Motley Fool Money - Apple vs. Uncle Sam

Episode Date: February 19, 2016

Apple squares off with the FBI. Investors bid Priceline higher. Wal-Mart stumbles. And Boston Beer falls flat. Our analysts discuss those stories and share three stocks on their radar. Plus, hedge fund manager Jeff Gramm shares some insights from his new book, Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism. Learn more about your ad choices. Visit megaphone.fm/adchoices

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in the app, which makes it so much easier to stay on track. And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit turbotax.com to get matched with an expert today, only available with TurboTax full service experts. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio show. I'm Chris Hill. Joining me in studio this week from Million Dollar portfolio, Jason Moser and Matt Argusinger. And from Motley Fool Deep Value, Ron Gross. Good to see you, as always, gentlemen.

We've got the latest on tech, travel, insurance, and more. We will take a closer look at the rise of activist shareholders. And as always, we'll We'll give an inside look at the stocks on our radar. But we begin this week with the growing battle between Apple and the federal government. At the request of the FBI, a federal judge has ordered Apple to provide new software to help the FBI unlock the encrypted iPhone of one of the killers in the recent shootings in San Bernardino, California. CEO Tim Cook says the FBI's request is unprecedented and wrote an open letter to customers saying

that Apple's opposition is not something the company takes lightly, but But they do believe this is an overreach by the U.S. government. And Ron Gross, I'll just start with you. This is really tough because when you step back and look at it, both the FBI and Apple are doing what they are supposed to be doing. Yeah, I agree. It's very tough. And I do see both sides of this. I don't see it as being cut and dry.

And I realize it's a slippery slope from Apple's perspective that they really don't want to go down. I do believe, I think I believe, that there should be a way for Apple to comply in this one particular case without putting all of our civil liberties at risk. That might be naive. Again, the slippery slope might come into play here, but I think they should be able to take care of that. And I actually think the fact that we're operating under a law written in 1789, the All Writs Act here, may mean that it's time to kind of come up with some new laws to, to address the world we live in now. There weren't smartphones passing there. You got a pivot.

And probably a constitutional lawyer or somebody like that would say the same privacy rules apply whether it's through technology or carrier pigeon. But I still think it's probably time to update our laws. Yeah, I mean, I agree. I think Ron is spot on. This is a very difficult one to sit here in noodle, and both parties are probably right to some degree. I do think Apple, there's no question to me that Tim Cook is absolutely taking the right

step here in regard to the business itself. I mean, Apple, beyond the fact that they make most of their money from their iPhones, protecting that brand is going to be paramount here. And really getting out there and taking a stance in what they really believe in and what really matters to them. And what Tim Cook has done is, he's gotten out there. He said, listen, above all, we care about our customers. Our customers come first. Obviously, we care about national security interests like that. However, we need to go through the proper legal channels here. And I think, you know, like Ron said, I mean, each party involved here, they're going to do what they need to do. And I think that as long as they allow this process to play out, it will certainly be political. But as long as they allow it to play out via the judicial system, which is most certainly will go, then at least if Apple is required to do something here by law, you can't go back on the message, the stance that they've already taken. And I think that customers, you know, believers in Apple, Apple enthusiasts, investors, I think they'll all remember that. And Apple's not out in front by themselves, Maddie.

I mean, yes, they're out in front, but you look at companies like Google and Facebook, and they are absolutely backing Apple on this one. Right. And I understand that. I mean, we're dealing with companies that have tremendous amount of our own personal data, either on servers or on phones. And so there's the idea that if I'm a customer of these companies, I want to have some security in what I'm doing online or where I'm going. I mean, people can hack my phone.

I have nothing on my phone worth a sticker. But I wonder to Ron's point about, coming up with a solution. I wonder if it comes down to really ownership here. I mean, I have ownership of my phone. So I don't want anyone to hack my phone. I wouldn't mind if they did. But in this case, we do have the federal government is in possession of this phone. And so in ways, they're asking, hey, Apple, can you help us hack our own phone? And I wonder if there's just a way, a legal way to make that happen without sort of jeopardizing the whole everyone else's phones or everyone else who owns their own personal data.

