Motley Fool Hidden Gems Investing - Motley Fool Money: 12.16.2011

Episode Date: December 16, 2011

What was the most significant business story of 2011?  Who was the most influential business leader? What are the most overlooked stories of the year?  What were the most undervalued stocks of the year? On this week's show, our analysts tackle those questions and share some stocks on their radar. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, Jr.: Everybody needs money. That's why they call it money. 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 joining me in studio this week, for Motley Fool Hidden Gems, Seth Jason, for Motley Fool Income Investor, James Early, and for Million Dollar Portfolio, So, Ron Gross. Gentlemen, it is our year-end special. Welcome. Can you feel the love? Very new year.

It's not new year yet. Oh, sorry. We're going to look back at 2011, the highlights, the lowlights. We will talk stocks in a little bit. To heck with that. Stocks. Let's focus on the news and the companies that made up the business year of 2011. And, Ron, I'll just start with you. What is your business story of the year? There's been a number of interesting stories. I have two for the price of one for you. Okay.

I'm going to go with the downgrade of the U.S. credit rating by Standard & Poor's in conjunction with the debacle that we experienced with the debt ceiling, where our beloved Congress just couldn't get it done. Do you think it was political grandstanding on their behalf? Yeah, I think it was a bit of a political mess. Now, I think in reality there was not a lot of repercussions from this downgrade. I think people thought we were going, you know, falling off the edge of the abyss. It seems like everything kind of worked itself out. Very disappointing. Treasuries were okay.

Everything seems to have worked itself out. They weren't okay. They got cheaper. Right, exactly. But for that one week's time- More expensive. It was big. There was a lot of doom and gloom leading up to that.

There were sort of like end of day scenarios being talked about. It didn't make history. First time it's ever happened. You think we're going to get back up? Nah. S&P's got it in for us. You think they do? All right.

James, your business story of the year. I'm going to go boring, Chris. And you mentioned the pending EU collapse. It's been all over the news. But it is a big story because- I haven't heard about it. The European economists apparently didn't have it all figured out after all, and this could have ramifications not just for Europe, but for the future of socialism economically. So, earlier this year, I mean-

All of the Europeans. Take that, Europeans. We do have a few listeners over in Europe. Well, not those ones. Exactly. The ones who run the countries. But earlier in the year, I'm just flashing back to, I mean, this is a story that just rippled throughout the year, and the phrase, kicking the can down the road. I mean, if nothing else, it seems like we all got that prediction right. Because back in February, March, April, we were like, yeah, they're just going to keep kicking the can down the road.

How long is this road, I guess, is my question. How much longer can they do this? Can anybody here explain what they agreed to recently? I kind of have no idea. I mean, they agreed to something, right? But it doesn't make sense to anybody. But then Angela Merkel kind of unagreed right afterwards. Yeah, it's very cryptic.

Ultimately, what's going on in Europe, doesn't it all come down to Germany and France? Aren't they the two that are essentially in the driver's seat the whole time? They are, and they are taking the position that it's not their fault for the most part, that they loaned a bunch of money to people who couldn't pay it back and that they really shouldn't have to take a bath or actually their banks shouldn't have to take a bath. And I think that's a naive way of looking at it. When you make bad loans, you are on the hook just as the bad lenders or the bad borrowers are on the hook. So what's your business story of the year? I think it's the same thing. It's about bad debt and how it doesn't go away just because you say it should, which is what a lot of these efforts are about.

They're about attempts. Unless you're an American. Unless you're an American. They're about attempts to sort of pretend that things are better than they are in order to stop the runs on banks and in order to stop the fear cycle from ratcheting up borrowing prices so high that countries who need to borrow are unable to ever pay those obligations back. And it works to an extent. It works to small extents sometimes, but it doesn't always work and it isn't working in Europe. And oddly enough, it's working better in the U.S. because, as we mentioned, even despite that credit downgrade, the U.S. dollar is seen as a bit of a safe haven and U.S. treasuries are seen as a bit of a safe haven. And so people who have money to put somewhere and they want it to be safe, they're still buying treasuries and they've driven the price up.

