Motley Fool Money - Motley Fool Money: 04.08.2011

Episode Date: April 8, 2011

Disney breaks ground in China. Google revamps YouTube. Expedia spins off TripAdvisor. And Procter & Gamble sells Pringles.  Our analysts discuss those stories and share some stocks on their radar. Plus, CNBC's Becky Quick talks about the new CNBC documentary, The American Tax Cheat.  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, Seth Jason, James Early, and Ron Gross. Guys, good to see you as always. How you do? You, Chris. We've got Disney breaking...

We've got Disney breaking ground in China. Southwest Airlines doing damage. control and everyone, it seems, gunning for Netflix. We'll talk with CNBC's Becky Quick about the new CNBC documentary, the American Tax Cheat, and we'll get her thoughts on Warren Buffett and the upcoming Berkshire Hathaway annual meeting. Plus, as always, a look at the stocks on our radar. But we begin today with the retail numbers for March. Guys, a majority of retail change reported decent gains in same store sales, including Costco, Macy's, limited brands. Others saw some declines. including, and I know this is a shocker, the gap.

Bump, bum, bum. Down 10%. Seth, Jason. Your thoughts? Well, what I'm seeing in this report is a continuation of the theme I have hit when we've discussed it a few times in the past, which is the sort of bifurcation, the separation. You see higher-end stores, I think, doing well. So, you know, Nordstrom, et cetera, doing some pretty good increases in same store sales.

And you see similar results at the lower-end stores, cost-cote kinds of stores, the places where people are really bargain shopping. There are a few other smaller retailers in the mix like Zumi's and Buckle that are also showing some good results. But overall, I think this says something a little bit worrying about the economy, which is that there's a large section of the population that's really not sharing in our newfound the riches, that are, you know, the stock market riches that come to only a certain class of the folks in this country. And I think that we're seeing a little bit of that in the retail report. And to me, that's a little bit worrisome.

James? Well, Chris, let me just say something of the mall component of this because that's sort of near and near to my heart. The mall vacancies are actually very, very high right now, but it's a bit like how your brain starts out with surplus neurons and then purges them once you purchase the ones that doesn't need for efficiency. And some people maybe purge a few more than others. But the main thing is the malls were overbuilt and filled with a lot of weak retail concepts. So what we're seeing right now is the stores that are left are actually doing better and the sort of survival of the fittest. here, which I think is a good thing for the evolution of business. It is good. And the worst vacancy rates are at those, you know,

ex-erb or far-flung suburban malls and strip malls. Those are the worst places right now. Ron? Yeah, and interestingly, I think we're seeing some of the strongest numbers come out of the international segments of some of these companies. Costco in particular had 11 percent, same-star sales growth in their international business versus 7 percent in the U.S. So we're really seeing international drive those businesses to a greater experience. extent than their domestic businesses. And the ones that have a nice presence overseas are going to do well. Let's go back to the gap for a second. In North America, gap stores fell 9%, Banana Republic down 8%, old Navy, down 12%. Seriously, how do we fix the gap? What do they need to do to turn things around?

James? Chris, when you buy a house, the realtor typically shows you a crappy, overpriced house that you probably won't want first to make the other houses look better by comparison. So Gapest, still has value within the context of Banana Republic and Old Navy, you could have like a small micro store with the Gap products to sort of make the Old Navy products look like better values and make the Banana Republic products look like higher fashions. Wait, isn't that what they're trying to do now? Yeah, I don't know if Gap has such a problem. They kind of hit or miss, hit or miss, produce some cash flow.

It's not a company I'm interested in. It's kind of a yawner, and the stock is, I think, a little overpriced in the low 20s here. I don't know if there's anything you can really do. It's sort of a big, tired concept. Cackies? More cackies? Yeah. They haven't changed anything for decades. They do have some other things in their stores that just don't seem to be necessary, whether it's part of the store devoted to the sleepwear or, you know, it's cackies, it's jeans,

it's polo shirts. That's what they do well. That's kind of their bread and butter. Ron's sleep from the nude. Wow. Is this where this is going? You said it wasn't necessary. This is deteriorating quickly. It's not necessary at the gap. Ron can go over to the, what is the Victoria's Secret for men called?

