Motley Fool Money - Motley Fool Money: 02.18.2011

Episode Date: February 18, 2011

What will IBM’s Watson do for his next act? Will Starbucks grind out big profits with single-serve coffee? What’s behind Warren Buffett’s latest buying and selling? We’ll tackle those stories, visit Australia for some stock ideas, and talk Academy Awards with film critic Nell Minow. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill, and I'm joined by Motley Fool senior analyst Charlie Travers and Ron Gross, and from Motley Fool asset management, Bill Mann. Guys, good to see you. Hey, Chris, how are you?

We got the latest from Starbucks, Dell, Borders, and more. We'll also take a look at what Warren Buffett has been buying and selling lately, but we begin with the big macro. Guys, time for everybody's favorite show, this week in inflation. Okay. On Wednesday, the producer price index came out. For January, the PPI rose to its highest rate in more than two years. On Thursday, the consumer price index numbers were released. Ron, the CPI continued its rise as well. So, how worried are you about inflation? I think I'm personally worried maybe more than the the other pundits or the market is these numbers were a little bit more than expected,

greater than expected, but still relatively tame. I think we're starting to see higher prices bleed into other sectors, not just food and energy, which is what we have seen in the past. But they're not to the extent yet where people are starting to get nervous. I'm getting nervous a little bit in advance of everyone else. Moving overseas, Egypt's stock market remains closed. It's going to stay closed until the banks are operating. at full capacity. We're seeing the unrest spreading through the region. This is a business show,

so as delicately as possible, as an investor, Bill, you were recently in the region. What do you see when you're looking at the news coming out of the Middle East? Yeah, we could reduce it to the least common denominator and say, what's in it for me. We actually were in the Middle East, and we were looking at companies there, and we were focusing on companies that have been beaten down a great deal, really because of the economic issues. But A lot of people have been talking about jumping into the ETFs in Egypt and in the Middle East and some of these markets. And I really think that that's crazy because there's something that's really important about the way that economies work really throughout the world. But in particular in this part of the world is that a lot of the companies that make up the ETF really got where they are based on contacts with governments that at least in Egypt are now gone.

And I'm not sure that you really know what you're getting. You know, when you move into these companies, I'm not saying that they're going to evaporate. I mean, they've got an installed base, but you really have no idea how they're going to be priced or how it's going to change. So the advantage that they once had in terms of their contact with the government, that's no longer the case. Yeah, being Mubarak's buddy isn't what it once was. Charlie? Yes, and we can't really talk about strife in the Middle East without bringing oil into the discussion. And if you look at a map of the region, there's one country that stands out as being absolutely surrounded by countries,

experiencing civil unrest, and that would be Saudi Arabia. And, you know, it has Bahrain, Libya, Egypt, and Yemen all around it having problems. And interestingly, there was an independent opinion poll in Saudi Arabia last year, and it found that the population's greatest concerns were high unemployment, corruption, and religious extremism, particularly among unemployed young males. And if you want to talk about a powder keg for civil unrest to possibly spread into the country with the world's largest oil reserves and what that could mean for the global economy. This is a topic we have to pay attention to. Bill, 45% unemployment in Saudi Arabia. It really is not, I mean, it seems, you know, from outside the country, which we all are, it really seems like it's a very wealthy

place, but it is the place in the world that probably has the largest difference between the top end and the bottom end, and the bottom end is pretty angry. All right, bringing it back to America into a much lighter topic. One of the big water cooler stories this week. Definitely not. One of the big water cooler stories this week was the Jeopardy Showdown between Watson, the IBM supercomputer, and the two human beings who Watson basically reduced to ashes with the big victory. IBM came out after Jeopardy was done and announced that Watson is going to be moving on to the world of medicine. Two hospitals have signed up to test the Watson technology. Charlie, I know you're big in the medical devices and that whole field. Is this a logical move for Watson and IBM? It sure is, Chris.

