Motley Fool Hidden Gems Investing - Motley Fool Money: 06.25.2010

Episode Date: June 25, 2010

​What will the financial reform bill mean for investors? Will Kinnect technology connect for Microsoft?  Will technical glitches hurt the new iPhone's reception?  On this week's Motley Fool Money Radio Show, we discuss those stories, share three stocks on our radar, and talk with Ted Turner biographer Bill Burke.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Everybody needs money. That's why they call it money. The best things in life are free. But you can give them to the birds and bees. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill, and I'm joined by Motley Fool Senior Analysts Seth Jason, James Early, and Shannon Zimmerman. guys. Happy weekend. Happy weekend to you, Chris. On this week's show, Apple releases the latest iPhone, Amazon releases a new price on the Kindle, and will a Supreme Court ruling release Enron's Jeff Skilling from prison? We'll tackle those topics, get an inside look at media mogul Ted Turner, and share a few stocks on our radar. But we began on Capitol Hill. Early Friday morning,

the House and Senate agreed on a financial reform compromise that is expected to pass and be signed into law by President Obama. Among the highlights, the bill sets up a new Consumer Financial Protection Bureau to safeguard borrowers. Most derivatives would be traded on public exchanges, not in private side deals. And the government would be given the power to seize and close down large failing firms in an orderly fashion. Shannon Zimmerman, obviously there's a lot there, but what did you think of the bill and what does it mean for the average investor? I think the bill looks great on paper, but the rules that will govern how it is implemented will make all the difference.

And we're seeing that right now in terms of the health care reform legislation as well. And that's where the rubber meets the road. So if you think that the crafting of the legislation was a sausage factory, the rulemaking is the real sausage factory. And it's going to come out looking like hash. To me, the thing to watch is the language that Blanche Lincoln submitted around the derivatives reform piece that was going to require institutions to spin off their derivatives unit. It turns out that they're going to, and it's a sensible thing, but it's open to loophole abuse. Banks will be allowed to hedge portfolio risk, but hedging risk is more art than science, and I imagine Wall Street would be quite artful in avoiding the intent there.

Yeah, one person's hedge is another one's just rampant bet. James Early, what did you think? My big concern is with payday lenders now more regulated, there go my best financial stocks. I'm kidding. I don't invest with them. I do think the bottom line here is that banks are going to pass these costs along to their consumers at the end of the day. Some interesting notes, I think, with proprietary trading, that's going to be a big wiggle area. It's very hard to define in terms of banks not being able to do that. 3% of bank capital in hedge funds or private equity, that's another big wiggle area.

Derivatives, medium wiggle area, excuse me. But bottom line is, will this stop the next financial crisis? I don't think so. No, there's always another way to create one of those. Let's try to remember the giant picture, what this is supposed to do. Well, it was supposed to do a lot of things. But one of the major points of this bill was to try to take large banks, for the most part, who are by default now protected by the U.S. government and make sure they are not doing so many things that they will explode without somebody worrying about it. And as Shannon said, this bill doesn't guarantee that we have that protection.

The devil will be in the details, and it will all be in how this is interpreted by the various regulatory bodies who now need to come up with rules to try and satisfy the legislation. Yeah, the much-valued financial innovation that consumers are supposed to enjoy, but we don't really. But they're quite innovative when it comes to avoiding any kind of meaningful reform. And it could just be that this is another how-to guide for toothless watchdogs. So, on a scale of 1 to 10, 10 meaning this is going to radically change the way Wall Street does business, 1 being it's going to be business as usual, where do you think this will fall out, Shannon? So, I want to be not cynical and somewhat optimistic. And so I'm going to say a 6.5, and I'm going to say that because it is, you know, it's an election year,

and now the march to November begins, and if, you know, folks can really sort of seize on the populist ire of Wall Street and make an issue of this, then maybe it will be reformed with teeth. If not, I don't have much hope. James Early? Negative one, Chris. Wow. You can squeeze a water balloon and it just bulges somewhere else. Are you that cynical?

I am. Wow, and look at me. Wow. Where did Seth go with this one? I was going to say seven. lucky seven. Really? I think it all depends, but I think there, I believe we can do it. Yes, we can. Wow. I've heard that someplace. We're off to a weird start here where Seth is the optimist, the biggest optimist in the room. In your face, everybody. It's bizarro.