Do they have that? No. Ron, do you know? I think the Victoria's Secret for men is Victoria's Secret. Wow. Well, then I have nothing to be ashamed of. We need to start one. It's Ron's secret, actually.

Moving along. Shares of Expedia shot up on Friday on the news that they were spinning off its TripAdvisor business. James, the company called this, quote, a shareholder-friendly transaction. Given the way the shares shot up, I would tend to agree with that. What did you think of the news? I do like it. And first, let me just say thank you to TripAdvisor. This is sort of illustrative of what a good business it is.

I was going to go to West Virginia with some people, and this hotel that I've seen looks pretty good, but it got like a one-star because the manager yells obscenities at all the customers. So I wouldn't know about that word now for a TripAdvisor, and TripAdvisor is really the high-margin, high-growth part of the Expedia business. So it's sort of like if you love something, set it free as long as you own a piece, as long as you profit from the IPO, I guess, and that's what they're doing. But by my account, Chris, Expedia has like 30-something brand. left over or even after they spin off TripAdvisor, so they're not hurting.

You're listening to Motley Full Money, Chris Hill, Seth, Jason, James Early, and Ron Gross, as we go through some of the big headlines of the week. Guys, time for this week in Netflix Competitors. Earlier in the week, Dish Network won the remains of Blockbusters business in a bankruptcy auction. And the Wall Street Journal reported that Google is working on a major overhaul of YouTube that includes spending as much as $100 million to create original programming. Ron Gross, you get the first crack at the story. Well, I think it's interesting. A couple of things. Certainly, competition is coming into

the Netflix space, and there's no doubt about it. And for investors of Netflix, I think there's going to be implications there are no problems. There's going to be implications. Never a problem with Netflix. In a more wide-ranging note, I mean, some interesting things are coming. Things are changing. And for consumers and watchers of movies and TVs, there's some good things on the horizon, whether it's DISH using the Blockbuster on-demand business to bring streaming and downloading, whether it's YouTube vesting $100 million for original content, which is a little bit dicey, in my opinion. More lonely girl.

But there is going to be more available to the consumer than ever before. And for people who enjoy watching movies, that's a good thing. Ron, let me just ask you, and this might sound silly, but it's a serious question, too. What type of original content would bring you to YouTube? And HBO type content, for example. I mean, if YouTube had a Sopranos-type show, I think they could gain traction. That's easier said than done, though. And it's expensive, yeah.

Content is usually losing game. Yeah, and this is something that I find the hubris of this to be amusing to me, that the idea that Hollywood is just so bad at original content and doesn't get the Internet, and we Google people are going to show them how to do it. I mean, all you need is Sopranos, right? Well, at the cost of a Sopranos, as we all know in here, the cost of 20, 30, 40 other failed shows or shows that didn't pay for themselves. This isn't as easy as Google fans would probably like it to sound.

You need to be careful. You can't just throw money at these problems. So now DISH has gotten themselves 1,700 blockbuster stores. Have a good time. What do you do with those? I say a lot of nothing, probably. So I'll give them a pass on it because I only paid $220 million in cash for the whole thing, $228. but, you know, those stores are pretty much useless.

And on Ron's price point, Google is only $100 million for this original content, which is not a lot. I mean, it's just they're looking at YouTube as the third most visited website and saying, well, maybe is there something here? So hopefully we'll just try with a pill in the water. Coming up, what can $1.5 billion buy you?

A hell of a lot of Pringle's chips. That's what? Tasty details in a moment. This is Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Seth Jason, James Early and Ron Gross. TransOcean recently disclosed.

Executives received bonuses for the, quote, best year in safety performance in the company's history. This was, of course, notwithstanding the tragic loss of life in the Gulf of Mexico when the Deepwater Horizon exploded. All of those quotations coming from TransOcean. The company came out this week and announced executives are donating their safety bonuses to a fund for the families of victims in that explosion. Ron Gross, I'll start with you.

you, TransOcean has gotten beaten up pretty good in the media and in this room as well for the way that they have handled pretty much every step of this, including the donations. Yeah. What is your thought and how do they fix this? It's relatively disgusting the way they handled this. I don't have a problem with the donation of bonuses. It's actually, I think I could come around to it being a nice gesture. It's the way they handle things.

