the mobile. But these guys have a lot of cash. They're the ones whose side you want to be on in the price war. So I like this company. It's bland, but I like it. And the ticker symbol? VZ.

VZ. What do you think, Steve? Is there any way Verizon could get really good at customer service, or is it just too big? They don't need to, and that's the beauty. They can treat you like crap, and you're still going to be their customer, right? I mean, I hate them, too, but that's why I love them. I don't hate them, but I do find that they've got a monopoly, and there's no way around it. You're out of luck.

Question for Steve. Ah, what was the last movie? Do you stream movies illegally or not? Wow. And here's my friend. I'm just wondering on public radio. Definitely legally. Okay, okay.

I don't know. We'll watch all sorts of different shows and stuff, so nothing's coming to mind right now. I'm blanking. That memorable. Jason Moser, what's on your radar? What I've talked about here before, a company is called Zoom, ticker XOOM. Zoom is in U.S. outbound remittances, and they focus on getting money transferred from the U.S. into 32 countries in which they have a presence, and they will continue to grow that country base as time

goes on. This very capital-like business model, I essentially refer to it as the Western Union for the 21st century. Total addressable market today of $100 billion, and that is growing as time goes on. They just entered China and Pakistan. We'll see those results start going to the top line in 2016. Very customer-centric business, very customer-centric leadership team there. It's when we just got into Stock Advisor, I'm happy to say, and so I immediately brought it over to the watch list in MDP. Very excited about the prospects for this business. The sexy world of outbound remittances, Steve. What do you think? What happens when all that money leaves

the U.S.? Is that a bad thing for our economy? Oh, no. Actually, that money is from migrant workers who send that money back to their families to live in. So, if you think about it from that perspective, Steve, it really contributes to the global economy. And so, we're actually helping the world become a better place. 17% of the Philippines' GDP is remittances. Question for Steve? Okay, Steve, if you could be an activist investor, what stock, what company would you get out there and really try to go to town on? You've got Ackman going on Herbalife. What would

Broido go to? I think the Uber thing, someone mentioned Uber, I think Uber is a really interesting company right now, and I think they are not playing along. They just seem to do what they want to do. I love Uber, I think it's a great model, but they banned it in the state of Virginia, and Virginia just kept on operating. Hey Jason, Zoom is the Western Union of the 21st century. What happens to Western Union in that 21st century? I think Western Union is in a bit of a pickle here. They're faced with that sort of innovator's

dilemma, where they're back on their heels with their old sort of physical infrastructure business, trying to become more nimble like a tech company like Zoom, but they weren't founded as that kind of a company. And so, really, I think Western Union is facing some headwinds there. They still have a good dividend over there, Western Union? I think they do, yeah. Wouldn't we all pay money to watch a reality show where Steve is an activist investor? Oh, I'd love it. I think we've got an idea there.

Drop us an email, radioatfool.com. Tell us what you want to watch. Thanks for being here, guys. Thanks. Up next, we will talk about the rise of extreme sports with CNBC's Carl Quintanilla. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. When we talk about innovation, it's natural to focus on technology or science.

But what about sports? Over the past few years, entirely new sports have been invented, backed by the time and money of some passionate individuals and companies. It's a topic explored in the brand new CNBC primetime documentary, The New High, Extreme Sports. It premieres Thursday, June 18th at 10 p.m., and it's reported and hosted by Carl Cantania. He joins me now from New York City. How are you? Chris, good to talk to you again. Good to talk to you. I'm glad you're holding up well because having seen an advanced cut of this documentary,

which delves into the growth of things like obstacle races, kiteboarding, base jumping, and more, This was a story that you were not just reporting. You were really out there doing some of this stuff. And, you know, it's not, in terms of money, this isn't the NFL. But these things are starting to become big business, aren't they? Yeah, it's amazing. I mean, part of the idea for this was I myself just had some co-workers and friends start running things like Tough Mudders and Spartan races. and it just seemed like it was feeding into an overall trend

that typical weekend warrior stuff was being graduated to a new level. And the more we thought about it and the more we looked at it, it did seem like the dovetailing of social media platforms where you want to show off what you've done, camera technology like GoPro has demonstrated, the influence of the X Games, a generation that's grown up on snowboards instead of skis. I mean, it's all converged into this new lifestyle of really taking athleticism to some extreme levels,