All right. Let's move on to the big macro. GDP rose 2.7% in the first quarter of this year, and that's lower than the 3% the Commerce Department had estimated a month ago. So the housing market took a step back as housing starts in May fell 17%. And on Thursday, the Senate killed legislation that would have extended unemployment benefits to 900,000 people. James Early, what's your big macro headline of the week? Chris, one thing about economics, it's a social science, meaning what's important is not reality but expectations. And we had the worst new home number since 1963. Obviously, the expiration of the tax credit was largely to blame for that.

But homebuilder stocks actually went up a bit on the news, which could be a very good sign that the market thinks the worst has already passed. So I'm going to be positive on that. Wow. Come on. Existing home sales looked terrible, and that was still under the tax credit regime. And right now, so we're seeing the housing market fall apart at a time when, thanks to the scatterbrained European economies, everyone's buying treasuries, which is lowering mortgage rates here. mortgage rates are at historical lows and we're seeing home sales at record lows that's some pretty bad news and it gets even worse now with this unemployment benefit thing these guys are

scolding everybody uh and they're punishing a group of people who actually need some support i i am really against dead beatery and as for governments but i think that at a time when you've got a deflationary spiral perhaps you're on the edge of it this is not the time to preach fiscal austerity. So does he get called Sven this time around? He's Sven too. I'm thinking about that. I'm thinking about that. It's unconscionable that the unemployment benefits have not been extended. Go get a job when you've got unemployment at almost 10%. It's, well, unconscionable is the nicest word I can think of to characterize that. You're listening to Motley Fool Money. We're going through some of the big stories this week. This week in BP, a federal

judge has rejected the White House's attempt to delay a removal of the deepwater drilling moratorium. BP has already spent over $2.3 billion on the cleanup so far. And this week, the stock hit not just a new 52-week low, it hit a new 14-year low. Seth Jason, you're a BP shareholder. How are you holding up? Oh, I'm fine. I'm fine. I got a lot of dividends. And as I mentioned before, I bought a basket of stocks in this area. So overall, I'm up on this entire affair. But, you know, this case was interesting. I kind of thought it would come to this. It's sort of in your face, President O'Chavez. And the reaction from the White House was pretty funny. It was the judge says, you can't do this. And they said, well, we're just going to say we can do it

again. I side with the engineers who were part of the report who said, you know, we really didn't say six-month moratorium. This moratorium was a public show. It was to say, hey, we're doing something. I don't think they really considered the economic damage they were doing to the Gulf by shutting off all of that drilling. And so I think it was ill thought out. And so those stocks in companies that play in that space really didn't move up much on this news because they're still wondering, investors are still wondering how this is going to shake out with challenges and everything. And until that is figured out, probably there won't be any movement in those stocks. I think in the week ahead, or maybe the weeks ahead, Anadarko, you're going to

We hear that name more and more often as their level of culpability is being called into question. And they're pushing back, of course, and BP's saying, uh-uh, it's time for you to pony up as well. Yeah, this was BP's partner in the well-owned minority stake. And not surprisingly, they're saying, hey, you screwed it up. We're not going to pay. I don't know if they'll pull that off. Good luck to them. Coming up, Enron is back in the headlines, and Toy Story 3 gives Disney 110 million reasons to smile.

In the rich man's world Motley, Motley, Motley Always sunny Stay right here. You're listening to Motley Fool Money. The best things in life are free But you can give them to the birds and bees I want money Welcome back to Motley Fool Money.

Chris Hill here in the studio with Seth Jason, James Early, and Shannon Zimmerman as we dig into some of the companies making headlines this week. Guys, a little company you might have heard of called Apple on Thursday released the iPhone 4. And by the end of the day, it was sold out at Best Buy, while Walmart and Radio Shack were looking to restock as quickly as possible for the weekend. Well, you can get the iPhone 4 at Walmart? Yes. That is hip.

All this despite numerous reports on tech websites of various glitches with the new model. Shannon Zimmerman, I believe as soon as the show is over, you're running out to buy your new iPhone 4. In fact, I'm leaving right now because I've got to go. And I forgot, at lunchtime I was going to buy you a pair of latex gloves that you could wear while you're using it so that you don't short out the antenna and cause it to drop connection. That's very thoughtful of you, Seth. What did you think, Shannon, when you saw the news, the good and the bad?

