Motley Fool Hidden Gems Investing - Motley Fool Money: 05.24.2013

Episode Date: May 24, 2013

The Fed stays the course.  Microsoft unveils the Xbox One.  And Disney makes some surprising cuts.    Our analysts discuss those stories.  Plus, corporate governance expert and film critic Nell Minow talks Apple, Buffett, and Memorial Day movies. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, joining me in studio this week from Motley Fool Income Investor James Early and from Million Dollar Portfolio, Charlie Travers and Ron Gross. Gentlemen, good to see you as always. Good to see you, Chris. We've got a lot going on. We've got home improvement stocks on the rise. We've got a couple of tech giants making headlines for very different reasons, and a little bit of trouble in the Magic Kingdom. Summer movie season officially kicks off this weekend, so we've got Nell Minow as our guide, and as always, we've got a few stocks on our radar. But we begin this week with the Fed chief. On Wednesday, Ben Bernanke went to Congress to testify before the Joint Economic

Committee and said, the U.S. job market is still weak, and it is too soon for the Fed to end the stimulus program. Ron, I should say, we're taping a little earlier this week because of Memorial Day weekend, so if the market goes crazy late in the week, everything we're about to say may be moot. But what we saw on Wednesday, when he made those comments in the wake of Bernanke's comments, the market was on the rise. But then later in the day, we had the minutes from the latest Fed meeting come out, where it seems like, behind closed doors, we got some members of the Federal Reserve saying, as early as June, we need to scale back this bond-buying program. First and foremost, what did you make of Bernanke's

comments? I think it's time to buckle up, because we're going to be going through this seesaw ride week in and week out for the next several months, with every little hint that something may be occurring. I think in the end, what's going to happen is going to be measured, gradual, it's going to be reasonable, and hopefully it's going to work out just perfectly. I said hopefully. The Fed has taken in $3 trillion worth of mortgage and treasury securities since the latest QE, quantitative easing program, has been in place. They're not going to yank that away. They're going to come down gradually. As they see unemployment come down, they've

said 6.5% is kind of the magic number. We're still at 7.5% in terms of unemployment. So, as things get better, they will, very rightly so, ease up on these programs. But it's going to be kind of gradual. Bernanke himself, though, seems more conservative, right? Wouldn't you ... I mean, one of his words, like, I want to avert premature withdrawal from stimulating, something like that. Yes. He definitely, as we were saying before the show, he is a student of the Depression. I think he's a relatively conservative guy. He doesn't want to do anything. He doesn't want to yank off the Band-Aid too quickly. And then there are some who think it's time.

They're probably more worried about inflation. I don't see any reason to be worried about that at the moment. But they are probably worried about down the road, and they want to pull things back maybe beginning as early as next month. But I don't think that's going to happen. O'Reilly. Charlie, it does seem, to Ron's point, it does seem like there are some people out there who almost overreact to any hint of this, as though all of a sudden the plug is going to be pulled all of a sudden, and there's not going to be sort of this gradual drawdown. And they're completely wrong. I mean, the Fed knows very well the impact its words have

on the market and its policies. It will telegraph anything it does very carefully. There's no reason to panic. Ron, last question on this topic. Six and a half percent unemployment. Is that realistic? That seems wonderful if we could get there, but that also seems so far off in the distance, I have a hard time believing that we're going to get there. I kind of agree with you. It's a big number. 1% ... I'm sorry, that must be hard for you to agree with me. 1% is a big number. Obviously, until corporations start hiring in meaningful ways, we won't come anywhere near that. But if GDP picks up, and we see the need to increase

production, increase capacity, increase sales staff, if everything just starts to work perfectly, view well, then we'll get to the 6.5, which is still not that low a number, by the way. It's still relatively high, but it probably means the economy is chugging along nicely. But it's all like a traffic jam at the end, right? Everybody just needs to step on the gas and go five miles an hour faster. Right. If we just say, if that first guy in the traffic jam would just go. We just need to agree to do it at the same time. That's the hard part. This week, Microsoft unveiled the Xbox One, the next generation of its gaming system.