The yields are still near record lows. To Ron's earlier point, obviously, there are always a lot of candidates for Story of the Year, whether you're talking about business or sports or anything else like that. One that's in the mix is the total meltdown that happened at MF Global. I should point out to our listeners, we actually have an in-depth series on the MF Global meltdown on fool.com. We had a whole team of people working on this. We had people going to congressional hearings. It's really a pretty robust body of work. So, anyone looking for more information on the MF Global Meltdown. You can check that out all weekend long at fool.com.

O' Do we have anyone punching Corzine in the head? Because it seems like he could use a dope slap. Unfortunately, he had some bodyguards with him. O' But we tried, it's good to know. We weren't the only ones who had that idea, I think. We always like to focus on things that maybe aren't getting a lot of attention from the financial media. Ron, what's your candidate for overlooked story of the year? Whenever we do the big macro on the show, I'm always ... O' Which is every week.

But no, we skip it sometimes. Almost every week. I'm always interested in the fact that we, and everyone reporting the news, never focuses on the real unemployment rate. It's always kind of this unemployment rate, which currently stands at 8.6%, that is discussed, but not the one that is at 15.6%, which counts the underemployed, as well as those people that have been fed up and have just stopped looking for work. And to me, it seems like that's a much more important number that we should be discussing,

and yet you really have to dig for it to find it. Don't you think that's one of those things that's never going to happen? Because I agree with you that it's a downer. Regardless of what party is controlling the White House, there's no

upside to say, you know what, we're going to switch. We're going to go over to the real rate of unemployment. To the one that's double the other one. And now all of a sudden it's double. Alright, well we'll have to lead the charge right here. Okay, James? Chris, I will go with the Japan-Fukushima incident in that it didn't derail nuclear power in the U.S. the way many people thought it would

and the way it actually did more in Europe. Nuclear power is dirt cheap. It is sort of a competitive advantage for us. We're 20% nuclear, which is not as big as many other industrialized nations, but it's still pretty big. And if you look at a stock like Exelon, which is sort of the granddaddy of nuclear power in the U.S., it's actually trading higher than it was before that incident. Meanwhile, the Germans, who are landlocked,

To do not have to worry about earthquakes and tsunamis busting their nuclear plants. It just decided a little bit before this, been in the wake of this, no more nukes here at all. And so they're just going to kill people slowly with coal emissions and natural gas. Well, you know, you've got to do it one way or the other, I suppose. Great move, Germany. Seth, your Overlook story of the year. We've talked about this a little, but I don't think we've talked about it as much as it should be. And it's that the Android market share gains and the smartphone war, really, they're sort of brushing the iPhone aside.

And that is interesting to me for a couple of reasons. One is that Apple is such a darling, you wouldn't imagine that it has any competition at all to listen to most of the press talk about it. The other is that Android still kind of sucks a little bit for a lot of people. It does a lot of things in a klutzy fashion. It's not really unified. It doesn't do things as simple as letting somebody on the phone accept a meeting invitation through Gmail. My father's phone won't do this. Apparently, Android phones in general don't do this.

It's really not all that great. You would think the folks at Google would be a little annoyed about that. Yeah, you'd think so, but not. And so it goes to show you, I mean, Android is still kicking butt market share-wise anyway, and it's all about the price, which most of these Android devices can be had for $0, and placement. They're just in sort of every phone ecosystem, and they're kind of close to an iPhone. They're like an iPhone clone, and people are willing to settle for that at the right price. What about the developers?

Because it seems like every year you've got Apple, you've got Microsoft, Google. They're all making pitches to the developers. What's the one that they favor? Is it Android? Is that part of the success? According to some polls I've seen, interest is highest for Android. And I think that's because of the market share gains and the fact that there aren't as many apps so far. So you have a better chance of standing out when, you know, I think the iPhone has 400,000 apps or something.