Yeah, to me, there are a number of stories in here, and the big story is actually the upgrade of the operating system, which came out earlier, and I actually have on my 3GS. I think that, like I say, I am going to go get one, And I'm excited that it's going to be faster and sleeker. And, you know, I don't like to make calls that much anyway, so the reception problem is really not that much of a problem for me. That's true. He's over there. He's always playing foursquare on that thing.

That's right. That's right. But, Seth, what about this? I mean, there have been these reports on Gizmodo and other tech websites. I thought this was a small thing being blown out of proportion, and I'm not sure it's not still. But there's an awful lot of good-looking data. The people who are posting these videos weren't just your run-of-the-mill internet cranks. They were holding the phone in various positions and turning it

And videotaping the results, often some of them with speed meters, measuring the download speeds capable by the phone in the various positions. And what it looks like is Apple moved the antenna to the outside of the phone. Well, anytime you touch an antenna with something else that conducts electricity, like your sweaty hand, you can change the performance of that antenna. And in the case of the iPhone, unfortunately, it looks like you can shut it down to very low levels indeed. Now, this is fixable if you bridge the contacts. There are spaces where there are pieces that aren't supposed to touch each other. It's fixable if you give Apple $29 more. You can give Apple $29 to put one of those weird iPhone condoms on it.

You can cover that up with scotch tape so you don't bridge it, or you can wear leather work gloves when you use your iPhone. Oven mitts, just walk around wearing oven mitts. Or actually, there are emails online where people have responses from Apple, including one that's purportedly from Steve Jobs. and they're telling people, get this, you're holding your phone wrong. You're holding your phone wrong. I don't think that's really a Steve Jobs email. The ironic thing, though, is that this was an effort on Apple's part to address what's been the chief complaint about the iPhone since it was first launched,

that the call quality is quite bad. So this was an innovative move to address that and it backfired. A year from now, what are we more likely to be talking about? Is it iPhone 5? Exactly. Continued domination, or does Google have a shot to take some of the market share with Android? No, people, you know what, if anybody else did this with a phone that's got this much hype, they would be crucified, but since it's Apple, everyone's going to say, what's the big deal?

They're held to a different standard, a lower one. Earlier in the week, Amazon dropped the price of the Kindle by nearly 30%, and Barnes & Noble quickly dropped the price of its e-reader, the unfortunately named Nook. Shannon Zimmerman, Amazon stock dropped a couple of points when this was announced. So how much is this going to affect their revenue? Goodbye, e-reader. I know we have a disagreement on this, Seth, but I do think the iPad is going to eat into that market share. And it's a commodity play at this point, at that price point.

And there's only down to go. And I don't really see. That's why I don't think it's goodbye, e-reader. When they're that cheap, people can afford to have both. Well, that may be. You could buy e-reader as a source of operating profit, probably. I'm not sure it was ever meant to be that. This has become much more of a razors and blades model.

And I was joking before the show that when Schick started selling razors really cheap, I bet there were stockholders who said, oh, my God, I'm out of this. We have a disagreement is whether or not the iPad can be a sufficient e-reader. I know that you can't read it outside when you're on the beach. I understand that. And the battery life is so much shorter. I think that if the price point is low enough, I think people will read on the iPad, but I don't think

you take away I think the iPad will be more popular but it'll be more popular because people want to mess with Foursquare and watch videos and things people who really want to read

I think are still going to seek out e-readers in six months the Kindle is going to be the biggest babe repellent you've ever seen black and white tiny little screen

compared to the that's good because I like to read you know I'm not in the coffee shop so that somebody can say hey he spent $800 on that shiny thing oh I love him

you know what has a really great interface paper book they don't though That's the thing. They don't. They work well in the sun. I have converted so many.

Kindles work great in the sun, too. That's the thing. You can't read an iPad in the sun. Everybody I know who said, you know, I love a book so much, and then they've played with my Kindle has ended up buying a Kindle. Yeah, but, I mean, the sand? What about the sand factor? The sand factor?