If this, in fact, goes all the way to the Supreme Court, we're talking about a process that will take years, not months or weeks. And so a lot remains to be played out here. But let's bring it back to the business. What, if anything, do you think this will do to either iPhone sales? Because certainly the unspoken advertisement here is that iPhone's security is top-notch. What, if anything, does this do to Apple's brand? I don't think it has much effect at all, because if Apple is forced to comply, that means theoretically all cell phone companies would be forced to comply, and they would all be in the same boat. I know from my perspective, either way this goes, it won't

make me give up my iPhone. It won't make me not get the new one when it comes out. I'm going to stick with it regardless. Yeah. I mean, I think that's right. Apple, as we know, is a big part of the smartphone market here, domestically speaking. But when we look at it globally speaking, I mean, Android devices have 85 percent of the market share out there. And as a matter of fact, they're up share. So, Apple actually is under pressure here. Again, I think that all goes back to the importance here and how Tim Cook reacted from the very beginning here. It would have been easy to jump the gun and say, oh, in the interest of national security, we're going to do this.

Instead, cooler heads prevailed. I think they're playing this out the right way. And I think that regardless of what happens here down the line, you know, it's going to be something that ultimately is out of their control and the brand will have been protected. And at only 10 times earnings, I think it's a really nice pie right now. All right, let's get some of the week's earnings reports. Walmart's fourth quarter profits came in higher than expected, but revenue was light. And the stock taking a hit this week, Maddie. Yes. Revenue was up just 2.2%, which, you know, it's not exactly, they're not exactly as wrong would say firing on all cylinders at Walmart. Really, the story here for me is about the

e-commerce sales, you know, up just 8% in the fourth quarter. And if you look at overall e-commerce sales in the holiday quarter, they were 14%. So Walmart's really falling behind. We know what Amazon did in the latest quarter, which is up 24% on our North American sales. So, for me, it's about Walmart being many days late, and unfortunately, many, many billions dollars are short when it comes to their e-commerce strategy. And I just don't see them being so far behind the game now that they're ever going to be able to catch up. And then you have, of course, on the larger business, stores are closing. The international expansion is not working out in a lot of areas as planned.

So there's just not a lot to get excited about Walmart. And, you know, the stock is admittedly cheap. They raise their dividend again. Still, I don't see them being a market-beater long-term. They have been upfront about the fact that they, They are investing in their employees with higher wages, and they are investing in their e-commerce platform. But to your point, you look at the trend over the last two years of how e-commerce growth has

just methodically flowing. And they've got to turn that around by the end of this year. Absolutely. I mean, if you look at their 8 percent growth in the last quarter, they started the year-over-year growth around 16 percent. So that's a sharp deceleration. And so if that trend continues, you have to wonder, really, are they ever going to gain meaningful market share in e-commerce?

It doesn't sound like it. week for the Priceline group. Fourth quarter profits came in higher than expected, and they issued some upbeat guidance for the concurrent quarter. Shares up more than 17 percent this week. That's a big move for a stock like that. Hey, I mean, Airbnb is getting all of the attention here lately, but I think this release from Priceline was their shot across the bow. They're saying, hey, we're doing just fine over here. And all of the numbers lead us to believe that is the case. Gross profit was up 23 percent, excluding currency effects. When we look at room nights booked, which is a good indicator

of demand, globally, room nights booked in the quarter of up 27 percent of the same quarter last year. And we know that booking.com is the big growth engine behind here. They have more than 850,000 hotels underneath their umbrella now. Just recently signed up with TripAdvisor to start bringing more of that inventory to their platform. And they were talking about some good brand exposure there as well. So it's interesting. We've seen booking.com and price line really start focusing more and more on the business customer, which represents about 20% of their business now. And I think that's important because I think that's a demographic that is less likely to go the route of an Airbnb.

