Motley Fool Money - Motley Fool Money: 09.16.2011

Episode Date: September 16, 2011

Shares of Netflix tumble after the company reports lower subscriber growth.  Shares of Research in Motion plunge on weaker-than-expected earnings. And Warren Buffett makes a surprising addition to the Berkshire Hathaway portfolio.  Our analysts discuss those stories and share some stocks on their radar.  Plus, corporate governance expert and film critic Nell Minow talks Apple, Costco, and Fall film fare. Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Pool Money. Thanks for being here. I'm your host, Chris Helen. Joining me in studio this week from Motley Fool Hidden Gems, Seth Jason, from Motley Fool income investor James Early, and for Motley Full Global Games, Tim Hanson. Guys, good to see you as always.

Good to see you, Chris, as always. We have got the latest on Netflix, Berkshire, Hathor. alternative energy and more. We've also got a few stocks on our radar. But our lead story, this week marks the three-year anniversary of when Lehman Brothers collapsed. Now comes growing predictions that a Lehman-like crisis is looming, only this time, starring European banks and governments. Tim Hansen, I will start with you. What is your latest on what's going on in Europe? Well, we've got unprecedented cooperation this week with the European Central Bank, the U.S. Fed, the Bank of England, Bank of Japan, and the Swiss.

teaming up to offer unlimited dollar funding for European banks for the rest of the year. Wow, it's like the Justice League of Superheroes. Wow. I guess it's just like that. They may be less effective, though. I mean, they're not solving any problems. They're basically making money available to banks so that they can not collapse right now. But at some point, you need to solve the underlying problem here,

which is that European sovereign debt is rapidly moving in on distressed levels. The banks own it. crisis of confidence is they're building. They're not lending to each other. The government is stepping in to fill the gap, but you can only fill the gap for so long, and nothing has been solved. James? Yeah, the problem started with the private sector first, and it's sort of like with friends, if people think that other people think that you're uncool, they won't want to hang out with you. And that's what's happening with a lot of these European banks. People are worried about them, so these banks can't suddenly find dollars to borrow when they have a lot of

these dollar-denominated contracts, and that's where the European Central Bank came in. to make these anonymous dollar loans so they could keep going. But if it weren't for the banks, the central bank, they would be in bigger trouble. The immediate issue this week was the very poorly kept secret that Moody's was about to downgrade French banks. And so credit ad regret coal and so Jen, they were dropping. The downgrade came out and it said, you know, we actually think their capital base is okay, but we're worried that because they're uncool and because everybody's worried they're not going to be able to get their short-term needs, funded. And so, I mean, I actually considered buying them on that horrible news as a kind of a flyer

of a trade. And I believe my exact words to my colleagues who were laughing at me like I was an idiot, was there's no way the central banks of the world are going to let them have a liquidity problem. The next day, the central bank says, no way, are we going to let them have a liquidity problem? But as Tim noted, we still don't know if the debt that's on their books will eventually become worthless. Yeah, you know, two banks this week did already borrow $800 million over a short-term period. You know, at some point, Europe is heading towards capitulation here because what the, you know, political and policy officials are doing is so dissonant from what the population of Europe wants, that, you know, they have elections there. Eventually the tide is going to turn. And when that happens,

there's going to be a, there's going to be a larger crisis. So other than taking a page out of, I guess everyone but Seth, in terms of, you know, not looking to buy into or trade, on these banks. What is the impact for U.S. investors? I think it's just, you know, from an investing standpoint, just stay away. I think it's too hard. Some sovereign wealth funds are stepping up with money. You know, we saw the Katari fund drop money into Greece to subsidize a merger there. But, you know, sovereign wealth funds are notoriously bad investors because they invest with political goals in mind rather than economic goals. You know, sovereign wealth fund, all it exists to do is get money out of the country. It represents. And if it can, you know, while doing that along the way, raise the influence of

its home country, the better it can do that. But don't follow this quote-unquote smart money because it's not that smart and they're investing with very different aims in mind than an individual investor would. James? And the biggest global problem besides Europeans losing their eight weeks of vacation. And if I were, I'd be writing too. I'd be writing too. Um, is, is, is, don't you take 10 weeks, James? I wish. There were a lot of the Philippines for a month. I was working in the Philippines. Okay. For the record, I sent emails. I was on the top of the mountain. Yeah. Well, anyhow, a lot of these contracts are tied to LIBOR, the London Interbank Office Race. By contracts, I mean debt contracts between companies, between parties all around the world. So, so far, LIBOR has not really risen much, surprisingly. But if that were to rise, that would really dampen global liquidity. I'm wild and crazy. I would look at some of these banks as short-term trades, especially of the French banks, because I not only think that the French government is going to bend over backwards to save the edge.