What about the bathroom factor? And I still have that really old crappy Kindle, but it still works really well for reading. All right, guys. Enron is back in the news. The Supreme Court ruled this week that prosecutors overreached in their conviction of Jeff Skilling, the former president of Enron, in using a federal law that makes it a crime to deprive others of one's, quote,

honest services. Yes, that's right, Jeff Skilling and the phrase honest services in the same sentence. The court ruled that it violated the Fifth Amendment. Skilling was convicted on multiple charges, though, so he doesn't get his get-out-of-jail card just yet. But this case will return to lower courts. James Gurley, it sounds like this was possibly another case of Slegel. Sly me, but legal.

It is important to note, Skilling is not off. Just this wire fraud technicality that he was prosecuted under, apparently, is a no-go with the Supreme Court. There was an issue, too, about the fairness of his trial in Houston. I think one juror had lost around $50,000 in her 401K because of Enron, and on her selection questionnaire had said that she believed Jeff Skilling was, quote, not an honest man. um i think she's pretty accurate so i don't know why she's a bad juror but uh yeah we'll see what happens from here but it is pretty odd i think this this is we live in a weird country we live in a really weird country everybody knows how much skilling and the rest of the guys at enron

hid a lot of what to me amounts to criminal activity it's technically not if you disclose it in footnotes that you know darn well nobody is ever going to read. And that's what a lot of Enron was. And so the moral of the story is, in the United States, if you want to steal a lot of money, just do it with a pen. All right. The Electronic Entertainment Expo, or E3, conference was held last weekend in Los Angeles, and gamers flocked to see the latest innovation in the gaming industry. One of the ones making headlines, the Microsoft Kinect, a game system for the Xbox 360 which employs controller-free motion sensors. Seth, you're the biggest gamer geek here. I mean, is this your dream come true? I didn't want to Kinect. This was what was called Project Natal

or Natal or however they wanted to pronounce it for a while. And it's a series of cameras and sensors that sit on a bar in front of your television or hooked up to the Xbox. And I didn't think this would work for anything i thought it was it was being over promised and uh now that i've seen the videos of what it can do i i might actually go looking for one of these not only can you now play games like bowling or rafting without ever touching a single controller it just watches what you're doing and translates your motion to the character on screen but you can if say you're watching netflix on your xbox streaming netflix you can do this minority report sort of navigation where you're waving your hands in the air and things are moving

and then you tap the air and you make your choices that way. This looks really, really cool. Also, video conferencing on your big screen TV will be right there. This is some great stuff. That's scary to me, too. Yeah, I gave up on gaming whenever pinball had multiball built into it. You've got to draw the line somewhere. Right.

So I'm not a gamer, but all the features that Seth was just talking about there at the end are absolutely amazing. It's some of that magic that Apple always claims to have and does, I think is being sprinkled on to Microsoft for this product. It looks super cool. I think they're going to wipe the floor with Sony, and I think Nintendo is going to hang on, but only probably because of that little 3D Game Boy thing they've got going.

And finally, Disney executives were all smiles as Toy Story 3 had the biggest opening weekend ever for a Pixar film. Toy Story 3 took in $110 million and is already the sixth highest grossing movie of 2010. Guys, this is not only good news for Disney, This is good news for Hasbro and Mattel because they're the ones actually making the toys. I have seen Toy Story 3. It is fantastic.

Pretty scary? No, no, it's fantastic. I highly recommend it. All right. Can you see it without having seen 1 and 2? You can, but it's better off if you've at least seen Toy Story 2. I would recommend that. So this is just their way of selling more DVDs, really.

You know, it's possible. I've got to go back and buy 20 bucks of the DVDs. The merchandise is a big deal, but, I mean, this is also just... I may have to go to this. This sort of lost me on Up, even though I loved Doug the Golden Retriever. By the time I got to the dogs flying by planes, I wanted to shoot everybody at Pixar. You've got a friend in me

You've got a friend in me When the road looks rough ahead And you're miles and miles from your nice warm bed You just remember what your old pal said Boy, you've got a friend in me Yeah, you've got a friend in me The guys will be back later in the show to talk about the stocks that are on their radar, but coming up, a conversation with best-selling author Bill Burke

about one of the most successful and entertaining leaders in the media business, Ted Turner. Stick around. You're listening to Motley Fool Money. Taking care of business every day Welcome back to Motley Fool Money. I'm your host, Chris Hill. This week, the United Nations set up a special committee to focus on global poverty and to improve human welfare. The committee is made up of high-profile leaders like Microsoft founder Bill Gates, Nobel Peace Prize winner Muhammad Yunus, and the focus of this week's interview, CNN founder Ted Turner. Bill Burke has served as president and CEO of the Weather Channel