It's the lack of judgment. It's the lack of being a compassionate human being. You just leave out the fact that the statistics says it's your best safety year ever. That's just ridiculous. If you want to say it's a that's what the numbers say, but, you know, we just feel so bad. There's no way we would ever feel comfortable accepting a measure like that. Just, you know, show some compassion. You're assuming that corporate executives have any kind of ethics.

I know a few. I know a few, but they really need to get on the ball. Well, and one piece of this story that really has not gotten a lot of attention is the fact that Steve Newman, who is the president and CEO of TransOcean, according to proxy statements, will be getting a $200,000 raise. Now, to put this in context, Newman became the CEO in March of 2010, and a month later, the explosion happened. As Jerry Seinfeld would say, Newman. Seriously, like, what? I mean, where is this guy's ethics? Why is he not stepping up and saying, you know what? I know I've only been on the job a month, but I don't deserve this.

Most people, if you hand most people a couple hundred thousand, most people are going to take it, unfortunately. And you know what? I've never had the chance, Ron. Maybe if you handed me 200,000. I'll see me after the show. I have a game for TransOcean to play. The money I save it's sleepwear. I've sucked away. It's a new reality show for the panelists here.

TransOcean comes in and piles wads of money in front of us and see just how absolutely horribly will behave in order to get that money. That's the reality show you're going to pitch as original programming to YouTube? Exactly. TransOcean. Are you up for it? I think they might be. I mean, it was more BP at fault for the disaster, right?

I mean, to their credit, if everybody, all the workers at TransOcean did well and actually had a good safety year, I suppose it's fair to reward them, but I agree with Ron. I don't think we know who's that. Yeah, I don't think we know who's at fault at the end anyway. Shares of Southwest Airlines fell this week as the company was in damage control mode, literally and figuratively. The company had canceled hundreds of flights after one of their planes had to make a an emergency landing when a five-foot section of the fuselage skin ripped open at 36,000 feet. Seth Jason, what do you think of Southwest's week so far?

Well, it's been a tough one. I think the response was appropriate, and you could even go so far as to say laudable for getting out in front of this. There's an interesting article in the Wall Street Journal that goes through the timeline, and they really didn't have any directive from the government agencies as to what they should do. And so to their credit, they said, all right, well, we're just going to inspect all this stuff. They started inspecting all these planes of this model, and then they had to re-inspect them. But on the other hand, if you look at another way, they really didn't have much of a choice. They've actually got a record of having some safety violations, and it would have been incredibly bad PR for anything else to have happened.

So this is one of those things that looks good on the surface, but they were probably forced into it. The good news, I guess, coming out of this is that it forced Boeing to go back and take a look at its assumptions. Right, Boeing was the one who actually made the plane. made the plane. And I have a little bit of sympathy for everybody involved, just as an amateur, a guy who builds bicycles and knows a bit about materials like aluminum and composites, it's incredibly difficult to keep those materials working and especially in the kinds of horrible conditions that, you know, jet aircraft are up in the air, they're down, they're flexing, they're not. So, I mean, it's pretty impressive that this stuff doesn't happen all the time. And they're certainly, I think, going to go back to their math at Boeing and figure out what's going on. And it's just good that it happened in a way. way that was merely horrifyingly frightening, frightening rather than including a loss of life. What do we think about Southwest's marketing and whether or not that needs to change?

Because this is a business that's really made a virtue of itself as sort of this scrappy airline. Your bags fly free. But if the fuselage skin is ripping open at 36,000 feet, I don't care that my bags are flying free. I just want to land safely. Of course, no bags fly free. I mean, they just either embed the charge into the ticket or not.

So that's BS. But, I mean, I think they could turn around and say, hey, we didn't, you know, we didn't wait around for the government to tell us what to do. We immediately turned around and did the right thing, even though we focus on costs. So they could turn this into a positive. And there's a market for risk takers. They could say, hey, we service our planes a little less often, but we save you money. Really? So thrill seekers?

Yeah, well, yeah. It's a market-based system. Someone can pay more for a more frequently serviced plane. People pay less, too. You're listening to Motley Full Money, Chris Hill, Seth, Jason, James Early, and Ron Gross. On Friday, the Walt Disney Company broke ground on the Shanghai Disney Resort after getting approval from the Chinese central government. Ron Gross, Disney's been working on this deal for 10 years. It's going to take five years to complete the park. I'm a Disney shareholder. Please tell me this is going to pay off.