And Charlie, you know more about this than I do. This seems like it's a whole lot more than a gaming system all of a sudden. It is, Chris. I have one item on my Christmas list this year, and it is the Xbox One. It's a continuation of the strategy they're pursuing with the Xbox 360, which has been their gaming console since 2005. When it started out, it just played games, but it morphed into a device that lets you stream content from Netflix, Hulu, Amazon Prime. And so the Xbox One announcement even takes it a step farther. It allows you to do voice search of your cable channels for example you could say watch amc watch hbo and it'll just automatically flip to that channel without you having to fumble around with a remote uh they've

you know signed a big partnership with the nfl which is truly exciting they really uh pulled an end run so to speak around apple and samsung there to get their uh technology uh to be the tablet and the console of the nfl so it's a very exciting announcement and i think that uh bodes well for them heading into the holiday season this year. What do you think this means for the stock? I should point out that shares of Microsoft are up about 30% year-to-date, and most of that gain, I'm happy to say, he said tongue-in-cheek, came after I sold it. We told you not to, just for the record. You're welcome, Microsoft shareholders. Apparently, that's what they were waiting for. They were

waiting for me to sell it. But what does this do for the stock long-term? I think there's going to be a huge bump in revenue as those system sales start coming through at the end of the year. Longer-term, the transactional revenue from processing people buying movies through the console is a big long-run winner for them. This week in home improvement stocks, Home Depot's first quarter earnings came in higher than expected. Same-store sales up more than 4%. Lowe's first quarter earnings rose just 2.5%, and same-store sales fell slightly. And James, both stocks hit all-time highs. What do you make of this? Chris, the backstory, there's been a sort of a frisky

little love spat between these two companies for the past, you know, forever, really. The past five years, Home Depot has more than doubled Lowe's stock price performances, largely because they realized that customers wanted to be treated like actual people. They got serious about their customer service. They stopped carrying, you know, locally irrelevant items like snowblowers in Florida or whatever. And it's worked. So again, here we have incremental differences. Lowe's had comp store sales up 0.7%. Home Depot was 4%. Stock price for Home Depot went up a couple percent after those earnings. Lowe's was kind of flat overall over the past couple of days. So it's not like a huge thing, but it's doing a little bit better every quarter can make a massive

difference over time. And that's what happened with Home Depot. When I look at Lowe's latest quarter, the results don't seem to justify the stock hitting an all-time high. Is part of that just sort of this rising tide we've seen over the last few months in the market in general? Yeah, I think you have to, I mean, it's great to look at the all-time high and say, okay, that's the glass half full. But I think you got to look at the glass half empty and how far it's lagged Home Depot. I mean, it could be doing a lot better. Hewlett Packard's second quarter profit fell 32%, but apparently Wall Street was expecting worse because the stock was up more than 14% Thursday morning after the results came in. CEO Meg Whitman says, you can feel the turnaround

taking place at HP. Charlie, can you feel it? This stock is like the crash test dummy bouncing off the inside of the windshield. I had to channel my inner James early there. So you got to remember the stock has done well today. It was up 13%, but over the last three years, while the market overall has done well, it's down 50%. You see things like their personal systems revenue, which is computers you buy in the home, down 20%. They're trying to turn that around with Android tablets like their Slate 7, which at $169 is actually a pretty good value. They're doing well in printers. They're cleaning up the balance sheet. Overall, I actually think the company's doing well. I mean, surprisingly well. I thought this company

was on the brink of disaster, given some of the PC numbers we were hearing earlier this year. But they generate a lot of cash, and they're doing a lot of the right things. And part of this, though, is that they're getting smaller, which if you're looking to get profitable, that can work in the short term, but that can't be sustained over the long term, can it? I think a smaller, higher return on capital business is actually a smart strategy for HP. And if you look at their numbers, they generated $10 billion of free cash flow last year. And for a company that I think the market has written off for dead, that's a lot of cash against a $41 billion market cap. It actually looks kind of enticing here.