companies, president of TBS, and general manager of Turner Classic Movies. So when Ted Turner wanted some help writing his own story and sharing it with the world, the choice was pretty simple. The result is Call Me Ted, a bestseller selected by USA Today as a best business book of 2009. I had the chance to sit down with Bill Burke a few months ago, and here's some of that conversation. I think when a lot of people think of Ted Turner, they think of sort of the more obvious public moments, something involving CNN, Jane Fonda being in an Atlanta Braves game, maybe even America's Cup sailing, that sort of thing. Give me a snapshot of what he was like before that, before he became this sort of iconic business and sporting figure. Sure. What was he like?

Well, he's always been a little different, and it starts with his childhood. He had a very, like a lot of highly successful people or unusual people who made a mark on the world, he had a very difficult childhood. His father was an interesting but very complicated guy, an entrepreneur himself who built a billboard company. But his father was an alcoholic, probably bipolar, definitely abusive. And Ted was, we talk about in the book, Ted was mistreated quite a bit as a child. His father was drafted into World War II. they left with Ted's younger sister who was a baby at the time and Ted was four years old and put

in a boarding school when he was four four years old abandoned essentially they came back Ted was went to military schools had similar treatment at those schools would come home in the summer get screamed at by his dad meanwhile his younger sister developed lupus which turned into encephalitis had this terrible agonizing disease died when she was 17 years old Ted's only sibling His parents divorced, and his father was grooming him to take over the billboard company when he called Ted one day and said he was selling the business. And Ted said, how could you do this? You've been quitting on me.

You've been grooming me to take this over. And he said, well, no, I'm overextended. I can't handle it. Maybe they'll have a job for you. Maybe they won't. Ted got an apology letter a few days later. Two days after that, his stepmother called and said his father had killed himself. How old is he at this point?

So Ted's 24 years old. His father's 53. Ted's whole life has revolved around sort of taking over his father's position. And while most people after the tragic death of a parent would mourn for the next six months, Ted spent the next six days undoing the sale of the billboard company and flew out to Minneapolis where this big shot billboard baron was ready to do this deal. And Ted talked him out of it and did some clever things we describe in the book. And at 24, took over his dad's billboard company.

And so his formative years were very difficult, very challenging. But after that, the pop psychology would suggest, and I tend to believe it, that the rest of his life has been to prove to his dad that he could do it. Well, yeah, one of the things that does come through in the book is just how intensely competitive he is. It shows up in business, and we'll talk a little bit about that. But one of the things that really stands out for me is the sailing. I mean, we tell a story in the book.

He took up sailing. He says this. He's not a very good athlete. He's this great-looking guy who fills a room, but he says, I can't throw a ball. I don't run in a straight line very effectively. And he actually took up boxing when he was in high school because he said he could take a lot of punishment.

But then they banned high school boxing, so he had to find a sport. That's why you took up boxing? Because you could take the hits? That's what he said, and I believe it. And so sailing came along, and he realized it was something that didn't require the same kind of physical skills but was more strategic and mental. And he was a terrible sailor when he started. When he was a kid, they called him Turnover Ted

because he was always capsizing. But he stayed at it and stayed at it and stayed at it. And as he says, I wasn't losing those races. I was learning how to win and got better and better. And as he was building this huge company, he spent every weekend sailing and was determined everything he did, he wanted to be the best, and the best was the America's Cup. And he had some really humiliating defeats on the way to eventually winning in 1977.

And it's in everything he does. If you spend time with him now, you go out to Montana and you fish all morning. He goes in one direction, you go in the other. You come back at lunch, and he wants to know how many you caught, and he wants to catch more. And he usually does. There was one time I actually got him, and it was a very quiet lunch that day. But he competes at everything.

Well, and back to the sailing for a second. You said there were some humiliating defeats along the way. He also had a race against his own wife. Yeah, yeah. The marriage was a little shaky at the time, and the final blow was they were racing against each other. And I don't totally understand the rules of sailing, but she made a pass that was technically illegal.

And so to draw attention to it, he sort of turned left to bang into her boat. The officials saw it. She was kicked out of the race, and Ted gloated afterwards, and she packed her stuff, and that was the last day they were together. Gee, it's almost hard to believe that marriage didn't last. Exactly. Let's talk about Ted Turner, the businessman. What is it like to work for him? It was a real privilege, to be honest.