My kids own it as well. So, you know, the Parks and Resort business of Disney, which is perhaps one of the more profile businesses, only makes up 28% of revenue and 17% or so of operating income. pales in comparison to the media business, which is ESPN, ABC, Disney General, which is like 68% of operating income. But it's still important. And the international division is actually doing better than the domestic parks and resorts here in the U.S. So I like what they're doing. I'm not surprised that getting a Disney put up in Shanghai took a while. Bob Baugher, the CEO called it a long and interesting process. And they have Disney Hong Kong as well, which they're actually expanding. So I like the expansion overseas, and I think they've learned a lot from the past.

They've had some stumbling, stumbling blocks in Europe, and I think they kind of get it now. 20 years from now, will Disney Shanghai be a big hit, a big flop, or somewhere in between? It's a giant hit. It's a giant hit. Really? You think this is like a slam dunk for this? Have you been to China? No, I've known. Do you know how much they love cheesy, marketable stuff?

No, I don't. As much or more than Americans. Wow. That's a lot, because we love that. I can't wait to see the Princess revenue coming out of China once they really get going. That is going to be big. Finally, Diamond Foods is buying the Pringle's Chips business from Procter & Gamble in a deal worth $1.5 billion.

James Early, Diamond stock was up on the news, so investors really seem to like this deal for Diamond. Why is Procter & Gamble getting away from the food? Well, Chris, first, let me just correct you on something. I don't believe they're allowed to be called chips. They are a refined or potato snacks Potato product yeah because they're actually They're not sliced potatoes

They're ground up paste It's then fabricated into a mold But fabricated molds This is actually a rare Situation where both parties win P&G can ditch the slower growing food business It's just not been as profitable for them And they can focus on personal care

And for Diamond Diamond is a rinky dink company That benefits Not super rinky dink but it's not huge and it benefits from Pringle's distribution system so it can funnel other products into stores that way. So it's actually a win-win deal. Yeah, I mean, Diamond's actually done a pretty good job of growing over the last few years, acquisitions of...

I was going to say that's not hard when you borrow money and buy stuff. Exactly. It's pretty easy when that's your game. Pop Secret, kettle chips. Diamond food was a nut co-op. It was a nut co-op. It was like as calm-e-American as you can get. And Wal-Nite.

Yeah. And now they're out there, you know, doing another roll-up. So we'll see how this works out. I'm skeptical about this strategy for Diamond, but you never know. When companies buy their way into growth like this, if it fails, you never find out until late.

I don't eat Pringles unless I'm on a road trip, and then it's just very much a guilty pleasure for me. James, I know you're not a snack food guy. So just rather than ask for your favorite snack food, let's just go the guilty pleasure route. It can be food. It can be something else. James, I'll start with you.

A favorite guilty pleasure? Chris, mine is a snack for me, actually. I like fortune cookies. I don't know why. I have hydrogenated oils, trans fats, but I just, you know, leave me a couple of fortune cookies on the table. I'll eat them all up. I just have this thing with them.

Wow. Do you save the fortunes? Sometimes they're good, yeah. You do. That may be the only food product that is more fake than a pringle. Ron? I absolutely love, and anybody who close to me knows this, I absolutely love banana cream pie.

Really? Really? I never eat it, but would eat it daily. Steve Reuters? I'm just going to go off the board here, go with a restaurant, which is the Olive Garden. Hook me up. Wait a minute. Olive Garden is your guilty pleasure?

It is. Love that thing. I'm going to second that. It's not really Italian food. Is it the all-you-can-eat breadsticks? It's delicious. What's your go-to meal when you're walking into an olive garden? Endless salad, because that dressing is just to die for it. And then the chicken parms is pretty good. And for dessert?

No dessert. The endless salad usually takes care of. Wow. How can it be a guilty pleasure with no dessert? In this salad. Did he just say to die for? I did. It's that good. My wife hates it because she does not like the Olive Garden and I insist to eat there as I'm responsible.

You can come swing by my place. All right. Seth Jason, James Early, Ron Gross. Guys, we'll see you later in the show. Coming up, tax day is just around the corner. CNBC's Becky Quick will join me to talk about the high-tech methods the IRS is using to catch people cheating on their taxes. Stay right here.