Really? Yeah. I'm shocked to say that, because I thought they also ran- The crash test company stock is looking good. Yeah, but actually, he's a good driver. Coming up, evidence this week that Disney's cash cow is not, in fact, bulletproof. Details next. This is Motley Fool Money. Hey, it's Chris here. Is your business protected from data loss? If not, join the 80,000 businesses who trust Mozi to protect their important information.

Mozi automatically backs up your critical files to world-class data centers with maximum security. It's easy to use and costs up to 80% less than other solutions. Learn more at mozy.com. That's M-O-Z-Y.com. Mozy. It's always there. this week that ESPN is laying off between 300 and 400 employees, and Ron, that's upwards of 5.5%, 6% of their staff. First and foremost, were you surprised by the news? I was, but I probably shouldn't have been, because if you think about the competitions that's been coming on board in the sports space, from NBC, CBS, Fox, and then you can see the broadcasting rights, the costs of those have been skyrocketing, whether it's

Major League Baseball up 100% since the last renewal, or U.S. Open tennis up 400% since the last renewal. These costs are just really, really exponentially increasing. So, if ESPN wants to maintain the same level of profitability, it needs to do something to its cost structure, and laying off people is certainly one lever they can pull. That seems a little backwards, in a sense. I hear what you're saying. It's almost like, be rational with your cost structure, so you can be irrational on your bidding for what you're paying to get the rights for these sports. Right, but I mean, what is the alternative?

I mean, they need to maintain their top top, at least stay in the game for sure. Like if they were to lose NASCAR or something like that, it would be a pretty big deal. So they need to put up these numbers. They need to put in these competitive bids. And they could accept a lower level of profitability. They're choosing not to.

As long as it doesn't affect our dressage coverage, Ron and I don't care. I don't even know what that is. Campbell Soup's third quarter profits came in higher than expected, and the company raised guidance for the full year, which sounds pretty good to me, James, and yet shares were down this week. Why? Well, I mean, there's good and bad. First of all, the positive, Chris, is that Soup was basically, we didn't know if it was cool. For years, sales had been going down, and we finally had a little bit of a bump. Most of the bump was actually from an acquisition of this Boathouse

juice brand. You know, you go into the supermarket, they have these kind of gourmet juice drinks, and you come to find out they're all loaded with sugar. I would never drink them, but they're very popular. But margins are still suffering, and the gross margins are the real problem at Campbell's. So until that turns around, I think the stock price is going to stay low. One of the things the company said when they issued the results was that they're disappointed in the performance of their U.S. beverage unit, and the bulk of that is V8, which is a juice that I don't drink, mainly because it's really, really healthy, or it's supposed to be really healthy. And we've talked before about the health trends in the U.S. and soda consumption on the decline.

Why is V8 not just crushing it for Campbell's Soup? That's a great question, Chris. You think you're doing well, but there's a lot of competition in the shelf-stable juice segment, it's called. V8, it's okay. It's a little bit old. It's very acidic. It's like one step below Drano in my book. It practically burns a hole in your stomach.

So people are going to other options. There's just a lot of competition out there. Do they need to partner up with, like, a Diageo, someone who owns some premium vodka, and just go hardcore after the Bloody Mary market? That's my idea. Actually, V8 does not make a good Bloody Mary. Really? You need straight tomato juice. Okay.

I've tried it. Okay. Just saying. We go the extra mile here at Motley Fool Money. We do on-the-ground and in-the-liver research. What we touched on last week is now official. Yahoo bought Tumblr, the popular blogging platform, for $1.1 billion. And Ron, I love Marissa Mayer's, one of her first comments when the deal was announced was, she said,

we promise not to screw this up. And that seemed to be aimed not at Wall Street, not at shareholders, that seemed to be aimed at the more than 100 million people who have blogs and really enjoy the Tumblr platform. And don't want it changed, right. And the Tumblr employees, the company itself didn't want change to come. I do appreciate Marissa Mayer's sentiments there. I don't know how you can promise something like that, because clearly Yahoo has screwed up many, many acquisitions before her time, of course, but we have lists of them. As I said last week, I think it makes sense to go after that target market, that demo of the younger crowd to make Yahoo! a little bit more hip. The $1.1 billion is a