And the reason is that there is tons of data generated, not just in health care, but in other industries like financial services. That is impossible for any one person or, you know, team of people to just sort through. And what the Watson artificial intelligence does, it's basically extracting a needle in a haystall. stack, looking at just massive amounts of data, and having the ability to give precise answers to language questions, which are very traditionally difficult for computers to understand. And if we look at IBM in the past, when it's a deep blue computer set, you know, kind of a new precedent by beating a world chess champion, that was a huge advancement. This Watson beating guys in trivia is a far superior accomplishment, and the ramifications

will be unknown, but they're very significant. Bill? You know, I think that it is a very interesting thing, but I have a really fundamental question about IBM. Can you all think of a company that has, has in very basic ways, reinvented itself better than what IBM has? I mean, if you think about it, IBM started out as a mainframe computer, and the computer's the size of rooms, and they went into PCs, and all that's gone, and they are truly a services company. It is amazing what the management's there have done. It's interesting that you say that because I know there's a lot of people on the short side of IBM.

It's actually significantly overvalued. They're not the IBM of the past. They no longer make anything. They're thinking that mainframes are a fad. They're no longer make anything. They're no longer an asset-based company. They're a service-based company. So there are people that take the other side of Bill's trade there.

Just on another note, something that staggered me about the Jeopardy contest is for Watson to beat guys, Watson had to go through 200 million pages of content in less than three seconds. That just staggered me the fact that the computer could do that. And really, I think, as Charlie said, it makes very interesting the applications and things like healthcare and financial services. Well, just like Jeopardy guys, you know, our O'Mautly Fool Money Show is kind of hosted by a very charismatic guy I love by millions of people. And I think we're in trouble. He can go through three pages in hours. It's very impressive. I think our Chris Hill is going be asking a Watson financial questions in the future while we're sipping marguerite is on the beach.

You know, Ron, you were talking about what staggered you. What staggered me was that Watson couldn't manage to figure out that Toronto is not a U.S. city. Like, come on. They forgot that page? I mean, it was a big win. No question. There may be hope for humans yet. Well, that's a key point. And while it is able to sift through mounds of data at the end of the day, you need a person with the wisdom and judgment to make the end decisions. Let's make up a statistic 60 percent of all Americans and 100% of all Watson's don't know where Toronto is. Right. All right. This week, Starbucks announced a partnership with courtesy products.

Starbucks will now supply coffee for up to a half million hotel rooms that use courtesy products, single cup coffee brewers. Ron, currently Green Mountain Coffee Roasters is the dominant player in the single cup market. How much is Starbucks going to be able to chip away at that? Well, that's the whole thing with Green Mountain. So the patents are coming off of Green Mountain's Kourig system, the pods. And what happens to Green Mountain going forward? Once that happens, is the big question.

It's been rumored for quite some time that Starbucks is going to enter the market with a major competitor to the Green Mountain system. Lately, it's been rumored that perhaps there'll be a collaboration between Starbucks and Green Mountain, which would be interesting and probably be the savior to Green Mountain. and Starbucks is a formidable competitor in this arena, and we're gonna have to see how it plays out. The $500,000 hotel news, that was interesting news. I don't think it's a game changer.

Charlie? I'm a grind my own beans, French press kind of guy, and I find this whole Curric thing morally offensive than the first place. I'll take the other side of that trade, too, because I use the corg every day. Socialist. Cheap and quick.

Bill, what do you think? Well, to me, the question of the Green Mountain Patent is a little bit overblown, Because if you think about Starbucks and you think about Green Mountain, to me, they're marketing entities. I mean, the thing that Starbucks does best than anything else, I don't think it's made coffee. I don't think that really anybody out there saying that Starbucks is the best coffee out there. Outside of Howard Schultz. Stipulated.