This is Motley Full Money. Welcome back to Motley Fool Money. I'm Chris Hill. My guest this week is one of the hosts of CNBC's Squatbox, and she's the host of a new CNBC documentary, The American Tax Cheat. It premieres next Thursday, April 14th at 9 p.m. Eastern. Becky Quick, thanks for being here. Hey, Chris, it's great to be with you. I think most people, myself included, would rather do almost anything else than have to deal with taxes. What got you interested in this topic? Well, I will admit that I started on this one with a little bit of trepidation because I would count myself in that group, too. In fact, it was a real struggle for me to get my taxes done before the 18th when they're due this year, but I figured I'd better have my taxes done before this documentary is actually done, and that was a real different thing for me. But taxes is one of those subjects that we all spend a lot of time thinking about. There's no truer saying than, you know, the two certainties in life are death in taxes, and taxes are coming first.

and it's something that we all have to spend an incredible amount of time talking about, especially lately when you've been watching what's been happening in Washington, and this massive battle that's been set up between those who think we need a smaller government, those who think the government need to be doing more, and the only way any of this is going to get done is based on whether or not Americans pay taxes. We found some really interesting statistics, including one poll that showed that 15% of Americans actually think it's okay to cheat on your taxes, And that came as a little bit of a shock.

And I think that's why we really started digging into the problem. So on that point, why is that? Because it seems like on average, if the average person is moral and ethical, and yet it's almost like there's this separate carve-out for taxes. Like, well, I'm going to be honest and everything I do, except on that, that's okay. Well, look, there are some things. And we talk to a psychologist, we talk to college professors, we talk to tax experts about that very question because the psychology here is really,

interesting. Most people do think that they're honest and above board and that they wouldn't cheat on just about anything. But there are a few areas where people kind of stray into those gray areas. Something like marijuana laws. That's another big battle right now, too. Is it okay to smoke pot even though it's illegal? It's a crime that you don't think is hurting anybody else. And that's the attitude and the mentality of a lot of people who think it's okay to cheat on their taxes is. Look, the government's ripping me off. don't have to do this. It's a voluntary system in a lot of ways. If you're a W-2 earner, that's one thing. They're taking taxes straight out. And in fact, it's interesting if you go back in history,

the tax rolls, the revenue that they were taking in skyrocketed back when they made it mandatory for companies to take it out of your W-2. That was right around World War II. But for a lot of people, it's still a voluntary system where you have to tell the government how much you're earning and fess up yourself and tell them how much you think you owe. And it's one of those situations where a lot of think that it's a victimless crime. That's not necessarily the case because uncollected taxes make up with the government estimates is about $300 billion a year that they're not getting that they should be getting. And depending on how you feel about government, that's money that is not going to fund the government. And by the way, if you're not paying it, it means

people who are paying their taxes are paying your fair share. You're listening to Motley Fool Money. My guest is Becky Quick from CNBC. She's the host of the new documentary, The American. can text cheat. What surprised you the most when you were working on this documentary? I guess what surprised me the most is how sophisticated the IRS is in terms of what they can do if they think you are cheating. I mean, I always knew that Big Brother was watching, but I didn't know the depth of the tools, of the toolkit that they have that they can use to come after you if they think you're cheat. You've probably heard about Al Capone. You know that he was brought

down by the IRS, not for all the millions of other things that he was doing wrong. Sure, I've seen the untouchables. Right, you've seen the untouchable. I know how that goes. So I thought maybe that was just a thing of the past, but the IRS is actually very actively involved with the FBI, with local law enforcement, to go after all kinds of criminals. When they can't catch them on something else, they're still doing this now

with people who run prostitution rings, with people who run drug rings, if you're money laundering, any of those different things, the IRS actually still does the same thing that they did back in Capone's time, where they follow you around and see what you're spending your money on and catch you on it. Now, speaking of the IRS being sophisticated, for the average person, NFL means the National Football League, but in the world of taxes, NFL refers to the National Forensic Laboratory that the IRS has in Chicago. What is going on in the IRS's secret forensic laboratory? Chris, have you ever seen CSI? Oh, sure. Okay, you've seen CSI. I was shocked. They do things. They taught me