So chances are anything you want to do has already been done over there. But then it's also Windows Phone after that. You've got more of a captive audience at Windows Phone. And I saw some interesting numbers this week that the click-through rates for ads were much, much higher on the Windows Phone platform than on Android or on iPhone. like twice as high, which should be really good news for developers who want to support themselves. On a 1 through 10 scale, where do you peg iPhone versus Windows phone? On what? A 1 through 10 scale of just overall goodness.

I don't like the iPhone. I didn't get one for years for that reason. I don't like to have to press eight buttons to do what I'm doing. And I didn't get an Android phone because of the sort of the issues I was talking about, can't accept meeting invitations and other stuff. You have a Windows phone. When you talk about the click-through ad rates, that's not you, though. you're not clicking on ads, are you? I never click on any ads.

Who does click on ads? That's what I want to know. Apparently, a lot of people do. Yeah, could they write into us and tell us why they click on ads? Yeah, if you click on ads on Facebook or on your phone, tell us. Drop us an email, radio at fool.com. We talked earlier in the week on MarketFoolery, our daily podcast, about Time magazine. The person of the year was the protester, and the protester as embodied by the protest in the Middle East, and Europe, and Occupy Wall Street as well. I was saying to our producer Mac earlier today, the thing that stunned me was that apparently one of the finalists

for Person of the Year was Kate Middleton. Wow, that's a high bar. I would love to be in the room at Time Magazine when they're just like, who's the person who's advocating, no, it really should be Kate Middleton over SEAL Team 6 or the protesters. SEAL Team 6 is a good one, yeah. Well, I'm pretty sure that a lot of that argument is, what's going to sell more covers? You think? I think so.

So cynical. Yeah. Let's pivot off of that. I've been in those rooms before. I know how they operate. Let's pivot off of that and go to your business person of the year, Ron. Business person, 27-year-old Mark Zuckerberg, who, as we speak, is getting ready for the largest tech IPO in history.

It's a fascinating story, a $100 billion valuation, perhaps. He's been in the news for years. He was Time Magazine's Person of the Year last year. But he has not fallen from grace, and the company just continues to grow. But he's a jerk, isn't he, though? I have never met the man. What do you think is the potential for a company like that after it goes public? Because, as I've said before, I have to believe that you've got other companies that are really looking forward to Facebook being public,

having to go through the same level of transparency that they have to go through as public companies. What's the potential for Facebook? The numbers, I think, look pretty amazing. 800 million users, I think, or something like that, and obviously very high revenue, profitable. The 100 million is the issue. I think people will be gunning for them to see that valuation come down. 100 billion, I think. Is he the next Steve Jobs to you?

Gosh, I think no. I don't think so, but I think, I mean, you've got to give the guy his due. I mean, 27 years old, $100 billion company. It's fascinating. Is James the next Steve Jobs to you? He's very close. I'd settle for being one of those twins who are suing him. Winklevoss.

Winklevoss, yes. The Winklevoss. Very attractive. James, you're person of the year? Chris, I'm going to go with Fortune Magazine's John Watson, CEO. Fortune Magazine's number three person of the year, business person. This is the CEO of Chevron as of 2010. This is one of my beloved oil companies.

And John apparently listens to our show because he has really been getting into this deep water drilling thing that I have been getting into, too, for such a long time. You're into it? I'm into it. We've used up all the heavy to get to, I mean, the easy light oil, and we have to go to the deep sludge down below. Plus, when you foul a beach, James doesn't care. When you say you're into it, you have like a shovel? Not that into it, but conceptually, I'm into it, yes. John Watson has been at Chevron for somewhere north of 30 years, just sort of broadening beyond that. Is that type of longevity a plus to you, or is it immaterial when you're looking at an investment?

Well, I mean, obviously, at some point, longevity becomes a liability. But, yeah, I like people who have either been with a company or ideally been in the industry for a long time. Yeah, certainly. Seth, you're Business Person of the Year. I'm going to go with Mr. Bezos at Amazon. Really? Yeah, even though the stock I read the other day had lost its gains due to worries about profitability, I think the company he runs just continues to do incredible things.