and it just seemed like a made-for-TV kind of topic. Well, let's go to the social media aspect for a second, because organizations like Spartan Race and Tough Mudder, and for those unfamiliar, these are beyond just races. these are races that have obstacles, some of them pretty challenging. These organizations didn't start until 2010. How much of the rise of Facebook and Twitter and selfies, etc., gets credit for the increasing popularity of these things? I think, you know, I think, I don't know, 30%, I think, is in large part because, as someone says in the documentary there is no better selfie than watching than having and

showing yourself leaping over fire at the finish line of a spartan race and that was i mean it's jaw-dropping for us as well it's only been five years since these races have really been invented at scale but already i mean more people this year will run an alternative race than ran marathons or triathlons combined and that's incredible i just the sheer volume of people who are now considering this rather than your typical 26 mile boston marathon new york city marathon i think it's just feeding into a new kind of zeitgeist well um i was gonna say that stat is astonishing to me because it's not like marathons are are on the decline there are more people running marathons at least in the united states than ever before so the fact that in such

a short amount of time these alternative races have overtaken them it's it's really surprising yeah it is and i think it is i mean look it for to run a marathon requires a huge amount of training and you have to get those long runs in on the weekend and all of that but you and i you know chris and carl could probably go out there on saturday and run three miles with 15 obstacles and it might take us two hours, three hours. We might, you know, be literally crawling through the mud at the end, but we could get it done. And once it's done, I mean, it's a high-value media property

to show Chris Hill, you know, climbing a rope and ringing a bell. I mean, I would put that at the top of the full website. Absolutely. That would really get the clicks going. Let me tell you what Chris and Carl are not going to be doing, and that is base jumping. And you mentioned GoPro. That's another part of this documentary. People who are essentially in flying squirrel outfits, for lack of a better term, jumping off 9,000-foot cliffs. They've got a parachute attached to them. But you were up there when they're jumping. I was terrified just watching it. What was it like for you standing on top of a 9,000-foot cliff and watching these GoPro bomb squad guys just leap off into thin air?

Yeah, no, it was surreal. It was literally, it's hard to describe. They're standing there one minute, and then they're just gone. They just disappear into thin air, literally. And I just think it is almost at the pinnacle of what we're talking about. There's the marathon obstacle course thing. All right, that's a natural progression, you could argue. But this, I mean, this is for guys, and mostly guys, for whom skydiving is not enough.

You know, for whom skydive number 500 is boring. You know, what else is there? And this is their answer. And obviously it comes with enormous risk. And as we take a look at in the doc, people die. People die to the tune of 200 people since 1981. I mean, the characters that we profile have had dozens of friends pass away, and their entire existence with this sport is now trying to ratchet that risk just enough to where it's pushing the limits but not going to get them killed. So how concerning is something like that for corporate sponsors like GoPro, like Reebok, another sponsor that's featured in the documentary?

To what extent, you know, do injuries and deaths factor in their decision making? I think it's huge. I mean, I think when we pose this question to GoPro, if it's all about getting the clicks, as you say, getting the views on YouTube, That means you have to do something new and more dangerous and more extreme. Doesn't that encourage you and I to maybe push our limits beyond where they should be? Why did Clif Bar stop sponsoring all these rock climbers? Because they felt that the risks they were taking, it just wasn't good corporate sportsmanship. Not good statesmanhood.

I think it must be an incredibly interesting discussion for marketing departments. because these guys, obviously, they are attention-getters, but push that limit too far, and you're getting attention for the wrong reason. GoPro has been a public company for just under a year, the stock up somewhere in the neighborhood of 85% since the IPO. And when you listen to management talking about what they're trying to become, they're trying to become more of a media content type of company than just the hardware. Obviously, the cameras are what sort of get people's attentions, but knowing what you know now, having sat down with executives, meeting these guys on the bomb squad, where do you think that company is in three years?