big number for me, especially as a percent of their cash on hand, which is in the $3 billion range. So, I think they perhaps overpaid for a company that really hasn't proven how it's going to monetize all those eyeballs. O' What are you talking about? Last year they made $13 million. Woohoo! That's worth a billion. Sure. We'll have to wait and see how it unfolds. I always feel like an old man when I talk about these stocks, because I'm like, ah, too much money, those young kids. But to me, it's not that exciting. Before we get to the stocks on our radar, I should mention, we have a special

free report that you can get just by emailing us. Just email topstock2013atfool.com. That's topstock2013 at fool.com, and we will send the report right back your way. This is from Andy Cross, our Chief Investment Officer here at The Motley Fool. I actually read the report this week. It was a company I'd never heard of before and have since added to my watch list. So, check it out. Just email us, topstock2013 at fool.com. Let's get to the stocks that are on our radar. Our man Steve Roido is not behind the glass this week. No, he's not. We might have to send out a missing person's report or a search party or something,

but Ron Gross, you're up first. What's your stock? I'm going to keep an eye on Costco, which we haven't talked about recently, but many, many times in the past. Probably one of my favorite companies in the world. The stock has done really well. It's at its all-time high. They report next week. I would love to have the opportunity to be able to recommend this stock again. I haven't for quite some time. It's been on hold for us, and we've done quite well on it. But I want to see how the profitability looks, if there's any kind of update in terms of the number of stores they think they can open, whether it's here or abroad. So, I'm really interested to hear that report.

We've talked in the past about how difficult CEO transitions can be, and we are more than a year now into Craig Jelinek being the CEO, after filling the very large shoes left by Jim Sinegal. How do you think he's doing? I think he's doing really well, and I think it's actually a credit to Senegal, because he put this corporate culture in place, and he's surrounded him with people that really and truly buy into this culture. It's not a kind of place where people are going through the motions. It's a very wonderful company that treats its shareholders, its customers, its employees very well, and I think the transition has been very, very smooth. And you're a Costco customer yourself, correct? I am a Costco member, yes.

as well as a personal shareholder and a professional shareholder as well. Nice, nice. James, what's your stock this week? Chris, I have recently looked at Apple in my Income Investor Newsletter. This is a company that I never thought I would consider, but they're paying a decent dividend, and essentially for all the reasons that the tech fanboys don't like it, I do like it. Tim Cook is kind of a boring guy.

He's not a great presenter in the way that Steve Jobs was. He's not flamboyant, but he's been very mature about understanding Apple's strategic and capital budgeting position, implementing a dividend or jacking up the dividend too. It's been very responsible, so it's great for me as a dividend investor. I have worries about the stock. It's just based on risk, but I think long-term, they got plenty of cash. I think it's undervalued right now. For a long time, Apple was number one on a lot of people's lists for this company should be paying a dividend. Now that they are, what's number one on your list of a company that you look to and say, it's time?

It could be a wish list if you want. I can't answer that question. I don't know who's that cashier is. What about Berkshire Hathaway? Well, that capital is in the hands of the world's best capital allocator, so they shouldn't be paying a dividend. But that's because he's Warren Buffett. Most companies should because most companies don't have Warren Buffett managing that money. Charlie, we've got about a minute left.

What do you got? I'm keeping a very close eye on Yum! Brands. They're the owner of KFC and Taco Bell because of all of their problems they're having in China with absolutely abysmal KFC performance over there. This is a big deal for YUM because China is half of the company's operating profits. The stock has not reflected the problems. The market believes management that this is a temporary issue. The sales are quickly going to rebound.

I'm not so sure about that, and if they don't, I think the stock's going to come down into a point where it would be a great buy. We find out on June 11th what the May sales numbers are going to look like. In April, they did a minus 36% same-store sales for KFC in China. A couple more months of that, and this stock could look quite tempting. All right. Charlie Travers, James Early, Ron Gross. Guys, thanks for being here.