Because like it or not, I think Airbnb is here to stay. Airbnb is doing very well, and I think they're doing very well for a reason, particularly as younger generations come up in this sort of sharing economy, it presents a nice, attractive alternative. But I think it's also going to make hotel operators step up their game in order to keep their business going. I think the consumers ultimately win here. And I think that price line and booking.com are in a wonderful spot as being the go-to resource

where all of these hotels want to list their inventory. This is a stock that trades. One share goes for more than $1,250. How much of the interest in this stock has to do with the fact that it does have that high price tag? And so, for a lot of investors, they're just going to stay away. In a weird way, it sort of artificially depresses demand for the stock. It absolutely could. I mean, it is going to keep a number of investors from even considering it because we get that question all the time, whether it's a stock split or not. You've got to remember, it's the same size pizza. It's just the amount of pieces, right? It's the number of pieces it's cut into.

And I wouldn't be surprised at some point to see price lines split the stock, given where it's gotten. But by the same token, this is a management team that thinks very long term. They would rather have investors in the company versus traders. You see other businesses like Markell, Berkshire Hathaway to a degree play that same game. And so I think they're okay just growing that long sort of patient shareholder base. Shares of NVIDIA up more than 10% on Thursday after the graphics chipmaker showed some nice profit and revenue growth in the fourth quarter. And that really puts the bow on a good 2015 for them. Very good 2015.

Yeah, they beat expectations really across the board. You know, Nvidia's lucky in the sense that they're really on the forefront of some very exciting trends. If you look at, you know, Nvidia is famous for its graphics chips. Virtual reality, we know, is there's a lot of excitement there. And you can imagine that Nvidia's chips are going to be sort of powering a lot of the high-end video rendering that's happening in virtual reality. And, of course, in the automotive side, you know, autonomous driving, they're in the Tesla Model S and Tesla Model X. They power the panels and a lot of the video displays. but they're also driving the technology towards autonomous driving. Revenue in that segment was up 68% year over year.

So I'm not generally a fan of chip companies. I think they play on a very poor part of the value chain. But now and then you'll find a company like Nvidia, which is really just positioned in all the right places. And I think Nvidia is one that is. We have seen chip companies, smaller players, who are heavily levered to one single company. Apple comes to mind. Is Nvidia pretty well diversified in terms of who they're working with? They are well diversified. I mean, so they, you know, you do have certain companies like Dell, for example, which has been a big customer in the past, but really they've diversified their business enough.

I mean, between supercomputers, autonomous driving, internet, things, which they have applications for, of course, video gaming. They're in a lot of different places, so we're very well diversified. Coming up, we're talking retail, beer, and the sexy world of farm equipment. Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser, Matt Argusinger, and Ron Gross.

Not a happy holiday for J.W. Nordstrom. Fourth quarter sales up just 4%. Had to do a lot of discounting, Ron. And that is not something. I don't think that's the first thing people think about when they think about Nordstrom. No, I know. And it is a tough business, as you say, comp sales just up 1%. Very lackluster performance. The strength continues to come from their online business. I guess not shockingly. That's where everyone's strength seems to be coming from. that business was up 11% for the quarter. And their discount stores, not the business, not the main stores that did some discounting, but their actual discount stores, rack and Hotlook, up 12%. So those businesses were quite strong. The bigger stores, not so much. 2016 guidance is weak. It looks like department stars across the board are going to continue

to struggle. Gas is cheap, but people don't seem to want to be headed to the malls to buy stuff. So that'll be a challenge for companies like Nordstrom. Historically, is Nordstrom good with inventory management? Because it seems like at least part of the story with this holiday quarter was struggling with inventory. I think typically they're quite strong with it. Every now and then there's a stumble. Retail is a tough, tough business. Sometimes you just have to put things on promotion to blow that inventory out. You really have no choice. But historically, yes, they're quite strong. Is it hot or is it hot? Hot. Hot. I think it's both. Is it interchangeable? I mean, I'm no