You know, I think it's really, I think it's easy to build a bear case on GoPro. How many times have you and I sat and talked about the commoditization of another piece of hardware? In this case, it's a camera. There was a reason why they called it camera on a stick on IPO day, because a lot of the shorts believe that that's exactly what will happen to these guys once the Chinese figure out how to make a durable camera that's easy to mount on something fun. So they are right. They're trying to transition into this content brand, YouTube-y kind of thing,

where you and I will tune in to watch guys play golf and kids will watch pets. But I think it's a hard sell. Now, they've had a lot of success, obviously. This past quarter looked pretty good, actually. Stock's off the lows. So I think, you know, they're still in the mix, but they've got to be extremely careful. Once the smartphone becomes waterproof, then what? I think that's going to be a good question in three years.

You're listening to Motley Fool Money, talking with Carl Quintanilla, The new CNBC primetime documentary, The New High, Extreme Sports, premieres on Thursday, June 18th. You mentioned YouTube, and obviously one level up from that is television sports programming. And one thing we've seen that's risen steadily over the past decade is the cost of sports programming. You mentioned the X Games. Obviously, ESPN has those. But at some point, are we going to start seeing more of these type of extreme sports? Because, let's face it, just like they're getting bigger, but they're not quite at the level of the NFL,

the same can be said of the broadcast rights for these sports. I totally agree. I mean, this is, if you're a programmer, you know, the sport, whatever it is, it doesn't really matter. It just has to be arresting television, right? And the bang for your buck sponsoring or covering something like a Spartan race, like NBC Sports does, is a sliver of the rights for an NFL game. We saw the other day Yahoo going to broadcast this NFL game out of London. I think $20 million was the reported cost for a game between the, is it the Bills and the Jaguars? The Bills and the Jaguars.

So, I do think that a lot of the programmers are looking for bargains, and here are some emerging sports, but with demonstrated staying power, with a very valuable demographic. So, I think we can all sort of read the trajectory where this is headed. Coming up, more with Carl Quintanilla. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hale talking with Carl Quintanilla from CNBC. One of the other parts of the documentary is about kiteboarding, which is basically holding on to a big kite while you're riding a boogie board in the water. That looked pretty tough, not for sort of the weekend warriors like we talked about before,

But the people who are signing up for this are young business people who are running startups in Silicon Valley. And it's this sort of combination of a sports camp but also VC networking. I've got to say, by the end, I was pretty impressed by what they were putting themselves through. Yeah, I gave it a try. It's extremely scary because the kites are huge, the wind is strong, and you're buckled in. And if that kite powers up the wrong way, you will get yanked into the air out of control. And so learning is a very difficult process. But it was interesting.

This is actually a big thing in the Valley right now. Young VCs, young entrepreneurs trying to sort of build a community around the sport because, in their words, It requires sort of incredible focus, an ability to confront your fears, just as they say it would if you were building a business or starting a business. So actually a fair amount of business and funding centers around who knows who in this community, which we found fascinating. And the fact that they take these big excursions to Maui and pitch ideas in between surfing sessions, we just thought was hilarious and, again, made for television. But it also gets at sort of the quality of a potential business leader that really has nothing to do with whatever business they're pitching. Yes, you've got a business idea, great, but how do you handle adversity? How do you handle dealing with something new and, you know, in the case of kiteboarding, literally falling on your face in front of your peers?

Yeah. No, it's, I mean, and we hung out with people who have been doing this literally four years, a decade plus. And we just watched them bite it again and again, which you can imagine, you know, building a business. Someone disrupts your space and eats your lunch. You have to move on. uh... and if you're funding that kind of company you you you're looking for that

type a uh... you know no take no prisoners sort of business leaders ceo entrepreneur and that's the program it's a it's a filter you know it's a filter to find out who's got the metal and who doesn't i couldn't help but think that there are companies not featured in this documentary

who have to be smiling at the prospect of everything that you unveil in this documentary and i'm you You know, we've mentioned YouTube. If you're Google, you have to love the fact that people are uploading these videos. If you're in the sports apparel business, if you're Nike or Under Armour or someone like that, well, there's no way someone's gear is going to last after going through one of these 10-mile Tough Mudders. I mean, there are hidden winners in the business world that aren't being featured here. It's a great point.

I hadn't thought a lot about it, but it brings to mind, I was looking at a chart the other day, of market share denim versus athletic wear for young women, like over the past 15 years. And it's remarkable. I mean, it's just, I think it's a real statement on the younger generations that are growing up. They don't wear jeans. Are you crazy? Nobody wears jeans. Your dad wears jeans.