He gets paid to say that. I get paid to say this. I don't think that the coffee part of the discussion is really what's important. Green Mountain has an enormous installed base, and I think that that's important for them, but they have proven to be a very good marketing entity in that segment. It's really the only segment in coffee where Starbucks has been beaten down. So you don't think they have anything to fear in terms of Starbucks taking market share? I think they have a lot to fear, but I think they have a lot to fear on the marketing side more than anything else,

because what Starbucks can do is they can come in and say, we're already providing, we've got a shop downstairs in how many hotels around the world. and we have, you know, we have you everywhere else. Why can't we have you at your house, too? That's a little creepy when you put it that way. It is a little creepy, isn't it? Coming up, you won't believe what you can buy at the McDonald's in Hong Kong. Stick around.

This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Bill Mann, Charlie Travers, and Ron Gross. We're going through some of the big headlines of the week. Shares of Dell were up more than 10% on Wednesday, when the company reported fourth quarter profits that were much higher than expected. Ron, you're a Dell guy, aren't you? I've been a proud shareholder since 2005.

Getting my lunch eaten, thank you. So a good week for you. Yes, it was better. Yes, we started. Better than most. We'll be ending the week better than we started. As Bill is actually just saying about IBM, a company reinventing themselves, Dell has been really trying to do that as well, moving out of the old Dell that we know of, which is your go-to company to get your PC manufactured,

to a company focused on servers and data centers and cloud computing. Specific to this quarter, though, however, the results were really based on companies replacing their older Dell computers, and there's just that replenishment factor that happens from time to time, especially when Windows comes out with the new operating system. So that really drove the numbers specific to this quarter. But Dell continues to try to reinvent themselves. I'm not convinced they're going to.

to be successful in it. I do own the stock. I'm hoping, but we'll have to keep an eye. Borders filed for bankruptcy this week and announced plans to close about 30 percent of its stores across the country. Charlie Travers, Borders is the number two bricks and mortar bookseller. Barnes & Numble is number one. Aren't they next? Aren't they next on the list to go bankrupt? Oh, absolutely. And this really couldn't surprise anybody. They filed Chapter 11, which is a reorganization, but not a liquidation. But in my opinion, this is just four. stalling the inevitable. What borders did was close 200 of its stores, which is about 30% of their store base. And for some context, things have been so bad for borders, this will leave them

with less than half the stores they had five years ago. You know, kind of a sign that, you know, management is maybe not really in touch with what's going on is they blamed weak consumer spending for some of their results. And yet Amazon... At border, sure. Right, exactly. Amazon sales were up 40% last year. So, you know, this is maybe trying to put some lipstick on a peg here. The problem with the border, the borders and Barnes & Noble to some degree, although the Barnes & Noble Nook gives them a little bit of an entry. Absolutely. The reader, yeah. Is that the areas where you profit the most in stores, in bookstores is the paperbacks, and it's the exact area where the Kindle has the most advantage now. I knew Borders was in huge trouble watching

my somewhat tech-un savvy wife walk through a boarder's with an Amazon thing on her smartphone, checking prices, comparing between the two, finding a book she wanted and she'd uploaded onto Kindle standing in the Borders. And that, to me, that sounds like trouble when that's something that is not difficult for anybody to do. Right. It's not surprising to see a bricks and mortar store get kind of put down by an e-commerce. And there's some important investing lessons here. Borders is actually a very popular value stock because of Bill Ackman's big purchase a few years back. You know, just to give some of our listeners some quick tips. Don't just follow somebody into a stop because they happen to be famous.

The border situation is obvious they're competitively disadvantaged. If you did a little bit of your own work, you could have avoided some of this pain. According to a filing with the SEC, Berkshire Hathaway has sold all 5 million shares of Bank of America while adding 6.2 million shares of Wells Fargo. Bill Mann, speaking of famous investors, what do you think of Warren Buffett's little company there in Omaha? Well, if you listen to what Warren Buffett has said about Bank of America, particularly its former chairman, Ken Lewis, you would be stunned that Berkshire would have owned it to start with.