Fashionista. Don't get me wrong. I'm just... Don't sell yourself short, man. I think it's French, so it depends if you're saying it with a French accent or American accent. Yeah, let's not go the French accent, route. Boston beer companies' fourth quarter profits came in higher than expected, but it was also the fourth quarter in a row that overall sales fell and the stock taking a hit this week, Jason. Chris, these earnings are making me thirsty. Oh, I... You know, to me, okay, I think the way to look at Boston beer, I think this is a very good comparable to this is when we look at restaurants. You know, when we look at restaurants and we focus on those comp numbers, with Boston Beer, their comp numbers are depletions. And

so we see that metric released quarter in and quarter at. And that's just sales from the distributors to the retailers. And so for the longest time, the growth story has really gained traction and depletions have continued to do very well. That's sort of starting to edge the other way now. And, you know, we talk about some businesses being victims of their own success. It could be argued that to a degree here. They are also victims of a far more competitive craft beer industry than was even five years ago. With that said, I still think there is a lot of reason to be optimistic about the business, about where they're going. They'll continue to bring new brands and new concepts into their portfolio of offerings.

They are coming up on lapping a very tough comp with the cider category, which traditionally has done very well for them as well. So they're not sitting still. They're bringing new products to market. I think the Nitro offering that they just brought was really pretty interesting. I've tried the Nitro coffee staff. Can't recommend it highly enough, guys. Thanks for doing that research. The Rebel Grapefruit IPA, another good one. Not bad at all. So all, this is a very, very high-quality business. And I think it's a testament really to the price that we paid for it when we added it to MDP. We got it at a great price. Jason definitely jumped at the research opportunity for Boston.

I supported it. I applauded it. Very enthusiastic about the five-year outlook for this company. Way to go the extra mile. Specialty insurer Markell, not the flashiest company in the world, but fourth quarter results were solid once again and capping another strong year for them. Definitely a strong year. It's been a tough year to be an insurance company. It's been a tough several years, actually.

You've got very competitive pricing, low interest rates. Yeah, but Markele turned in a good year. They're not growing premiums in all their insurance segments, and that's partly because they're pulling back on a lot of their lines, a lot of property and casualty lines that they've just become on profitable. And we like Markell doing that because it shows that they're disciplined. And so if you look at their combined ratio, which is a measure of profitability in the insurance business, anything below 100% means insurance companies profitable. And Markell turned in a ratio of

89% in 2015. That's down from 96% in 2014. So that's great. So definitely making money on the insurance side. On the investment side, not so great of a year. The equity portfolio was down 2.9%. But that was offset by gains on the fixed income side. So overall, pretty flat there. Really exciting, though, is the Markle Ventures business, which is, if I think of it's kind of like Berkshire Hathaway's portfolio businesses, Markell's got a private equity sleeve of their business where they buy majority stakes for whole positions in small businesses. Markle Ventures revenue hit $1 billion for the first time in 2015, and pre-tax profits rising to $90 million. So we like to call Markell the baby Berkshire, and I think that's very apt in this case.

They had a great year, very disciplined, solid investing track record. And this Markle Ventures business is really taking off. Yeah, you know, we talked about Berkshire Hathaway and Kinder Morgan. I thought it was also interesting I saw in Markell's 13F in their investment portfolio. They just added shares of Amazon, Alphabet, and Facebook. So it looks like Tom Gainer is channeling his inner fool. Yeah, he never shy. He doesn't shy away from those technology names that Buffett does.

And I think I have to admit, essentially with Amazon, which we recently added to, I think that's a good buy. Deer and Company is the world's largest maker of farm equipment, and it just got a little smaller. First quarter profits came in higher than expected, but shares falling after the company said it expects 2016 to be, quote, challenging. Never like to hear that word, Ron. It's tough out there, Chris. Wee commodity price is really hurting businesses, industrial businesses like deer. And, you know, the sales numbers reflect that down 13% in both their agricultural businesses week and their construction businesses week.