Thank you, Chris. Corporate governance and a summer movie preview. There's only one guest who can do that. Mel Minow is next. This is Motley Fool Money. They're going to put me in the movies. They're gonna make a big start out of me Welcome back to Motley Fool Money. I'm Chris Hill.

We've got company executives and boards of directors in the news, and we've got the official start of summer movie season. So, of course, there's just one guest we can turn to. Nell Minow is a corporate governance expert with Governance Metrics International. She is also the film critic known as the Movie Mom, and she joins me now. Always good to talk with you, Nell. Well, thank you very much. I'm glad to be back on the show. Let us start with one of the biggest companies in the world, and that's Apple and its tax strategy, which has been in the news this week.

And for those who may not know, Apple has been very successful at minimizing its taxes. And at the heart of the company strategy is that three, you know, these Irish subsidiaries and some favorable tax laws in Ireland. And you've got Tim Cook, the CEO, saying, hey, look, we pay every single dollar that we legally owe in taxes. They're expecting to pay $7 billion this fiscal year. But on the flip side, you have people saying, with some cause to back them up, that Apple may be the biggest corporate tax avoider. What do you think when you're looking at this company? You know, the Supreme Court has said nobody is under any obligation to pay a penny more in taxes than they are legally required to do. And the tax laws are written for a particular reason.

The people get out of paying taxes for, let's say, for municipal bonds. You don't have to pay taxes on the income from municipal bonds because we want to encourage people to buy municipal bonds and essentially shortcut the tax process instead of putting the money into taxes and letting them spend it on the municipal bond projects. It goes directly, and it's simpler and easier. And so there's a bit of a zero-sum game here. Most times tax avoidance provides some benefit that would otherwise be paid for with taxes. The problem is that there is this form shopping from country to country when you have big multi-nationals, and then the home country ends up feeling that they have not been treated

correctly. So the problem is not Apple. The problem is the tax code. As a shareholder, of course, you want them to minimize their tax exposure. As a taxpayer, however, you may feel differently about it. And so I don't blame Apple in any way, but I think it is a good time for us to look internationally at the way we deal with multinational corporations. One of the things you always hear about Apple is how much cash they have on the balance sheet somewhere in the neighborhood of $140 billion. But they're not the only corporation that has a lot of cash on the balance sheet.

There are plenty of other companies that have cash to spend. I think we talked the last time about Apple and what I thought they should do with that cash. I think they should pay it back out to shareholders. Is that your sort of default setting of the best use of cash for companies that have it? Is that sort of, in your view, the most shareholder-friendly way to dispense it via dividends? Well, let me put it this way. To use a term from law school, that's a rebuttable presumption. You assume that that is the best thing, and it's really up to them to prove that they have a better use for it.

And I find, generally speaking, they don't. You know, generally, they say, well, we might think of something. That's not a good enough reason. You can borrow money when that comes. You can sell more stock when that comes. But unless you have something to do with the money right now, please don't sit on the cash. If I want to own cash, I can do it. I don't need to do it through you.

Let's touch on another corporate governance issue that is near and dear to your heart that has also been in the news recently, And that is the notion of separating the positions of chairman and CEO. For those listeners who may be new to this issue, I mean, as the kids would say, what's the big deal? What's the big deal about one person? Well, let's talk about where it came from, okay? The idea of splitting the chairman and CEO positions came from the U.K. Back in the 80s, when overwhelmingly most U.K. public companies had a majority of insiders on the board. And so they hired a guy with a sir in front of his name to look into this, the former CEO, wonderful guy, Sir Adrian Cadbury.

And he said, I've got an idea. Maybe if we had an independent chairman, that would provide a little bit more oversight. You wouldn't have this closed loop of information and oversight on the board. And so in the U.K., the split went from 0% to just about universal in a 10-year period. And then it started to attract some interest over here. Over here, I can tell you there have been academic studies showing that it has no effect whatsoever. Guess why that is? It's not because it's a bad idea.