how to dust for prints. So they can look at documents. Let's say you said, I've never seen that document. I'm not the one who signed it. They say, oh, yeah, your fingerprints are all over it because they'll dust it for prints. That's the low-tech stuff that they employ. Then they go into these laser lights where they can check out to see if the ink that you've used to sign something was actually around when you're claiming to have signed this. You know, this is like that classic backdating thing where you said, oh, yeah, yeah, I signed that receipt. I signed those taxes, and I signed that form about three years ago. Oh, yeah, well, you used a big pin that has ink that was only created last year, so that's not the case. They have this incredible library of every ink

that's ever been created. They're able to sit you down, and they hooked me up to a polygraph machine when I went in if they really want to get you scared. All these guys, by the way, these special agents carry guns, which is an intimidation factor in itself. And they can hook you up to the polygraph machine, which they did. How'd you do? Well, I would have failed miserably. They didn't want to run me through the whole paces because they want to fill out all the paperwork. But I'm telling you, I got nervous sitting in the chair. They put the – and again, you think of Robert De Niro and meet the Fokkers and going down in the basement with these guys. They hook you up to all these different machines.

And there's even a cushion under the seat that you sit in. And I don't know if I should even say this, but it knows that one way of getting around these tests is to tighten up and flex, right? In your buttocks, and that stops all of your heartbeats and different things from going up. It's like the anal sphincter reaction way to cheat around. So now they have you sit on a cushion so they know if you're doing that too. Boy, they are sophisticated at the IRS. Yeah, I learned a few tricks. So do you think, I mean, I'm just, I'm thinking big picture now.

Is it possible that we're looking at another CSI spinoff, like CSI tax code? You know that might be interesting for a while. Hey, come on. It can't be any worse than CSI, Miami. Come on. You have a fair point. And it is pretty cool. I was able to go in and you put on these special classes.

and you look through the laser lights and you get to test things left and right. And it's something to bear in mind. If you're thinking about cheating the system, they only audit about 1% of all people every year. But once they get their clause in you, if they really think you're cheating, it's going to be hard to fool the feds. Now, were there any stories that you came across in putting together this documentary where you found yourself sympathetic to someone's plight, you know, in spite of the fact that they're cheating on their taxes? Yes, because, look, I don't think you can say that everybody who's not paying their taxes is doing it because it's their fault and because they're willingly trying to defraud the government. There's a woman named Shirley Cornett,

and she is the perfect example. She's in Arizona. She and her husband had been going to this firm, local firm in town, accurate, the name of this company. They'd been getting her about $4,000 a year in tax refunds. In 2008, this is, again, a firm that she's been using for years, comes to her and says that they have these special new tax preparation methods that can get you even larger refunds the company will keep 10 percent but you know this is a special thing that only senators and other people get to use as a result they got her something like 20 times greater refund than she'd gotten before so you're talking 80,000 dollars she went back to them and pushed back and said is this legal and they assured her it was legal so she took the tax check she and her husband

dumped it into their house so that they could remodel their house. And then the IRS came, and it came after the firm, and it came after all the clients of the firm. And, again, this is a woman who thought she was doing the right thing, had been advised by her tax preparer that this was legal. Unknowingly is put in this position where now the IRS is garnishing her wages, where they're hoping not to lose their house, they're doing everything they can to pay back the money with interest.

But, again, she was trying to do the right thing. And part of that, you've got to blame the tax code for. It's such a Byzantine mess of laws, all kinds of stupid deductions. And it's set up so that people who can afford really good accountants can find their loopholes, find ways around it. So I think that's probably half of the issues that are out there is people just confused and trying to do the right thing. But, you know, the tax code doesn't make it any easier. Coming up, we'll continue the conversation with Becky Quick. We'll talk about Warren Buffett and play a round of buy-seller hold.

This is Motley Fool Money. You're listening to Motley Full Money. My guest is Becky Quick, host of CNBC Squabox, and host of the new CNBC documentary, The American Text Cheat. You're heading out to Omaha in a few weeks for the Berkshire Hathaway annual meeting. I know you've gone to the meeting for years. For those of us, like me, who have never been, what does that seem like? You know, you hear Woodstock for capitalists. Is it really like that? Yeah, and I didn't know what to make of it before I'd been out too. I guess I've been going out for about four or five years now. And I've covered shareholder meetings before. I've been to a lot of them.