I started there in 1992, so Ted was still very much in charge. But it was an interesting transition for me. I was coming out of a business school environment where it's, you know, you're learning more about sort of traditional business practices. And then you go into this place that was like the Wild West. And I was in charge of new business development for the entertainment group, which sounds like a fancy job. But it was just Ted had an idea in the shower and we'd run the numbers. And one day, the next, you didn't know what it was going to be. It was like we described his policy as ready, fire, aim.

And he'd come in, you know, one day we're going to buy Paramount. The next day we're going to merge with NBC. We owned Hanna-Barbera. We were going to buy Chuck E. Cheese. You know, it was just always something. And he was incredibly empowering. One of the things I like to talk about when it comes to Ted is that he's known for taking chances on businesses. But in that, he takes chances on people all the time and makes bets on people.

I mean, asking me to write this book made no sense. I was there for a year working on a business plan for a cable channel. And then they put me in charge of Turner Classic Movies. I was 27. A year and a half later, I was 29 years old. They made me president of TBS Superstation. made no sense. But that was the way he did things. And it was like oxygen in the company because everybody felt like they were going places and there were opportunities. And it was a very,

Ted described it as Camelot in the years. Well, it does seem very much like a culture of being in motion, of constantly being in motion. I could see where that would be on the one hand, very exciting. Are there times though, when that sort of works against you and it feels sort of frenetic and almost out of control? It felt frenetic and out of control, and I think it rarely worked against us. In fact, we were competing often. We were the upstarts. We were the smaller cable channels competing with ABC, NBC, CBS, and even some of our cable competitors like USA Network. At the time, they had multiple owners, and we'd compete for packages of movies to run on our network, and they had to wait for the next board meeting to decide whether or not

they could buy them. We'd call Ted and show him the numbers, and he'd say, go. And so the frenetic pace actually was a competitive advantage for us. So it was hard keeping up, but it was a heck of a lot of fun. When we come back, more with Bill Burke on some of Ted Turner's investment hits and misses. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. We're continuing our conversation that we taped a few months back with Bill Burke, the co-author of Call Me Ted, a bestselling business book about CNN founder Ted Turner. What do you think Ted Turner would say his greatest weakness is from a business standpoint? It's a good question. It's hard for him sometimes

to admit, you know, he talks about some of his personal failings with marriages and things like that. You know, he'll say agreeing to the AOL deal. And there, I think, what I see as a weakness in him is also a strength sometimes, which is his loyalty in people and his trust in people. And Ted was at a point in his career when that deal came along where he was already kind of pushed aside. He was spending a lot of time out in Montana. He admittedly, I was in a meeting with him one time where he said, I don't get this whole Internet thing.

He's never done an email in his life. And all the smart people around him said this AOL deal made a lot of sense. And he was tired, and he was literally, he announced his divorce with Jane Fonda that week, the week before. So he had a lot going on, and he trusted these people, and he said yes. and then spent the next two years watching his fortune crumble. So his biggest weakness, I think, was showing too much faith in some of the players in that deal. Yeah, I was watching an interview that he had done with Charlie Rose, and this was in 2004,

and he compared America's decision. He said America's decision to go into Iraq was every bit as bad a decision as the AOL-Time Warner merger. Yes. Yeah, he lost, depending on how you want to calculate it, he lost about $7 billion in two years. And we were in the back of a car one time driving around New York, and Ted wants to be the best at everything. So he said, he calls me Billy, unfortunately, and he said, Billy, you've got to figure this out. I lost more money in a shorter period of time than anyone in history. I said, well, it's kind of hard to quantify that, Ted. He said, well, $7 billion in two years.

I said, okay, well, let's call that 700 days. He's like, yeah, $7 billion, 700. I lost $10 million every day for two years. No one's ever done that before. I said, congratulations, Ted. How does he measure his success, though? I mean, he strikes me as someone who, on the one hand, is interested in success and money is an easy way to calculate it. But he seems like someone where success is more than just money.

Yeah, definitely more than money. Often quantifiable, though. He likes the fact that he owns 2 million acres of land. He, you know, was worth $10 billion. There are things that are measurable for him. When you fish, he caught 12. You caught 8. You know, he likes to measure things.