I mean, the launch of the Kindle Fire, which I thought was just a laughable notion and is now seen as a viable alternative to the iPad, you know, coming out of the Kindle itself, which entered into a space where there was already hardware and there was already software for selling electronic books. Everyone laughed at them. And they just continue to get it done. They continue to take a bigger share of sales. And it's a weird place because you look at the website, it's not all that slick and futuristic looking. But he just continues to drive customer loyalty in interesting ways. I found one the other day. I went to return something, and it was kind of a cheap item.

And I'm on Amazon Prime, and I buy a lot of stuff from them. And I clicked through to get the return, and they said, you know what? Don't even bother to send it back. We'll just refund your money. You were talking about that the other day, the customer service people. It's unbelievable. We had a problem with the Kindle. And not only did they send us a new Kindle, but they were concerned that perhaps we didn't have a good enough cover for it.

And they sent us one just for free. Oh, very nice. Very nice of them. I don't know if that makes it a great stock. Maybe that makes it a terrible stock. Well, that was another thing you touched on earlier, Ron. What is it, 102 times earnings or something like that? It's up there.

But it makes it a great business to be a fan of anyway. But a great business. And he's a great CEO. He's no Reggie Middleton, but he's pretty good. He's still good. Who among us is? Coming up, we will dig into the stocks of 2011. So, stay right here. You're listening to Motley Fool Money.

Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James Early, and Ron Gross. It is our year-end special, guys. Let's focus on the stocks of 2011. Overvalued stock of the year. Just quickly, Ron. Could have picked any social media stock, really. I went with LinkedIn, 113 times cash cashflow. It's a $6 billion company, 14 times revenue. Microsoft is two times revenue. That's got to be pretty offensive to a value guy like you. Yeah, exactly. Bank of America throughout most of the year. Not crazy overvalued, but I have no idea what's

going on with the company, therefore I had to create overvalued. They run sideways with a very good handoff from the Fed, so I don't like that. Seth, what's your overvalued stock for 2011? Lot to pick from. I'm going to go with Green Mountain Coffee Roasters. This is a stock that currently, well, it got hammered by the market. It still trades for 34 times earnings or something like that. It was over $100 a share at one point, and then started to be some discussion of perhaps crummy bookkeeping, miss a little on earnings here or there, and all of a sudden, bang, the bottom falls out. This is what happens when a popular stock suddenly becomes less popular and starts

to scare people. All right, let's move to undervalued stock of the year. Ron, what do you I got Microsoft. Keep going back to it. $56 million in cash, $8 billion in cash flow in the latest quarter alone, six times EBITDA. Why aren't you carrying a Windows phone? StocksChief. I'm going to ask this, because I haven't asked this in a while. As a long-time Microsoft shareholder ... I'm sorry, all right?

No, no. Is, or should, Steve Ballmer, the CEO, step down in 2012? He's been there a long time. He's been there more than a decade, and I'm a shareholder who's interested in seeing a change at the top. What do you got for me? Give me some good news. I don't think you'll see it. Really? Should he? Should he? Should he? I don't think it helps the stock one way or the other. Really?

Yeah, I think the company's doing what it needs to do. The stock's going to take care of itself. Okay, because the stock- The reason the stock hasn't gone up is not because the company hasn't done well. The reason is that the multiple has gotten sort of insanely low. I mean, Microsoft makes a ton more money, sells a lot more product than it did five, 10 years ago. The growth rates have been great. The multiple that investors have been willing to pay is just shrinking. I was just hoping for a little good news. It's more fun to blame the CEO, though.

Take your 3% dividend and just keep quiet. Stop whining. Okay, I will. James, what do you got? Chris, if Time Magazine can name the protester as person of the year, I'm going to name the consumer products company as my undervalued stock. I'm thinking more specifically Procter & Gamble, Unilever. These are companies that have not really risen with the market quite as much,

but they're very solid. They're very consistent dividend payers, lots of cash flow. And I just think their time will come. Okay. Seth, what do you got? SuperValue, to me, is something of a mystery. It's a company that nobody likes because it's in the grocery biz and it's not Whole Foods. And if you're not Whole Foods and you're in the grocery business, you must be dying. But the company, even though it has a very high debt load, it has no problem paying its interest and paying that debt down ahead of time. No problem producing a lot of cash flow to pay out as dividends, as well as to fix up the stores. They've got good leadership, I think, in place. A lot of ex-Walmart types who seem to be turning