You probably have too. And usually it's a pretty dry atmosphere, the boardroom. But Berkshire shareholders tend to be fanatics, especially ones who have been in the stock for a long time because they've done very, very well by it. This is a different type of meeting because last year I think there was something like 40,000 people who showed up. They fill the Quest Center in Omaha, Nebraska, and Warren Buffett and Charlie Munger will sit on stage, and they'll take questions for hours. It's usually six or six and a half hours of questions from shareholders and from the media that they field on this stage in front of

40,000 people. And again, there's a number of events that are built up around it. It turns into a whole weekend affair. This is not some Monday morning shareholders meeting. This is a Saturday. And if you don't like listening to the questions, you can go into the other side of the auditorium where they set up all of Berkshire's businesses. Or a lot of Berkshire's businesses are there like Fruit of the Loom selling underwear, sees candy is selling things there, dairy queens there, giving away dilly bars. And it's a place where the shareholders get together, and it's more like a circus or a big event than a shareholder meeting. Obviously, there's been a lot of coverage about David Sokol, Buffett's longtime lieutenant, the circumstances around his resignation. Buffett has famously told his employees in the past, if you lose money for the firm, I'll be understanding. If you lose a shred of reputation for the firm, I'll be ruthless.

I'm going to ask you to play Mind Reader here. Do you think that Warren Buffett thinks that any reputation has been lost over the last couple of weeks? Well, that's what I am dying to hear. I had been hoping that Buffett would come out and address all of these questions that have been raised before the annual meeting. Because, again, at the annual meeting in just a few weeks, he's going to be taking six to six and a half hours of questions just from the shareholders, not to mention the media coverage that will be there on that Saturday and on Sunday when they hold a press conference to address all these issues. He's not going to be able to avoid taking questions there. I had wondered if he would come out ahead of time and talk about all of these issues,

because there are so many questions that have been raised. And his press release that he put out talking about David Sokol's resignation and the circumstances behind it, he said that that was everything he knew at the time and that he wasn't going to take questions. But my guess is that is something that can only last until the annual meeting if it lasts that long. I'm very eager to hear what he thinks. He said in the press release that he put out that, He didn't think anything illegal had occurred with the trading that David Sokol had done

in Lubrizol before Berkshire Hathaway bought the company just before the Berkshire Hathaway bought the company for $9 billion. But the obvious question is, was there anything illegal or was there anything unethical done? And was this a violation of Berkshire's own policies? They have a long code of conduct policy that lays out when an employee shouldn't be traded. in a stock. One of them is when you have any inside information about potential deals that Berkshire could be doing with another company, and it's hard to argue that this wasn't a situation like that. So I'm incredibly eager to hear what he thinks about those two perspectives in particular.

You're listening to Motley Full Money talking with Becky quick from CNBC. All right, Becky, time to wrap up with buy-seller hold. Oh boy, here we go. Here we go. There's a lot of buzz about this private company. Buy-seller hold of Facebook IPO in the next year. I say hold because, look, I admit this sounds like the same thing, all the skeptics on Google who were out there, who said, oh, this is way too high to be praying when they first went public

and, boy, did it take off. But I say that because I'm somebody who is on Facebook, and I can't remember my password to get back into it. I log in about once a month, and, you know, I just feel like there are people who are totally addicted to it, but then there's a whole lot of us who have accounts and don't even know how to get back in. You worked at the Wall Street Journal for seven years. Buy, Sell or Hold, the future of the print edition of the New York Times.

I hate to say this, but sell. I mean, I love newspapers. I love the Wall Street Journal. I love the New York Times. I like having the printed paper in my hand, and I still am not somebody who have pushed everything over to my iPad yet, because I just like the actual paper in my hands. I like seeing how the editors laid out the paper,

and knowing what that means about their news judgment on all the stories. But I don't know too many people my age or younger who feel that same way about it. And it just seems like a dying industry. And I hate to say that, but I'd have to go by. I mean, with it. You live there, you work there. Buy seller hold, the idea that New Jersey is the Garden State. Bye.