It's interesting. I was talking to my colleague Jeff Fisher this morning, who's actually short deer. And we were talking about how one man's short could potentially be another man's value investment, and it's really kind of all about the timing and when you choose to get in. But deer had only 10 times earnings, depressed earnings. At some point, the cycle's going to turn, and that's going to be a good stock to own. Let's bring in our man Steve Brodo from the other side of the glass. Steve got less than a minute.

I'm just curious, you ever drive a John Deere tractor? Ever drive some big farm equipment? No. I did. Growing up, we had a large backyard, and we had a deer tractor. I did grow up in Illinois, but no, we had a small tractor, but it was not a big. I've always wanted one of the riding lawnmores, you know. It was awesome.

I never had a yard. Before I learned to drive, that's what I would do. Yeah, it was great. Steve, what's the biggest vehicle you've ever driven? In 1978 Ford LTD. That was very, very large. It was the size of a tanker. Still just four wheels on that vehicle, though, right?

Just four wheels. All right, guys, we'll see you a little bit later in the show. Up next, we are heading to the boardroom with author Jeff Graham. Stay right here. You're listening. to Motley Fool Money. Money, money. Welcome back to Motley Fool Money. I'm Chris Hill. With activist shareholders like Carl Icon, Dan Loeb, and others constantly making headlines, investors are forgiven

for thinking that this is a relatively new phenomenon. But in fact, this type of endeavor dates back to the 1920s. And it is a history wonderfully brought to life by Jeff Graham in his brand new book. Dear Chairman, Bordman Battles and the rise of shareholder activism, Jeff joins me now on the phone. Jeff, thank you for being here. Thanks for having me. I think a lot of people hear the phrase corporate governance and then they start to doze off. But some of the battles that you illustrate in your book are just flat out entertaining. You've organized the book around eight different shareholder letters, and I want to spot you up with a couple and have you walk me through them and what they mean for investors. And let's start with Warren Buffett,

In 1964, he sends a letter to the CEO of American Express, and the subtitle of this chapter is The Great Salad Oil Swindle. It's an interesting case because actually Buffett is on the other side from the activists, you know. So American Express had been defrauded in the Great Swindle, and the company had guaranteed the inventory of a swindler who had... thousands or millions of gallons of soybean oil that he actually, you know, they were just seawater and American Express, you know, had guaranteed the existence of the soybean oil and I was on the hook and it had you know a hundred million dollars of liabilities and at that

point that was enough to sink the company. And they ultimately arranged a deal with its claimants that would allow the company to survive, but that compensated the claimants for the liabilities. And incredibly, the shareholders of American Express, or a few shareholders decided, oh, this is a bad idea, you know, they don't have to do this, and they protested the company paying their claimants. And Buffett intervened to say,

hey, look, I'm a long-term shareholder here. This is the right thing to do. and I'll testify on your behalf. And it was a turning point in Buffett's career for several reasons. Like the first is he had historically been a little bit of an activist himself investing in these kind of declining companies that had lots of cash, but were what he called cigar butts, where you pick the cigar butt off the ground because it's a cheap stock

and you can get a free puff. And with American Express, he found like a really good business and he intervened not to compel them to pay out their cash, but to kind of, or to pay out their cash to shareholders, but to do the right thing and to pay, you know, to pay claimants. Why do you think Buffett is not more of an activist? And it's something that some people have criticized him for, I guess, you know, recently with Coca-Cola and executive compensation.

but for as much power as he has, arguably as much, if not more power than any investor out there, he really doesn't throw his weight around in the way that, say, a Carl Icon does. And I'm just wondering, as someone who has gone to Berkshire Hathaway meetings, has studied Warren Buffett, why do you think he is not more of an in-your-face activist? You know, I think there's a lot of opinions out there about this. And I think there are people that, you know, that believe, oh, it's a calculated ploy to be the nice guy and to garnish his public image. But, you know, I honestly think that activism, to be a good activist, you know, there's a dispositional element. Like, you have to like, you know, being aggressive.