I mean, he called Ken Lewis the man who accidentally saved America. He has killed Ken Lewis and Bank of America for years. But the thing here that is important is that this was not a big stake for Berkshire. And a lot of times the media gets this wrong. In fact, I'd say almost every time the media gets this wrong because there's a second investor at Berkshire Hathaway or there was up until a few. weeks ago. And his name is Lou Simpson. And he ran the portfolio for GEICO, which is a subsidiary. And so they don't break it out. So when you see something that's smaller in size and purchase

size, it is usually in the GEICO portfolio. And it was almost always Lou Simpson. And Buffett didn't even necessarily know. It must be nice when 5 million shares of anything is a small size. But, Ron, what do you think? Yeah, we also have the new guy in town, Todd Combs, who was recently brought on by Buffett to manage two or three billion, which is a similar equity amount as Lou Simpson was managing. So we might be seeing a little bit of Todd kind of making this his own and selling some things and we'll see some purchases that he likes down the road. I mean, I think that's a relevant thing to do since Lou Simpson did retire for a day.

For one day. And then started up his own shopping. I mean, when you come in, you can take over a portfolio, you're being handed a bunch of names that you might not know. So I don't really know that there's anything that you can read into this other than there's a new guy in town. If you love those E-Trade commercials with The Talking Baby. And who doesn't? I've got some bad news. E-Trade is planning to phase out the Talking Baby campaign.

Guys, do we think this has anything to do with the fact that competitors like Schwab and TD Ameritrade are actually doing better at things like, I don't know, signing up new customers, having assets under management? Nothing says, nothing gives me more confidence than a talking baby when you're talking about asset management. Seriously, who are they targeting with these kinds of ads? Talking babies. Actually, my children love them. If you're targeting the 10-year-old investor, you're in. Their $5 portfolio, it's great. Now, E-Trade in the past has also used monkeys in their commercials.

That's better. So regardless of the product or service, if it's a commercial with a commercial with a talking baby or like a monkey in a suit with a briefcase? Which is appealing to you more? Charlie? I've hated talking baby nonsense ever since Ali McBeal. So I'm going to go with personification of animals, whether it's a monkey in a suit or squirrel on water skis. More of a who's talking to. I'm married. I can't avoid it. And finally, McDonald's restaurants in Hong Kong have a new item on the menu, Mick Weddings. For just under $1,300, guys, you can get the warm and sweet wedding package, which includes wedding gifts, pink invitations with the golden arches, decor featuring the likes of Ronald McDonald, the hamburger, and of course, food.

We're all married here. How would this have gone over with the misses? Ron? Oh, big points with the misses. No, I think this is fine. I draw the line at the $165 extra tab for the wedding gown rental. But the rest, I mean, who wouldn't want fries and a big mac at their wedding? Do they take the fry stains out of that first?

Oh, my God. Bill, I mean, is this such a far-fetched idea? I mean, it seems bizarre here in America, but, I mean, maybe in Hong Kong, it's... You know, it does bear saying that a lot of times brands have a very different image overseas than they do here. I mean, you just could not imagine in Washington, D.C., waltzing into a McDonald's, and there's a wedding going on. The article said it's a big place for dating, actually, where they're doing this. So, I mean, as Bill said, it's a different culture. We go to have a little Mickey D's and they're going for dating.

You know, in D.C., we do have the old social safe way. You know, people would walk around with the same thing of frozen peas for hours on end. So, you know, perhaps we were just early. If you're at McDonald's and you're getting married and you have to have one of the McDonald's characters as your best man, who do you have standing up next to you? Bill, man. Oh, man. I got to go package deal with the fry guys.

Ron, what do you think? You can go with Ronald? Professionally, I sometimes do. But not here. Is Mayor McChese? Sure. Is that a McDonald's guy? Yeah, he is.

Well, I'd like to have someone of a, you know, ceremonial nature. He could actually do the wedding. Yeah, he's probably the one who does the ceremony. So, all right, Charlie, what do you think? I would say nothing is more fun at a wedding reception than a big, fat, jolly guy dancing. So I would go with grimace with a bow tie and a tux fest. Nice. Steve Broido, what do you think? Who are you picking as your best man?

I'd have to go grimace as well. I might have to insist he wear pants. All right. I like how he said I might have to exist. All right. Charlie Travers, Ron Gross Bill, man. Guys, thanks for being here. Coming up, we'll talk Academy Awards and the Business of Movies with film critic Nell Minow.