You've got to go down to South Jersey. You can't just look at what you see on 95. That is a totally unfair representation. New Jersey is beautiful. It's got the ocean. It's got the mountains. It's got farms down in South Jersey. It's got access to Philadelphia and New York. Bye, bye, bye, bye. Do you want to make a choice between Bruce Springsteen and John Bon Jovi? Or is that an unfair choice? No, the boss. Buy seller hold the political prospects of Donald Trump. You know, I would not have been a buyer until about 20 minutes before I walked in here where I saw that he is the leading, candidate among Tea Party voters right now that they'd like to see him on the ticket and that he's number

two when you look at overall people who vote in Republican primaries. Now, that surprised me, especially since he hasn't even declared his candidacy yet, but those are numbers, Chris, I looked at right before I walked into this and, you know, made me do a double take. So a hold maybe? Yeah, I'd say hold. It's a little early still, but he could be a buy down the road. And finally, she made her big screen debut in last year's film Wall Street 2, Money Never Sleeps, buy-seller, hold, the acting career of Becky Quick. Definitely so.

Hollywood's not coming, knocking at my door, and that's okay. They're not? Maybe a little sabbatical in the summer, a little Shakespeare in the park? I don't think they need me, and I think that's okay. The new CNBC documentary is The American Tax Cheat. It premieres on Thursday, April 14th, at 9 p.m. Eastern. fascinating stuff. So watch it, set your DVRs. Becky, Quick. Thanks so much for being here.

Hey, Chris. It's great talking to you, and I'll talk to you again soon. Have a great time in Omaha. Thanks. Bye. As always, people on the program may have interest in the stocks they talk about. Don't buy ourselves stocks based solely on what you hear. Joining me in the studio once again, our trio of senior analyst, Seth, Jason, James Early, and Ron Gross. Guys, it's that time. Once again, time to talk about the stocks that are on our radar. Gross, I will start with you.

All right, Chris. I think Nike looks really interesting here, ticker symbol NKE. Stock has gotten smacked around a little bit as increasing raw material prices has taken a bite out of their margins. Company is going to institute price increases in 2012. I think they have the pricing power to do it effectively, and so I think the stock looks interesting right here. He's right.

If Nike says I need to pay him $5 more for the running shoes that keep me from being crippled, they're going to get the $5. You're going to do it? You're absolutely going to do it? No problem. other people are in a similar situation. You'd be crippled with that? Nike's brand is that strong run?

I believe it is. Have you heard of the swoosh? I'm familiar with the swoosh, yes. James Early. Chris, Guangjin Railway popped up on my screen. G.S.H is a ticker. This is a $2.75 billion market cap Chinese company. Now, I am not at all advocating this at this point,

but has a 3.5% yield and has train service between Guangzhou and Shenzhen and China. Is that far? Is that like a 20-minute ride? It's not that far. Now, this is kind of like a New York to D.C. or Boston to D.C. kind of. But as opposed to some of those Chinese stocks we hear about, we can actually verify that there are trains that they operate. Returns in equity are kind of low, but it's a stable operation. So you're not necessarily advocating it, but is this on my radar?

It's one of these things where the dividend alone, just your eyes light up like a kid in a candy store? A dividend in growth. I mean, this I said, it's probably one of the less likely sectors to be a fabricator. The numbers are probably more trustworthy than some of the other Chinese areas. Seth, Jason? Well, I had a different idea, but I'm going back to Logitech, which is the maker of mice and keyboards and a lot of peripherals that we are all familiar with. They lowered their guidance, was it last week or the week before, something like that.

The stock has just been killed in the meantime. And although that wasn't great news, when I looked at the lowered guidance range, I had already modeled the company as being worth about 19 bucks with numbers that were lower than their lowered guidance. So I think it's a decent value here. and a pretty strong brand. It'll be around. I think it's just a good entry point.

So that's L-O-G-I. And ironically, in front of you is a laptop computer that does not have a mouse attached to it. No, I've got this little red IBM nipple thing in it, and I like that. But I have Logitech stuff at home for when I plug it in there. All right. Seth Jason, James Early, Ron Gross.

Guys, thanks for being here. Thanks for all of us. Thanks to our special guest this week. Becky Quick from CNBC. The new CNBC documentary, The American Tax Cheat debuts on Thursday, 14th at 9 p.m. Eastern. If you haven't already, check out Market Foolery, our new daily podcast. Earnings start next week, people, so we'll be covering it on Market Fullery.

Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening, and we'll see you next week.