You have to be extremely confident that you're always right. And I just think, and, you know, this is just an opinion, but I just. think it's not his thing ultimately, that it's not his style that he doesn't enjoy it. One of the other letters that you highlight, and maybe this is appropriate given that we're in an election year, because I think for a lot of people, they hear the name Ross Perrault, and they think back to when he launched an independent bid for the presidency in 1992, but he was a businessman for a very long time and a very successful one. Walk me through his letter to Roger Smith. the head of General Motors in the 1980s? Sure. I mean, it's probably the best letter in the book. So Ross Perrault had sold his company EDS to GM in the 1980s. And, you know, the idea for GM at the time was Perot was, you know, a legendary businessman.

He got the most out of his people. and GM was I'm a bureaucratic, a company that was having a hard time competing with the Japanese. And so their idea was to bring in Perrault, put him

on the board, and to kind of infuse the GM culture with like the magic of Ross Perot. And of course that didn't work, and he immediately began to conflict with this CEO and chairman of

GM, a man named Roger Smith. And the letter that's included in the appendix of the book is kind of the breaking point in their relationship. A GM has decided to buy Hughes Aircraft, and Perrault wrote a four-page angry letter to Smith explaining that it was a bad idea to do this deal and kind of pointing out all the flaws in Smith's long-term strategy. And it's a really remarkable letter. It's basically in all bullet points, and he pulls no punches. And for anyone who has heard Rospero speak or even Dana Carvey's impression of Rossboro on Saturday Night Live, it's really easy to hear that distinctive voice

with those bullet points. And of any of the letters, it is, I don't want to say it's confrontational, or rude in any way, but it is certainly the most pointed. He's just incredibly direct. There's no misreading that. I mean, I would say it's confrontational. It's not rude. It's funny. I, you know, I tried to get the guy that narrated the audiobook to do a Ross Perot impression when he reads that letter, but he didn't want to do it. You couldn't bring in Dana Carvey just on a consult? He could probably just phone that one in. I, you know, I forgot about the fact that. that Dana Carvey existed. That was an oversight. That doesn't speak well for Dana Carvey's

career. But that whole case, I mean, GM pretty much went from the best company in the country to the worst company that anyone had ever seen in a matter of 20 to 30 years. And it's a real, it kind of explains the fine line that you have between good corporate government. and bad corporate governance. And how on the one side, you had a company that was incredibly well run that played a key role in the success of the United States in World War II. And on the other side, you had a company that manufactured, like the one-car death machine, you know, talked about in the Nader book, that pretty much became, you know, you know, the example of bureaucratic, you know, bad corporation. And the fact that that could happen in 20 years, you know, kind of highlights how important a governance is and how quickly it can go

badly. You're listening to Motley Full Money talking with Jeff Graham. His new book is Dear Chairman, boardroom battles and the rise of shareholder activism. I want to lean on your expertise as an investor for a few moments before we wrap up. I read an interview where you said recently, the bitter truth is that many public companies are horribly run and shareholders are often treated terribly. That struck me as pretty strong. And I immediately and rather selfishly went to my own portfolio

and looked at the 15 or so companies that I owned and thought, well, wait a minute, I don't feel like I'm being terribly treated by these. companies? What are one or two of the ways that you think the average public company is mistreating shareholders? Well, I think, you know, the main thing is that you have a system of where the management essentially chooses the board of directors. And the board of directors is supposed to answer to the shareholders. The truth is, you know, for lots of boards, you know, there's a policy that they're not even supposed to talk to shareholders.