But also, if you ask him his most proud legacy, it's creating CNN. And while he's not entirely happy with the way CNN has evolved in recent years, he counts on that as his biggest legacy for really exposing the world to news. He, I think, can fairly take some credit for easing some of the tensions during the Cold War, covering Tiananmen Square, I mean, really meaningful things. That, to him, I think is what he's most proud of. And today it's his philanthropy, from the UN Foundation to the Nuclear Threat Initiative to work he's doing on climate change.

Those are the things he's most proud of. And having five kids that are productive adults. Yeah, his philanthropic work, certainly his work when it comes to the environment, where does that come from? Is that rooted in his past, or is that something that's just sort of evolved for him over time? It's definitely evolved. He was in the outdoors a lot as a kid, and a lot of that was being off on his own. There was a man named Jimmy Brown who's very prominent in the book who was an African-American guy that his father had hired actually to maintain his boat.

And he wound up being Ted's surrogate father, basically. And they'd spend hours fishing and frog gigging, which I'd never heard of. But it's basically stabbing frogs. I think that requires a large stick. Less fun for the frog. But he spent a lot of time in the outdoors. He's always been fascinated with the outdoors, but never very active in environmental causes. And then in the middle of his life, spent a lot of time with people like Jacques Cousteau, who really opened his eyes.

John Denver, they got pretty close. Carl Sagan. So he spent a lot of time around some really thought-provoking people. And at the same time, he was building his wealth and then was in a position to actually do something. And so it was definitely an evolution over the course of his life. And now that he's out of a full-time business other than his restaurants, which are a pretty good business, he's spending most of his time on his philanthropy. be. What do you think he considers to be his greatest investment? I think he would probably say his dumbest investment is the AOL Time Warner, but is it the launch of CNN, or is there

something prior to that? Well, you use the word investment. In terms of his legacy and something that's ongoing that really changed the world, CNN would be on that list. I think if it's a pure investment, the acquisition of the MGM, ultimately the MGM Library, what happened was he bought all of MGM and then quickly realized he couldn't afford all of MGM and had to sell back the working studio to Kirk Kerkorian, who sold it to him in the first place. So when it was happening, it was an embarrassment. There was a cartoon one time that showed Ted leaving Hollywood in a barrel, you know, and everybody laughed at him.

And shortly thereafter, TNT was launched, which is a multi-billion dollar asset. Years later, we launched Turner Classic Movies. It was probably one of the greatest investments in Hollywood history. similarly hannah barbara which people thought he overpaid for and six months later we started the cartoon network which is an incredible asset so i think it's those kind of investments in content he bought the atlanta braves for 10 million dollars uh in the early 70s so i probably put those on the list well and speaking of baseball you um that's how i first got to know ted turner was through the atlanta braves um you're involved in a baseball team of your own

the Portland Seadogs. That's right. Beloved team up in Maine. That's right. My father in retirement started a double-A franchise in Maine. We used to be the Marlins double-A affiliate, and we're now the Red Sox double-A affiliate, which is a nice place to be the last several years. And two hours from Boston, we've produced a lot of guys who've made it up to the Red Sox, and there's nothing more fun than a warm summer night. Games in April aren't so much fun. Yeah, well, I'm also from Maine, And so I remember being excited that there was going to be a franchise and slightly mystified when it launched, and it was the Marlins affiliate. So I got a hat from my mom, which was the Marlins colors with the Portland Seadogs.

So it definitely fits better to me with the Red Sox. Has Ted given you some advice when it comes to baseball? No, he hasn't. He's funny. When he bought the Braves, he didn't know a thing about baseball. He saw the Braves as programming for TBS, and he quickly learned about baseball and got up to speed on it. But he's not involved with the Braves anymore day to day.

And he always asks how the Seadogs are doing. But, you know, it's funny when you ask about advice. I have learned a ton from Ted, but it's never been, hey, kid, let me tell you this. He's not that kind of guy. He's not a put his arm around your shoulder and, you know, give you advice kind of person. You learn by osmosis and by hanging out with him. He's not necessarily a teacher. There was an article one time that described me as Ted Turner's protege.

And I saw him a couple days later. He's like, protege, huh? I didn't know I had any of those. And he wouldn't think of it that way. He is 71 years old now. We talked about the restaurants that he's involved in. But every once in a while you hear something about him wanting to maybe seize control of CNN again. Is there a next act in his business life?