Stay right here. This is Motley Full Money. Welcome back to Motley Full Money. I'm Chris Hill. Business Week has called her the queen of good corporate governance. Nell Minow is with Governance Metrics International. and when she's not handing out grades on corporate America, she's reviewing films as the movie mom.

Nell, always good to talk with you. Well, thank you very much. It's wonderful to be back on the show. We've got the Academy Awards coming up. We will get to that in a minute. But I want to get to something that you wrote earlier this week. You wrote a piece entitled, The Days of Outrageous CEO Pay may be ending.

Why do you feel that way? Well, that was a follow-up to a piece of horrendous atrocities. and I was so depressed writing the earlier piece with these terrible, terrible new developments and executive pay that I promised myself and my readers I would come back with a little bit of good news, a little bit of light within the dark cloud. And so there are some promising new developments. And the first one is when we were looking at the idea of, say, on pay in this country, we looked to see how it had done in the U.K.

And in the U.K., in the first four years that they had an advisory, shareholder vote on executive compensation, only eight times the shareholders voted against the compensation, only one at a major company. In the first month that we've had it here in the U.S., the first six weeks, I should say, there's already been two votes against and some substantial minority votes against. So I think that that's encouraging. It's encouraging that shareholders are pushing back. They're insisting on annual votes on pay, even though companies are trying to wiggle away with every three years. And I like some of the ideas that are coming about the Harvard Law School Corporate Governance website had a very interesting idea about tying bonuses to credit quality.

So I like the fact that people are recognizing that our current pay system doesn't work. Now, another recent article of yours is entitled, How Hugh Hefner is screwing Playboy shareholders and why they should fight back. Now, I mean, this is an American icon. What's he doing that's so wrong? Well, he took his company private. He offered $4.50 a share, which is pathetic last July, and his board of directors, who are, of course, all in the palm of his hand because he has 70% of the voting shares, finally inched him up to $6.15. But they didn't even look at a counteroffer from Penthouse that was higher. There was 10 cents a share higher. And that's just, you're just not allowed to do that.

The Board of Directors is there to maximize shareholder value. You're allowed to turn down a lower offer if the shareholders are staying on board, and you're going to make it up to them over the long run. But these shareholders are being taken out, and they should get the highest price. It's really appalling to me that the board didn't even think about that. Do you think there's going to be any recourse from some of the minority shareholders? Yes, I do. I would imagine that there will be a shareholder lawsuit.

They may end up getting that extra 10 cents a share out of it. But it's, you know, it just shows you. why dual-class stock can be such a problem for shareholders. I don't recommend that anybody go into a company like that because if the CEO controls the board, there's really no recourse for shareholders. You're listening to Motley Full Money. We're talking with Nell Minow, corporate governance expert and film critic.

All right, now let's talk movies. The Adam Sandler movie, Just Go With It, opened at number one in the box office last week. This was the 11th consecutive time that it, Adam Sandler movie has opened in the number one spot. And he was up against Justin Bieber, which is pretty daunting, especially since Justin Bieber was, his movie was in 3D, which gave him a significant advantage in terms of box office receipts, because he charged premium for those tickets. Congratulations.

I think you're the first person to refer to Justin Bieber as daunting. But, I mean, 11 times in a row at the number one spot in the box office, that's, what is that say to you about Adam Sandler from a business perspective? From a business perspective, what it says to me is that Adam Sandler is an unbeatable brand. He is, in my opinion, coasting along on the reliability of his reputation. You know, in a way, he's kind of like the McDonald's or in the old days, Howard Johnson. Everybody knows that the quality is not going to be great, but it's going to be reliable. You know exactly what you're getting.

I also wouldn't discount the impact of Jennifer Aniston in the film. She has a lot of followers, but she never opens a movie number one. She really has to rely on him for that. I thought it was an awful movie. And on top of that, I have a personal grudge against it because it's the remake of the film that my husband and I saw on our very first date back in high school, cactus flower. And so, you know, it really adds insult to injury that they do such a lousy job with it.