And so there's a friction there that the system creates that is counter to the whole point of the structure. And that's the hard thing with governance. And the truth of the matter is that incentives are very important in how people act. And the shareholders and the board of directors and the CEO of the company, are rarely going to be perfectly aligned.

And, you know, in this book, I don't come down that hard on management teams. I pretty much, I might take these eight examples to explain how the system works, to show you examples of bad activism and good activism of bad boards and good boards. But I definitely have seen in my career as an investor a lot of bad oversight. and just a lot of complacent boards. And it's kind of a fact of life in investing, especially in smaller companies. If you invest in the microcap space, you know,

when you find a cheap stock, it's usually because there's a governance issue with it. You know, that is usually the cause of the undervaluation. I know you're a value investor, but to the extent that you look to management when you are making investment decisions, what do you look for when you're evaluating the people that are running a company?

Yeah, I mean, because I'm a finance guy, I'm not that great at being able to tell if they're good operators. Because it's easy to seem like a good operator if you know your business. It's hard for a financial investor like myself to be able to tell. And so the main thing I focus on is their capital allocation. And a public company or any company can create or destroy a lot of value depending on the way that they spend the cash flow that their

business generates. And so that's the thing that I focus on are do they understand their capital allocation choices? Do they have a reason for doing the things that they're doing with the cash? And, you know, I don't expect perfection. I mean, I have investments in a couple companies where I love the management. I think they're like they're great operators and their allocation of their cash is pretty good. And that can be good enough. But in general, if you allocate extremely well, then it creates a tremendous amount of shareholder value. Over the last six months, we've seen a lot of companies across a pretty broad range of industries where the share price has been cut 20%, 40%, sometimes even more. How do you differentiate between a stock that is a value

play and a stock that's a value trap. Yeah, I mean, that's like the hardest thing. I mean, I mean, I think of the best example of a value trap. In a value trap, there is value that, like, in the company, but you're not going to, you know, but you're not going to realize it because of the way the company is run. And so, to me, a value trap means bad oversight and bad governance. And that's reason that that activism exists is to take advantage of that that dynamic last question and then I'll let you go this is your first book what do you know now about writing a book that you didn't know when you started um you know I thought the whole process is it's just it requires you to like to work every day and you have to commit you know four to five hours every day to

right. So I knew that it was going to be miserable. I knew that I didn't have time to do it. But the depth of the misery I didn't completely appreciate. But then there's this thing, like the moment that it's over, it's like a euphoric, you know, like, whoa, this is incredible. Like I think that the finished product is very good. And so it seduces you into thinking, man, maybe I should do another when really it was brutally, you know, miserable when it was happening. I think the depths of misery is a good title for your next book. Charles Schwab called this required reading for any investor. The book is Dear Chairman, Boardroom Battles and the rise of shareholder activism. It is on sale next week, but pre-orders on Amazon already have it

climbing up the business bestseller charts. Jeff Graham, thanks for being here. Thanks a lot for having me, Chris. Coming up, we'll give me the inside look. Coming up, we'll give me the inside look at the stocks on our radar. This is Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy yourself stocks based solely on what you're here. Welcome back to Motley Full Money. I'm Chris Selling. Joining me in studio once again, Jason Moser, Matt Argusinger, and Ron Gross. Guys, two things before we get to the stocks on our radar with our man, Steve Brodo. First, joining Steve on the other side of the glass this week, special guest, Tony

Gonzalez coming in from Florida. A long-time listener and member of several different Motley Fool Investing Services. Former tied-in for the chiefs, the Falcons? A different Tony. Oh, okay. Well. You know, that one's retired. This one still kicking.

Still kicking and hard at work. Second, no word yet if the chocolate-covered fries that McDonald's has been testing in Japan are coming to America. But reports this week that McDonald's will be testing the chicken McGrittle, a fried chicken patty between two maple syrup-infused pancake buns. They will be testing this at 11 locations in Central Ohio. No, no, no, no. No, you're not interested?