things around, yet the market just consistently ignores it. So I think you have to look at it again. Ex-Walmart type just sounds sexy somehow. I mean, he's an ex-Walmart type. Where is super value concentrated geographically? Because are there any in this area? This is the whole problem. They're all over the country. They went on this giant spending spree years ago, and it's the hangover from that that is the reason the stock was just eventually killed. So, they are all over the country. Centered originally, the company's based in Minnesota, centered out there. But out here, you'll find Shopper, for instance, Shopper Food Warehouse. Out here, that's a SuperValue barkeep.

That's my favorite store to shop at, actually. They've got different brands underneath the SuperValue writ large. Several. Thank you, guys. We'll bring you back later for your radar stocks for 2011. Coming up next, Nell Minow joins me in studio to talk about the latest news from Warren Buffett and the must-see movies this holiday season. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill.

Long-time listeners will know that in the nearly two years we've been doing this show, We've had a lot of great guests, but there is one that we have had on more than the rest, and with good reason. Nell Minow is with Governance Metrics International, which rates corporate boards of directors. She is also the film critic known as the movie mom. It is her ninth appearance, but it is her first in-studio appearance. Nell, welcome. Thank you very much. We finally got you in studio.

Next time will be 3D. Exactly, exactly. Yeah, because 3D is huge. Definitely want to talk movies and boards of directors. But I want to talk about a couple of things that have come up in the news this week. And let's start with Time magazine. Time named its person of the year, and Time's person of the year is the protester. And that includes, obviously, protests in the Middle East and Europe, but also the Occupy Wall Street movement here in the U.S.

You follow Wall Street. What do you think about the Occupy Wall Street movement in general? I made a point of going to visit Occupy Wall Street twice. And I've also spent some time with the D.C. outpost. And I think that Occupy Wall Street has already accomplished their number one goal. They have changed the vocabulary of the conversation. When John Huntsman referred to Mitt Romney as owned by Wall Street, to me, that was the ultimate success of Occupy Wall Street. They have now made Wall Street a pejorative in our political dialogue, and that was what they hoped to do.

Their other agenda, I think, is an important but a complicated one. And I hope we will make some progress on that. And that is the pernicious effect of campaign finance corruption. And so I hope that will happen. But in the meantime, the number of uses of terms like income disparity has skyrocketed in the media and on the news. And I think, therefore, they've accomplished what they wanted. The movement has taken a little bit of criticism in terms of not really having a clearly defined message. What do you think the message should be? Listen, I think it is genius of them not to have a clearly defined message because the more clearly you define your message, the more our system will splinter you into a kind of petty discussion of topics that are just distracting. So the fact that they have identified a major source of injustice and are opening up a conversation about how to address it, I think, was actually very canny on their part and is part of why they've been so successful. Warren Buffett was in the news this week. His son, Howard, has been named as a non-executive chairman at Berkshire Hathaway.

Buffett said that his son is going to serve as a guardian of the company's values. It's an unpaid position. He is a farmer. Howard Buffett is. What do you think of this arrangement? I thought it was a very, very wise step. There's been a lot of focus on who is going to succeed Buffett in his job as basically stock picker, as an investor, and not so much focus on what clearly is important to him, which is who is going to succeed him in his job as tone at the top. As we all know, he had a bit of a kerfuffle earlier this year when one of his designated lieutenants got into trouble. And I thought he handled it very well.

And I think what he said with this appointment was the same thing he was saying with that, which is that our number one goal here is the preservation of our values. And we mean that in the ethical sense as well as in the financial sense. And Howard Buffett is not just a farmer. He is a philanthropist who has shown himself to be very thoughtful. And I think that's a very good step. You've had the chance to sit down with Warren Buffett and interview him. What makes the guy tick?