It's because it's so easy to circumvent. Michael Dell wakes up one morning and says, you know, I think I'll just be chairman of the board. I'm not going to be CEO anymore. And then a couple years later he says, no, I think I want them both again. You think there's going to be any difference in the performance of the company? Of course not. I think it has worked very effectively going back to the 1980s again in companies that are in major crisis or transition when General Motors was completely moribund. They finally were forced to split the chairman and CEO, and it turned out to be a very effective strategy.

Same thing in the final years of Michael Eisner at Disney. It worked out very well. So, you know, it can be good if you have the right people and it's the right moment, but it is by no means a surefire or a universal good. I was going to say, because we've certainly seen some pretty high-profile CEOs, Jim Sinegal for years at Costco, Warren Buffett, who I know you're an admirer of. I mean, maybe those are outliers, but it seems like ultimately it depends on the person. Of course, the two people, the chairman and the CEO. Of course, that's true. But in fairness, there's a little bit of kabuki operating here, a little bit of symbolism. And that is, when shareholders are unhappy with the board, they don't have many avenues for raising that as an issue. And so what they can do, legally, they are allowed to put a proposal to split the chairman and CEO positions on the proxy. And I think of it really as a vote of no confidence.

And I think, although J.P. Morgan is crowing about their victory that they got a lower vote on that proposal this year than they did last year, I don't think anybody should be proud of having 32 percent of the shareholders say that they don't like the way the board is working. And more important than that, and this is, of course, you know what I advise shareholders to do, I think, you know, it's a way of sending a message. I don't really care too much about whether they actually split the chairman or CEO or not. However, much more important, shareholders withheld votes in tremendous amounts from the members of the risk and audit committees. And even though the lowest vote that any director got was, I think, 52 percent, that's pretty significant. You're listening to Motley Fool Money, talking with Nell Minow, corporate governance expert and film critic.

You and I have talked in the past about the rising cost of content with respect to movies, but we also saw it this week play out with sports programming when Disney's subsidiary, ESPN, which I always think of as just a cash machine, had to lay off several hundred employees. I don't know about you. Personally, as a shareholder, I was surprised by this. But maybe I shouldn't be when we see how much they're paying for the rights to the NFL, to college football, etc. Are we now in a situation where the cost of content, whether it's sports programming or movies, is only going to go up? I think that's true. I think it's really the seller's market right now for the cost of content.

And you're quite right that to look at the layoffs at ESPN as a reflection of the licensing costs rather than, you know, anything else that they might be doing wrong. The problem is that one of the things that makes ESPN so successful is that they have so many people. They have more people, I think, than the networks have covering politics because that's the great thing about sports is that you can look at so many different details. And people love that from them. They love that specialty. So it's very hard not to eat the seed corn in a situation like that. They're really badly squeezed. And so I do think we're going to be looking at different kinds of structures for financing content in the future.

And I, you know, you don't think of mentioning Kickstarter in the same category as ESPN, but this idea of consumer pre-selling, pre-buying kinds of content, I think is one that we will see more and more often on bigger and bigger ticket items. Do you think that was part of the reason that Netflix shifted their strategy? For a while, their strategy was very much about volume and offering the most movies and television programming. And now they seem to be shifting over to more of an HBO model where they're creating their own content like House of Cards. Exactly. I think that is why. And as streaming became available from the networks, from the providers directly, I think Netflix had to differentiate itself in some way. One thing that no one was expecting, you know, consumers will always surprise you, and everybody thought, oh, movies, great. But one thing nobody was expecting is that there would be this new concept of binge-watching where people would say, I'm going to spend the whole weekend watching 24. I'm going to watch three years' worth of Star Trek The Next Generation. And so people were not anticipating that there would be this category and therefore more demand for it. And so I think they were very, very smart in releasing House of Cards all at once,

and they're going to be doing the same thing for Arrested Development. It was genius for them to find that cult classic that everybody wanted to see again. And so, yeah, I think that is definitely the direction this is going to go. Before we move on to talking about the new releases and the summer movie season, last month the movie industry lost one of the all-time greats, and you lost a personal friend when Roger Ebert died of cancer. What do you think he meant to the movie industry? There'll never be another one like Roger, and that's partly because he was just so prodigiously talented, so vast in his understanding, but also so unbelievably productive. I mean, if in a good week, if I can produce four movie reviews, you know, I feel like I have climbed Mount Everest. He would knock off nine in a week over and over and over and over and cover all the film festivals and do magnificent interviews. If you have not read his interviews, please do yourself a favor.