It's just potty humor and it's slack and lazy and very disappointing in every way. And yet he delivers at the box office. His last movie made something like $700 million worldwide. Now, if Adam Sandler is a really good investment, conversely, there's a Broadway musical about Spider-Man that looks like it might be the worst entertainment investment of all time. It's certainly up there with Pluto Nash, I think is still maybe number one ahead. That one lost $100 million. This one is only losing $65 million.

But, yeah, it is shocking. And to me, it's interesting. I wrote an article about it for BNet today because it's exactly the kind of mistake that investors make all the time, which is that you are betting on the past performance. And as they say, in mutual funds, past performance is no guarantee of future performance. Quite the contrary, particularly when you're dealing with artistic endeavors. You've got three people involved with this. You've got Julie Tamor, the writer and director.

You've got Bono and the Edge from you, too, all people with just extraordinary records. But because they have been so successful in the past, nobody is there to tell them no. And so they have now spent more than anybody has ever spent before, and they have had one catastrophe after another, including accidents with the flying apparatus and reviews that are just atrocious. You're listening to Motley Full Money. We're talking with Nell Minow, corporate governance expert and film critic. The Academy Awards are next week.

Now, we're a business show, so I'm curious as to what gets your vote as the best business movie of 2010. Well, as I wrote on Beanet, business was the number one. most popular villain in the movies last year. And I think my favorite example is in the adorable movie for children, Dispicable Me. The main character goes to... Great movie. Yes, goes to get money from the Bank of Evil, just because you're a crook doesn't mean that you don't need a little capital investment now and then.

And so he goes to borrow money from the Bank of Evil, and the Bank of Evil has a sign saying formerly Lehman Brothers. So even in a charming little movie for kids, there are still digs at Wall Street. So Wall Street did very, very badly at the movies last year. Another good example was in the other guys with Mark Wahlberg and Will Ferrell, which was just a silly fun comedy I enjoyed very much. But at the end of the movie, over the closing credits, it's like a PowerPoint presentation that's quite serious about the financial meltdown.

They just threw that in there. So business did not fare very well on screen. I will tell you that there were some very good documentaries, inside job, and of course, the documentary that I'm in about the financial meltdown, The Flaw, which will be released later this year. I was out at Sundance for the premiere. All right, the Academy Awards. I want to know who you think should win and who you think will win.

Let's start with the category of Best Actor. Best Actor is a lock, and it's the should win and will win all in one. Colin Firth gave one of the great performances of the decade in this wonderful movie, the King's speech and he is going to win. What about Best Actress? Best Actress is a tougher one. If it were me, I'd like to say to go to Annette Benning from The Kids Are All right. I think it's probably going to go to Natalie Portman, a showier, more widely seen role in The Black Swan.

We like to see people with doing the kind of histrionic thing. We like to give points for that. So I think she's going to get it. But it is Annette Benning's fourth nomination, and she's ever won before. There is a little bit of rewarding seniority in the academy, isn't there? Not as much as there used to be. I think if she were older, possibly, because as you know, the membership of the academy skews older, but I think people still feel that she's got a couple more shots at it. What about best picture? Which picture should win and which will win?

This is a tough one to call. If you'd asked me two weeks ago, I would have said there was just no question about it. It was going to go with social network. but things seem to be moving toward the King's speech, and I think it's going to be a dead heat. That one's too close to call. Are there any potential surprise winners in the Academy Awards this year? I don't think so. I think the only possible dark horse would be how to train your dragon over Toy Story 3.

But that's a real long shot. It could happen, but it's a real long shot. The only reason it could happen is that Toy Story 3 is nominated both for Best Picture 3. and best animated picture. So it could kind of split the vote with itself there. And before we move on to Buy, Seller Hold, what is the best movie of 2010 that not enough people saw? Well, this one is actually right up your alley.