What do you think is the secret of his success? Because as track records go, he's got an incredibly long track record of success. Yeah, I think he's very straightforward about what his secret of success is. His secret of success is not being distracted by things that distract other people. And, you know, he lives in a modest house. He drives a modest car. I've been in his modest car, believe me. What kind of driver is Warren?

He's a very careful driver. He's a very good driver. But when I was there, the couple of times that I visited him, the traffic in Omaha was not too challenging. It wasn't like driving around Midtown Manhattan. I was going to say, that probably helps a little. But I think he specifically likes to stay in Omaha to keep him away from the kind of distracting gossip that runs so much in Wall Street. He gets up every day. He looks very dispassionately at the numbers.

He makes his decision on that basis, and then he goes about his business. And he doesn't let anybody's ego get in the way. And I think that's why he's done so well over such a long time. Your organization, GMI, has been praised for its ability to assess risk. With that in mind, what are a couple of companies that are high in risk that might not appear that way? I know that as an investor myself, there are certain companies that I just sort of look at and think, well, that seems like sort of a safe sort of plodding along company. But I'm guessing with all the public companies in the world that there are, that there are some that are just, as we see around

here, lurking gators. Just below the surface is a tremendous amount of risk. Yeah, we came up with a risk list just a little while ago and tried to give some examples of some of the things that we look at that worry us about companies. And I think what I would say is that, as I've mentioned, And excessive compensation, compensation with no relationship to performance is probably my favorite indicator. But we're looking much more robustly at accounting than we used to. And so I guess I think I'll answer your question by saying one sector that we're concerned about right now is the for-profit universities. We think that there are a lot of accounting dodges that they use. And we also think that the government is going to crack down on the extensive federal subsidies that they have been benefiting from.

They are also very highly paid. They're much more highly paid than their equivalents in the nonprofit university system for very, very, very poor returns by comparison. We've talked accounting. We've talked executive compensation. I'm curious, though, is there a risk factor that is, in some ways, for lack of a better term, a red herring? That's something that either institutional investors or individual investors seem to get agitated about and focus on maybe too much. And it's like, you know what? That's not nearly as big a deal as executive compensation.

I think some of the conventional indicators, like earnings per share, are gamed so thoroughly by companies that they're really not very meaningful anymore. You're listening to Motley Fool Money, talking with Nell Minow from Governance Metrics International, also the movie mom. A couple of questions about the movie business. We were talking earlier about Netflix, which has certainly stumbled in the second half of 2011. But I think one of the positive announcements the company has made recently that has resonated with some of their shareholders is that Netflix is going to be producing some original content. They signed a deal to bring back Arrested Development. Do you think that's really the future for a company

like Netflix? Is it original content as opposed to licensing movies from other studios? Yes, I do think that that is exactly where they need to go. I think whoever owns the content is going to take home the ball at the end of the game from now on. Because with the delivery system's in place now is people can get the content streamed to their iPads or their televisions directly. Really, the studios are going to go back to controlling that business. There's no reason for them to have a middleman anymore. They control not only the movie, but they control all the goodies and the extras, and they can sell it to you in parts. You can buy a movie with the director commentary or with the interviews or without or with the backstage stuff

or without, they're going to be able to unbundle that stuff and sell it to you very, very efficiently. And so I think whoever owns the content is going to own the game from now on. Let's move on to movies themselves. The end of the year, every year, you get those movies that are released right around Christmas or that last week just so that they can qualify for the Oscars. I think this year it's movies like The Descendants, George Clooney's movie, Iron Lady, about Margaret Thatcher, Tinker Tailor, Soldier Spy. What are the ones we should be spending our money on? The one that everybody should go to is probably We Bought a Zoo. It's great to see Cameron Crowe back behind the camera. And it is

just a very nice, good old-fashioned family movie based on a true story. And so I like that one a lot. Only opening in LA and New York for awards consideration, but coming out in January is extremely loud and incredibly close uh and with tom hanks and sandra bullock uh about the little boy whose father's killed in 9-11 it is excellent i thought it was great wonderful score by alexander duple does plot and it was uh made by the guy who did billy elliott i just thought really really really well done so i like that one a lot i was a little disappointed by um some of the big movies that are opening up, like The War Horse, which I did not think was as good as you usually expect from Spielberg. And also Iron Lady, obviously brilliant performance by Meryl Streep. Brilliant