They are fantastic. And he was a brand in and of itself in a way that you just won't see anymore. A lot of people wrote after his death about how he and Gene Siskel started this little TV show local in Chicago, which is where I lived. And so I saw it from the very beginning and how it became a phenomenon. And I just don't think the media works that way anymore. But one great thing about Roger, if you check out RogerEbert.com, he had sort of a little group of acolytes and followers that he handpicked who will continue to write for his website. And I'm lucky to be one of them. That's fantastic.

You know, one of the things I always think about him, and this is from when I was growing up and first discovered Siskel and Ebert's TV show, is that both of them, but especially Roger Ebert, he was an enthusiast. And at the time, the sort of big movie critics were people like Rex Reed and Pauline Kael. Who were very snobby. Well, yeah, and also sort of brought a level of meanness to it. And I remember with Roger Ebert thinking, oh, no, he really genuinely loves movies. You're exactly right. And, you know, he wrote either three or four books about the movies that he hated the most. One of them was called I Hated, Hated, Hated This Movie, and one of them was called Your Movie Sucks.

And the reason that his bad reviews are so much fun to read is that he took it personally. You know, he sort of was the muse of movies, and he wanted to love the movie. You know, he wanted to be carried away by it. And when a movie didn't do that, it never failed to completely outrage him. Coming up, more with Nell Minow, including a round of buy, sell, or hold. This is Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill talking with corporate governance expert and film critic Nell Minow.

The Cannes Film Festival is underway, and I already knew that it was underway. What I didn't know and what I learned from your blog is that one of the films being featured stars Jerry Lewis, his first lead role in almost 20 years. Tell me about Max. In more than 20 years, yeah, and a dramatic role. It's called Max Rose, and he plays a man who is a widower and who finds out that perhaps he didn't know everything he thought he knew about his wife. and I think that Jerry Lewis has a lot of talent as a dramatic actor and I'm really looking forward to seeing this, which I haven't said about a Jerry Lewis movie very often in my life.

You're listening to Motley Fool Money, talking with film critic Nell Minow. As we kick off the summer movie season, as Memorial Day weekend officially does, I'm curious, which one are you going to be going to this weekend? The Hangover Part 3 or Fast and Furious 6? Well, I've seen them both already. So let me just tell you that, just let's look at it from a business point of view for a moment. You've got two franchise movies, two movies that are following on insanely successful predecessors, and one of them is a great example of how to continue your brand,

and the other is a disastrously bad example. Do you want to guess? I'm going to guess The Hangover Part 3 is the disaster. It's horrible. It's horrible in every possible way. It's so bad that it made me retroactively like the first one less. Wow, that's pretty bad. Yeah.

And it should be a case study for people who are in any industry about how to completely destroy your brand. They just could not have done a worse job. And with Fast and Furious 6, remarkably, contrary to history and to what I thought were the laws of nature, every one of these is better than the one before. I mean, they never made any sense. So we're not worried about that. We don't really care about the characters very much. What we care about is the stunts, and the stunts are mind-blowing.

They are really wild. Wow, if they keep this going, maybe they'll get up to, like, Academy Award level. Yeah, that would be about Fast and Furious 27, I think. But you will see during the credit sequence that they've already got the seventh one in the works. It seems like there are a lot of big films this summer that are aimed at children, maybe even more so than in the past, sequels like Monsters University and Despicable Me 2. but also this new feature epic. Is there one kids' movie that's looking particularly strong to you at this moment?