I can't recommend it highly enough. It's called Floored, and it's a documentary about the most aggressive, testosterone, crazy competitive people on the face of the earth, the pit traders in Chicago, and about what happened to them when computers came in and made them obsolete. It's a fabulous movie. It's called Floored? All right. I will add it to my list.

We will wrap up with buy-seller hold. Let's start with someone you've already mentioned. He's the subject of a new documentary. He's coming off a Grammy performance that my producer, Matt Greer has called, quote, completely underwhelming, buy-seller hold, Justin Bieber. I think he's a strong buy. His movie performed very well this week. Did you see that Twitter used, they're talking.

tweak their algorithms so that he couldn't be a trending topic. So all of his little fans started spelling his name with two Bs, and he went right to the top again. He's a very talented kid, and he seems to have a good head on his shoulders. I think he's going to be around for a while. Oh, that's, I don't know. That's just, that's mildly depressing. Resistance is futile. Buy-seller Hold, James Franco and Anne Hathaway is the host of this year's Academy Awards. I think they're going to be sensational. First of all, is there anything James Franco can't do? He seems pretty multi-talented. He is a multi-talented guy, and I think they have a sense of humor.

They take themselves lightly. Anne Hathaway can sing, and I think it will be a nice injection of a younger perspective into the show, and I think it'll be very good. All right. We were talking earlier about Netflix. Buy-seller Hold the likelihood that Amazon.com will become a serious player in the streaming and movie rental market. Amazon has done very well and almost everything they've tried with the possible exception of going up against eBay.

So I definitely would not count them out. I think Amazon is very, very, very tough to beat. So I would strong buy on them. He recently got engaged to a 24-year-old. He's 84-year-old, buy-seller-hold, the pending nuptials of Hugh Heffner and Crystal Harris. That's a short sell for sure. And not only that, I'm also going to make a predict. that, you know, he's got private equity partners in his new venture and taking Playboy

private, and I'm guessing they're going to ease him out. And finally, her body of work includes an appearance in The Flaw, a documentary about the financial crisis, buy-seller hold, the acting career of Nell Monroe. That's definitely a sell. I think I have gone as far as I can go with my acting career. It was a thrill to be a part of that movie, but I was playing myself, and that's about all I can do. The Fortune magazine has called her the CEO killer, but at the Motley Pool, she's one of our favorites. Nell Minow, thanks for being here.

Anytime. Bye-bye. As always, people on the program may have interest in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. Coming up, we're heading to Australia for some stock ideas. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. In addition to being a senior analyst at the Motley Fool and a regular on this show, show, Tim Hansen is also the co-advisor of Motley Fool Global Gains, a service focused on international

stocks. And providing analysis for international stocks means every now and then Tim's got to do some traveling. He joins me now from Australia. Tim Hanson, how you doing, buddy? Good day, mate. How's it going? Don't, don't try the accent. I know, I know. I shouldn't know about that. I feel bad now. Now, last month on the show, we were talking about the historic floods that Australia was dealing with. How are things now? You know, it's funny. We were driving around the city yesterday, and the river is still very murky here in downtown Brisbane. But there is, as far as we can see, no remnants of damage in the Central Business District.

That's incredible, given the scope of the floods. But that's also not to say that everything is hunky-dory. You know, there was heavy rains yesterday. It continues to be the wet season here, and a lot of the mines in Queensland State, which are doing all the coal mining, continue to be either shut in or not producing quite as much coal as they would like to be producing. The Wall Street Journal reported this week that Moody's, the ratings firm, put Australia's four largest banks on review for a possible downgrade. What did you make of the news and what's been the reaction there? Well, it's appropriate that they all got put under review at once because as someone said it was yesterday, there is no better syndicate in the world, maybe OPEC, but there's no better cartel in the world than the four,

big four Australian banks. They apparently all raise their rates and lower their rates at the same time. They never try to steal customers from one another. It's really sort of a good old boy network here in Australia. The reason Moody's has put them under review is because there is a bit of a potential housing bubble brewing here in Australia. If there's one thing, everyone that we've talked to is upset about, it's the price of a new home here in Australia. It's just truly unaffordable. What happens to those loans, if people can't pay them off, that's the question that the banks have to answer.