You wear Lululemon. You wear Nike. You wear Under Armour, even when you're not going to the gym. And, again, this mindset that being active and being extreme, in a sense, is just sort of your modus operandi. That applies to the kinds of food you eat and the kind of clothes you wear, even the kind of cars you drive. Yeah, there's a whole subterranean texture to this particular story, which, unfortunately, we didn't get to. But, you know, talk about tradable stock plays. They're all over the place in this space.

You're listening to Motley Fool Money, talking with Carl Quintanilla from CNBC, NBC, Real Sports on HBO. Before I let you go, let me ask you a couple of things not related to the documentary. Earlier this week, Apple had its Worldwide Developer Conference. A few new things unveiled, including a music streaming service to compete with the likes of Spotify, Pandora, etc. You've got some people saying, well, those companies are in trouble. and others saying, you know what, this is much ado about nothing. What do you think of this new offering from Apple? One of my favorite tweets of today was, I think it was from Slate,

it said, Apple's new products are uninteresting, boring, and stale. They'll be a huge hit, which is true. Apple does not need to be the best because all they need to do is convince you to stay in their ecosystem. And if they get 10% of the installed iPhone base to sign up, they've won. So I think there is a sense they're playing defense rather than offense. A lot of their innovations this week were playing catch-up to rival devices and software. But you know what? It doesn't really matter.

They're a phone company. All that matters is how many phones and tablets they sell. All the rest of this is sort of window dressing. And I think that's why the stock has not moved materially based on new music or even the watch, for that matter. Watch is going to be 2% of their business. We have to remember they make phones. End of story. When we talked at the end of last year, you said automakers were one group you were going to be watching in 2015. And we're almost at the halfway point of the year, and things are looking pretty good,

particularly in the wake of the auto sales in May, trucks are back like never before. Is this sustainable for the rest of the year, or do you think there was some pent-up demand from just a rough winter? You know what? The more people we talk to, it drives the bears crazy. But we're beginning to see some very eye-popping projections on year-end auto sales, well above what we're what we're on pace for now the theory is you're getting job growth now we're finally getting a little bit of wage growth a car people are you know people are eating out and they're saving for a car and maybe a home improvement they might not be buying as many clothes but a car is a very discretionary purchase and a lot of the cars on the road are old

and it's just hard to ignore when you're creeping up on an 18 million uh unit run rate that um And that this is not one of the pillars on which our economy is standing right now. It's amazing. This weekend at a Motley Fool event we're having in Seattle, we're interviewing Jim Senegal, the founder of Costco. You did a fantastic documentary for CNBC on Costco. What's a question we should ask him? Why haven't they, why couldn't they nail online?

It was one of the admissions they made to us at the time that they had not. They've done so many things so well. Totally invigorated an entire category of retail. Eaten Sam's Club's lunch. But has anybody ever ordered from Costco online? I'm a frequent shopper, and if we get it, it's through Google Express. I thought that was a huge missed opportunity that he might be able to shed some light on. And, you know, shorter term, they're being hammered by the strong dollar, and gas prices have had a volatile effect on their comps.

But I just think, you know, they could have done probably a much better job than they've done already online. Last question, and I'll let you go. Duncan Brands recently announced it is testing home delivery, which puts it in the company of Starbucks, Chipotle, and McDonald's, who are also testing home delivery. Is this going to work? Are we going to have a fleet? Everyone's going to have a fleet of their own vehicles? Are they going to partner with Uber? I mean, I'm not opposed to this food getting to my house.

I'm just wondering how it's all going to work. Either delivery trucks or drones, one of the two. Someone said, I forget who, that if they were to start testing commercial delivery, right, to the Motley Fool offices, to the CNBC offices, then they might have something going. But, yeah, it is amazing, the home delivery craze. A lot of people are just praying this is not Cosmo.com, you know, Act 2. What's next? I mean, they're going to start testing intravenous delivery.

It's going to be like in Wally where those fat people never had to get off their chairs. That's what America is becoming. The brand-new CNBC primetime documentary, The new high, Extreme Sports, premieres Thursday, June 18th at 10 p.m., so check it out. Carl Quintanilla, always good to talk to you, my friend. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. Thanks for listening. We'll see you next week.