Oh, right now it's a tie between Despicable Me 2 and Monsters University. If anybody can pull off sequels to two of my favorite animated films, it would be those folks. And I did not like the follow-up from the Despicable Me People hop. I thought it was awful. But this one looks great. The only thing that makes me a little nervous about it is that I thought the movie was already put to bed and ready to go,

And then we just got word that Al Pacino quit. His name is still in the commercials. Really? Yeah. He was playing, I think, the bad guy. So they're quickly fixing that up. I'm really curious. I'm sure we will find out more about that.

But I still think it looks just great. And I think the trailer looks wonderful. I think the trailer for Monsters University, and please check out the website for Monsters University, because they do a hilarious, I want to say a loving tribute more than a parody of what college websites look like to encourage you to try to apply to Monsters University. It really made me want to go back to college. So I thought that was great. I think also for kids, Turbo looks really good about a snail.

It's got a great voice talent. Epic has got one of my favorite people, William Joyce, behind it. And so all of those look really, really good. But the big summer release that I think is likely to be huge is Elysium with Matt Damon. There are something like six end-of-the-world movies coming out this year. I don't know what that means. I was sensing a theme there. Yeah, but Elysium is kind of an Occupy Wall Street-type version, and it's done by the guy who did District 9.

I have tremendous faith in him. I think that's going to be absolutely huge. I think Pacific Rim is going to be great. And then I just want to mention one little tiny independent film that I enjoyed so tremendously called The Kings of Summer, about three 15-year-old boys who run away and build a house in the woods because their parents are driving them nuts. I absolutely loved it. And then in terms of a Hollywood movie that I've loved, opening up next week is Now You See Me, about magicians who rob a bank. That's got a little bit of an Occupy Wall Street theme in it, too. And, boy, I thought it was terrific.

And before we wrap up with a round of buy, sell, or hold, since it is Memorial Day weekend, what's at the top of your list in terms of films that really honor military service or veterans, et cetera? Oh my gosh, there are so many, and I publish a list every year. Sergeant York for World War I, for World War II, I really, really like Mr. Roberts. And then for Vietnam, a very, very underappreciated film from Francis Ford Coppola called Gardens of Stone about the people who work at Arlington Cemetery, I think is just excellent. But there are so many great movies that honor the military, and there should be more of them. All right, we'll wrap up with a round of

buy, sell, or hold. Senator John McCain is pushing a bill that would encourage cable companies to unbundle their channels and offer a la carte cable pricing. Buy, sell, or hold a la carte pricing in the next three years. Oh, that's a big buy. I think that's definitely going to happen. This movie opened with a lot of buzz. Buy, Sell, or Hold, The Great Gatsby. I would say maybe a hold minus on that one. I think that it is a bit of a flash in the pan. It's very entertaining to watch, but I don't think anybody will remember it two months from now.

Her reputation took a bit of a hit based on the video of her recent arrest. Buy, Sell, or Hold, Reese Witherspoon. Oh, I wouldn't count out Reese Witherspoon, who, by the way, gives a lovely performance as a bad girl. Maybe she's practicing for it in Mudd. I think she's around for the long haul, so definitely a buy on her. She's underpriced at the moment. And finally, I'm asking this from my colleague, Ron Gross, who is the biggest fan of this franchise that I know. Buy, sell, or hold the latest reboot of the Superman movie franchise, Man of Steel.

You know, I am such a Superman geek. He is my favorite superhero. I'm really crossing my fingers on this one. But I have to say, I think the trailer looks amazing. and the same guys behind this, Christopher Nolan, who did such a great job with Batman. So I'm hoping that one's a buy. As someone who follows you on Twitter, do you own a pair of Superman sneakers? I do.

I thought I had seen you tweet out that photo. I did, yeah, when I was visiting the Awesome Comp. And not only that, but my husband gave me these great Superman socks that have capes on them. Wow. Next time you come by full global headquarters, we'll have to put you and Ron together. Glad to. She is a corporate governance expert with Governance Metrics International and the film critic known as The Movie Mom. Read her stuff online.

Follow her on Twitter. Nell Menno, thanks so much. Thank you. Bye-bye. That's going to do it for this week's Motley Fool Money. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill.

Thanks for listening. Have a great Memorial Day weekend. We'll see you next week.