Root trip? On the Twitter, I said, just because you can, doesn't mean you should. I don't know. I think if this were a stock, I think I would buy a couple of shares, Jason. Unscientific survey here. We were talking to Mac before taping. I mean, do you go with this chicken McGrittle or do you go Burger King Odd Dog? I like the fact that Ron called the Twitter.

That's right. All right, you know what? I'm going to put the call out to any of our dozens of listeners who happen to be in the Central Ohio area or anyone willing to make a road trip to Central Ohio. Drop us an email, Radio at Fool.com. We want some on-the-ground research of the chicken McGrittle. Radio at Fool.com. Drop us an email. Let's get to the stocks on our radar, and Steve Brunow hit you with a question. Ron Gross, what are you looking at this week? Building on the theme we just discussed with Deere, I'm looking at Heister Yale, H-Y is the symbol.

They're a large manufacturer of forklifts. So, as with Deere, we're at a tough point in the cycle right now. 2016 actually doesn't look much better, but that's where value investors look for value. A company is solidly profitable, even during this tough time. Very strong balance sheet. Only six times EBITDA, PE ratio of 12. Stock looks cheap. Just got to be patient.

Steve, question about Heister Yale? Yeah, what's your favorite feature about their forklifts? I like the vertical up and then it can go down as well. You know, if you don't have that, then you're not really a forklift. And they make some great ball bearings, don't they? It's all ball bearings. Jason Moser, what are you looking at? Yeah, building on another theme.

Maddie was talking about e-commerce earlier. Looking at Wayfair, ticker W, we have it on the watch list in MDP. Their earnings will come out next week. This is one. We've seen some very strong opinions on both sides of the coin there in regard to this business and sort of the sustainability of the model. But in short, they sell home furnishing. publishing is online. And so they're just really taking advantage of that e-commerce opportunity

out there. Everything really depends for them on the percentage of orders from repeat customers, because they've already invested to get those customers, and that really does help their bottom line. But we'll definitely be keeping an eye on the earnings release next week and seeing if it needs to stay on the watch list, go on the portfolio, or if we need to kick it to the curb. Steve, question about Wayfair? How do they handle returns? It seems kind of complicated if you order a king-sized bed. It doesn't work out. No big deal. It's just 2,000. Yeah, I think that's going to be a pretty tough one, but fortunately for the consumer, the

returns of the returns, you just send it back. They're the ones that are going to deal with that on the cost side of it. But yeah, I imagine a couch presents some challenges. Maddie? What I haven't talked about in a while, B-of-I holding, ticker B-O-F-I, is the holding company of Bank of Internet, which is an online-only bank, small-cap bank. You know, this is a bank that's come under a lot of scrutiny over the past six months to a year. year. A lot of short attacks out there, most of it unfounded. But if you look at the latest results, net income up 40%, assets and deposit base growing in excess of 30%. And it trades for

1.5 times book value, which is about half the multiple it was trading for about a year ago. So it's one I'm starting to take a look at. I think there's still some clouds out there, but it's back on my radar. Steve? What can a bank of the internet do that a bricks and mortar bank cannot? Well, the cost structure is obviously much, much better. And so they can give you better terms on loans and deposits, deposit rates based on the fact that their cost structures much lower. Bank of Internet, Wayfair, Heist, Yale. You got one you want to add to your watch list, Steve? Kind of feel bad for Ron, so I'll go with this. What a guy.

Ron Gross. Pitney boat. Not above sympathy. All right. Ryan Gross. Jason Moser, Matt Argusinger. Thanks for being here. Thanks, Chris. Go to podcast.fool.com. You can check out past episodes of Motley Fool money. And you can check out all of the free podcast from the Motley Fool. That's podcast. That's going to do it for this week's edition of Motley Fool Money. Our engineer is Steve Broido.

Our producer is Mac Creer. I'm Chris Hell. Thanks for listening. We'll see you next week.