And if so, what do you think it is? I think the answer is yes. I do not think it's CNN or anything, frankly, in the media business. He made that comment recently and it was picked up a lot of places. I think he was just trying to get a rise out of whatever the audience was that day. He's really sort of turned the corner on the media business. He is spending a lot of time on alternative energy. When I first started working on the book with him about four years ago, I said, you know, if you were a young guy starting out today, what would you go into?

And he said, alternative energy. And naively, I said, well, why is that? And he looked at me and said, because it's the biggest business opportunity in the history of mankind. That's why. And so he's actually spent a lot of time with Boone Pickens. And if you think about a guy like Ted, not only does he have resources and a platform to speak on the subject, He also owns 2 million acres of land. He owns a million acres in New Mexico alone, and much of which is ideal for solar.

A lot of the land in Montana and even Argentina could be ideal for wind. So there's a lot of interesting opportunities just with his own properties. Is he the largest private landowner in the U.S.? Yes. Wow. Yeah, a quantifiable achievement. There you go, quantifiable. He's got that.

He's got the losing $10 million a day for two years. You got it. And he's the largest owner of bison, 50,000 head of bison. So put that on the list, too. Right, but he also owns a restaurant that serves bison. Yes. That's self-interest. He'll say, I reached the conclusion that to save the bison, we had to eat them.

And so what he has tried to do is create more of a market for bison so that other ranchers will use their properties to raise bison. And actually, the price has gone up since he has worked on that. Call Me Ted, The New York Times and Wall Street Journal bestseller. It's out in paperback. Co-author Bill Burke. Thanks so much for being here. Thank you. It was a pleasure.

As always, people on the program may have interests in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. I'm Chris Hill, and back in the studio with me are a trio of senior analysts, Seth Jason, James Early, and Shannon Zerman. Guys, it's that time again. Time to focus on the stocks that are on our radar. Seth, Jason, we'll start with you. Time to look at Microsoft.

Mr. Softy. I'm speaking in typo. Cash flow yield, free cash flow yield, 9%, 10% right now. This video game stuff isn't much of a needle mover yet, but I think it has great potential in the future. Windows 7 is doing okay, and the new Office suite is out. Always drives a lot of revenue. It just looks fairly cheap, and it is a company that has put out

so much cash flow over the years and will continue to do so that it's probably a great kind of, I don't know, geezer-type dividend play, which is the kind of thing everyone in this room loves. Yes. And the ticker? MSFT. James Early? Chris, you probably know what I think of ketchup, right?

Not much. It's toxic waste. It has added sugar, and if a product has added sugar, I'm generally not at that party. But Heinz is a nice company that I do like. HNZ is the ticker. Just to raise its dividends, 7.1%. Lots of cash flow here. A 59% return on equity, which is really nice.

An 11% valuation upside by my model. These products are selling really well overseas where it has a lot of non-ketchup offerings too. Is a 59% return on equity, that seems real. Is that way above average for a stock? Very, very nice. Well, yeah, that's the thing. You can either have a lot of return or very low equity to reach that fraction. But, hey, it's still good because we are equity owners, basically, as owners of the business.

Shannon Zimmerman? My stock this week is Apollo Group, tickers APOL. It's online educator for profit. University of Phoenix is the school that it's most closely associated with. Just looking at the valuation profile, it's been beaten down hard, traded at about 11 times earnings, where its five-year average is about 22, even cheaper in terms of its three-year cash flow. There is some headline risk surrounding the company right now,

including a class action suit that it thought it was getting off the hook of, but apparently it's not. So it may be beaten down for a reason, but I'm giving it a close look. Okay. Shannon Zimmerman, James Early, Seth Jason. Guys, thanks for being here. You're welcome. Thank you, Chris. Thanks also to our special guest this week, Bill Burke,

co-author of Call Me Ted, the best-selling biography of Ted Turner. If you missed any part of the show, you can find it at our website, MotleyFoolMoney.com. You can also get a copy of our free report, The Motley Fool's Top Stock for 2010. All that and much more at MotleyFoolMoney.com. Our engineer is Steve Broido. Our producer is Matt Greer.

I'm Chris Hill. Thanks for listening. We'll see you next week.