But it is a little different here than what it is in the United States. You know, the United States, we had this phenomenon where people just gave their keys back. They said, I'm underwater. You know, I hear the keys. I'll suffer the credit score consequences for a little while. Here in Australia, you're personally liable. So those banks can put you truly into bankruptcy forever if you don't pay off your loans. We've talked in the past about how China is dealing with inflation.

China is Australia's largest trading partner. So how is China's economy affecting Australia's? Oh, hugely. You know, I mean, we met with a couple mining companies this week, and they're all trying to figure out mining services companies this week, and they're all trying to figure out what their China strategy is. one of the more interesting ones is a company called Campbell Brothers, which does sort of testing for, you know, if you're thinking about building a mine and you get a sample of the rock, you send it to them, and they'll tell you if it's worth building a mine there or not. They have a very innovative sort of hub and spoke model where all their labs are in, all the samples go to some central labs.

But, you know, China won't let samples get shipped out of China because they think it's a strategic in their national interest to not let anybody know what they have. So that's one example of an Australian company that's trying to work with China to figure out how to do business there because the market opportunity is so huge. But if China slows down, you know, Queensland State, that's where Brisbane is, huge coal mining. They think they have 30 billion tons of coal in the ground here, and they're excited to mine it out of the ground and send it to China. But if China doesn't want it, you know, economic growth here is definitely going to slow down. Now, when you go on these trips, you're typically meeting with business leaders, company executives, you're kicking the tires of companies that you're considering as investments. What's caught your eye so far?

You know, we've seen a couple of really interesting things. I mentioned Campbell Brothers, which is something we're looking at. One that it was big in the news this week here in Australia was Foster's, because Foster's, you know. The beer company. The beer company, Australian for beer. I won't do the accent. But Fosters is actually both a beer and a wine company here in Australia. They combined operations a couple years ago via acquisition.

The beer business is really, really struggling here in Australia for reasons. People have their theories. One is that Fosters just isn't marketing here very well. Another is that people who are really stressed out by having to pay their mortgages aren't been spending on sort of consumption, which hurts the beer industry. But what they're going to do is they want to refocus the beer side of the business on beer and the wine side of the business on wine, so they're going to split the two companies apart. the beer business looks like a natural acquisition candidate for, you know, the mega beer companies like SAB Miller, you know, the MBEVMB of the world.

And so they situate or they gave that side of the business all the debt. So they're hoping that I think somebody comes in and buys that and then pays off the debt for them, which means the wine business is going public with no debt. And so that's really interesting because, you know, China's just starting to drink a lot of wine. They obviously make good wine here in Australia. It's a nice debt-free business. That's an interesting opportunity. Now, I'm not suggesting that you and the other members of the Motley Fool Global Gains team aren't working hard, because I know you guys are working hard, but there's got to be a little fun as part of the trip. So help me out.

If I'm thinking about a trip to Australia, what's one piece of advice you'd give me? Coffee in Melbourne was really good. They make really good coffee in Melbourne, a fun city. But, you know, I may have more to tell you next week because we don't have any meetings planned for this morning. so we're headed off to the lone pine koala park. So we're pretty excited about that. It's a park entirely consisting of koalas? They have 130 koalas, but they also have Tasmanian devils, you know, kangaroos.

It's your typical smorgasbord of Australian wildlife. That sounds vaguely dangerous. This isn't like a petting zoo or anything, is it? Apparently you are allowed to hold the koalas, so we'll try to get photos of that. Really? Yeah. All right, Tim Hanson, thanks for being here. Thank you, Chris.

For more information on Tim's trip and the meetings that he's taking and the investments they're looking at, you can find all that at motleyfoolmoney.com. That's motleyfoolmoney.com. That's it for this week's show. Thanks to our special guest, Nell Minno. Our engineers are Steve Broido and Gail Anyo Nuevo. Our producer is Mack Greer. I'm Chris Hill.

Thanks for listening. We'll see you next week.