performance by Jim Broadbent as Margaret Thatcher's husband. But the movie suffers from the same syndrome as J. Edgar. And I'm not just referring to the prosthetic makeup. I'm referring to the very non-linear storytelling, not knowing what really happened and what is really imagined and not substantive enough, not really dealing with some of the policy issues. Is there a business movie for 2011 that you would recommend to folks? I highly recommend both Inform and Content, Margin Call. I think it's an excellent film, very, very interesting. And we talked about some of the distribution issues. This one is a rare film that was really ahead of the industry and being available in video on demand as it was

released in theaters. So you can get it right now off of iTunes. Brilliant performances by everybody inspired by the fall of Lehman. But it's got Jeremy Irons, Demi Moore, Paul Bettany, absolutely Zachary Quinto, very well done. Kevin Spacey. But also, even though it was inspired by Lehman, It is general enough that the dynamics in it apply not just to the financial world, but really any large organization. So I thought it was extremely well done, brilliantly acted, very powerful ending. We always like the hidden gems here at The Motley Fool. So one movie that's not really on anybody's radar that we should find a way to see. A movie that was really overlooked this year is called 50-50, and that's because it's the true story of a guy who had cancer.

but he wrote the movie, so we know that he came out of it. And it stars Seth Rogen, who really is in real life the best friend of the guy, and so he's kind of playing himself. So I think people were afraid of it because it has cancer in it, but it is a really smart, really good, very well-done movie with the wonderful Anna Kendricks from Up in the Air. And then I just also loved Win-Win with Paul Giamatti earlier this year, a really smart story about a lawyer struggling with a bunch of stuff.

Last year, you confessed to us that one of your guilty pleasures was the A-team. Yes. So I have to ask, what is Nell Minow's guilty pleasure movie of 2011? Slightly less guilty this year because Real Steel, unquestionably. Real Steel. Too much fun. This is the movie with the 10-foot fighting robots. They're like 20-foot fighting robots.

The boxing robots. The boxing robots. The Rock'em Sock'em Robots movie is a hoot and a half. It is too much fun. And then also, not at all a guilty pleasure, but a really solid thriller, is Source Code, directed by David Bowie's son, Duncan Jones, who's just terrific, really smart, sharp movie with Jake Gyllenhaal. Very, very well done. You're listening to Motley Fool Money, talking with Nell Minow, the movie mom. We will wrap up with a round of Buy, Sell, or Hold.

Award season is getting started in the movie business. Buy, Sell, or Hold, an Oscar nomination for Brad Pitt for his performance in Moneyball. I voted for him as my best male performance of the year. I thought he was absolutely terrific in it. People don't give him enough credit, I think, as an actor. And in my new book about movies, I have an essay about him. But if you look over the course of all of his roles, he has a unique ability to take his movie star charisma and deploy it in a calibrated way. He can decide exactly how much he wants to use for any given performance. And in something like Ocean's Eleven, it's up full scale. And in this one, he toned it down a little bit, and he made that character very real. And the scenes between that character and his daughter I thought were great. There are rumors that this company will be IPO-ing in the first half of 2012.

Buy, sell, or hold the business of Facebook? I am a strong sell on Facebook. I'm very bearish on Facebook. I don't think that there are that many barriers to entry. And I think that there are so many things that they do wrong that it would not be hard to come in and take it away from them. And finally, it is your ninth time on our show. Early next year, it'll be his ninth time on this particular show. Buy, Sell, or Hold, Billy Crystal hosting the Oscars in 2012.

Buy, buy, buy. Really? Yeah, absolutely. I'm a hold. He's the best host that the Oscars has ever had. and boy, do they need it because that show is so moribund. So I hope he will bring it into the 21st century

because it's been languishing for a long time. See, I feel about the Oscars broadcast a little bit the way I think you feel about a company like HP where it's like it doesn't matter at the company who the CEO is. If you don't fix the board, you're not fixing the company.

I look at the Oscar telecast and go, you could get anybody as the host, But until you get an executive producer who says, we're going to cut a third of the awards, we're going to make sure it's like the Golden Globes, we're in and out in two hours or two and a half or something like that, the deck is a little bit stacked against you as a host. I totally agree. But the problem is they're trying to serve three goals at the same time, and the television audience is the last of the goals. So they're trying to serve the Motion Picture Academy, number one, and the people in the room, number two. So a lot of what happens in the show is directed at the people in the room. Billy Crystal is more important than the producer because he'll tell the producer what to do.

He understands how to make the show work. So keep that in mind, folks. When you're watching the Oscars next year, you are dead last in the eyes of the executive producers. Nell Minow from Governance Metrics International and the Movie Mom, thanks as always for being here. A pleasure. Coming up, we'll give you an inside look at the stocks that are on our radar. Hey, drop us an email, radioatfool.com. Give us your best stock for 2011, your worst stock.

Hey, you can even give us your best and worst movies. That's radioatfool.com. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill, and back in the studio with me, Seth Jason, James Early, and Ron Gross. Guys, this is the part of the show where we normally do the stocks that are on our radar, but we're going to make it the stocks for 2011. But

before we do that, I'm just going to say, you all missed the boat earlier in the show when we talked about the story of the year. The business story of the year was talked about on this show back in June when Kraft had its 12th billion dollar brand in Tang. That's the business story of the year because that's the story that our listeners responded to the most.

We got Tang sent to us from all over the world. We actually have a little bit of lemon pepper Tang. We've been drinking this. I've not tried it yet. One of our colleagues picked this up on a recent trip to the Middle East. This was flagged by one of our listeners, Jacqueline Ray in Dubai. And so, cheers.

Cheers. Nice bouquet. Lemony pepper. I don't see much pepper. I can use more pepper. It's nice, and it certainly tastes better than the tuna tang. I think it tastes good. Do they have any with hot sauce? I would be up for that. We'll see what we can do. Chili tang. All right, two minutes left. Ron, your stock for 2011.

I'm going to give you the most undervalued stock that I know, and it's a company I've mentioned before. It's LS Starrett, ticker symbol SCX, a microcap toolmaker. Three times cash flow, 0.6 times its tangible book value. Small company, $250 million in revenue, but But it is profitable, and it is the most undervalued company that I know of. Very interesting. James Shirley, you run- Athol, Massachusetts. Yes, sir.

That makes me proud. You run Income Investor. What is your dividend stock? I'm going with an Income Investor stock. It is McDonald's. The ticker is MCD, an unhealthy train wreck of a product offering, from my standpoint as an ecotruck. Really?

How do you feel about it? However, it is firing on all cylinders, Ron. Do you have to pay me when you use that? I should. I should. 52-week high. company is is cleaning house so what's your hidden gem for 2011 i i think i prepared the wrong one no i have a dark horse candidate okay and uh this is a company that has stumbled but has still seems

to have a fairly strong brand and i'm not sure they can pull it off but i'm willing to give them a chance and that is logitech when i first picked them in hidden gems they were still doing pretty well and it was sort of a quality company at a reasonable price then they went big into this Google TV thing. And Google TV is a joke. And I thought it was at the time, but they spent way too much money on it. Google left them hanging with a horrible product. They had to write off all this stuff. In the meantime, they completely missed out on this whole tablet iPad thing. I heard of that. Yeah. So they're trying to catch up there. They generally have pretty good product engineering.

They've got somebody new in charge and sort of a return of the guy who really knows how to keep the company running. So I think they can come back and do well from here. The ticker is LOGI. Okay. Seth Jason, James Early, Ron Gross. Guys, thanks for being here for our year-in-review special. Thanks to our guest this week, Nell Minow. For more coverage, you can check out video highlights at fool-tv.com. That's it for this edition of Motley Fool Money. Our engineer is Steve Broido, our producer is Mac Greer. I'm Chris Hill, thanks for listening, and we'll see you next week.