entities, but that they're probably going to try to backstop even the equity itself. So, but you know, that's kind of a crazy trade. I wouldn't recommend it for everybody. Shares of Netflix down more than 20% this week after the company lowered expectations for U.S. subscribers for the third quarter. In July, Netflix had forecast 25 million subscribers. That number was lowered to 24 million. Seth, Netflix's long-time recommendation of our Motley Fool Stock Advisor Service, and over the long-long Hall, it's been a huge winner, but this is a stock that in the last two months has dropped 45% in value. Only because it went up about 8 billion percent in value for the preceding few months.

Netflix's math is wrong. They need to subtract one more person from the disc plan. In preparation for the show, I waved goodbye and said, see you later. I'm not paying for those crummy disks, the extra $7 a month. I think this is worse news than a lot of Netflix investors would like to imagine because Rick Munara's on our site wrote a good article about this that the disc business while often being sort of painted as the anchor on Netflix because of mailing costs

and those kind of thing. It actually had a pretty good competitive moat because of the distribution centers and everything. And when you're going straight online only, you lose a lot of that. It's much easier to switch an internet-based subscription. I think there's more competition in that space. None of it is as big as Netflix right now,

but Hulu and Voodoo and Amazon and iTunes all offer decent, if somewhat different, plans that can compete here. And I think this ultimately becomes a race to decide among the main players who's willing to accept the thinnest margins. And if that happens, Netflix shareholders are going to be really unhappy. Tim? I think the interesting thing is that, you know, Seth started naming all the companies that are competing in this sort of online content delivery space. And what they all have in common is somewhat crazy valuations, which means that you're in. implying that every one of those companies is going to have significant, maybe greater than 50% market share of this online content distribution industry. But market share can only add up to

100%, which means for every winner out there, if you believe Apple is going to be the winner, then you probably need to be betting against Netflix. If you think Google TV is going to take off, you should be betting against both of them. They can't all win, but the market seems to think they all can right now. What does Reid Hastings, the CEO, do now? I mean, the latest thing that we've heard, you know, you look back over the last two months, they come out, they lower, you know, they raise prices, then comes the news that negotiations with stars has broken off, so they're going to be losing their stars content. Now comes this news where they're lowering guidance on subscribers. It kind of seems like the CEO really needs to cut a big deal here

on the content side of things. Well, he's got the best list of sort of user data and number of users or whatnot. So he's just got to figure out the best way to hold onto them. And, you know, I think content is one solution to that. There may be some other bells and whistles. Netflix can add to make that happen in terms of reliability or pricing. But I think content's probably the best lever they can pull. Yeah, the trouble is that the content providers have decided they're not going to let Netflix pull their lever. They're going to make them pay a lot more for the proposal, for the privilege. Forbes, among other media outlets, raised the question of acquisition that that Netflix, as its market cap, continues to go down, increasingly becomes a target for acquisition.

Reed Hastings sits on the board of Microsoft and Facebook. Do either of those make for likely candidates, or does a company with really deep pockets like Google make better sense? If you had to bet on one of those, what would you bet on? Seth? I don't think we're anywhere near that point. I think the stock would have to become much more distressed. It would make the most sense for somebody like Amazon at the right price. You're listening to Motley Fool Money. We're here every week, but for daily analysis on the latest money news, check our daily podcast, Market Foolery on iTunes and at MarketFulery.com. Shares of research in motion down big on Friday after the Blackberry Maker reported disappointing earnings and lowered guidance for the next quarter.

James Early, in February, shares of research in motion were at 70. Today, it's in the mid-20s. I don't know what the problem with American capitalism is. can't just declare a business dead in the water and move on. So you're saying it should be at zero? Yeah, they should abandon this effort sooner rather than later because it's obviously going into ground. They see that, but they're just going to try and end up, the result is ringing every drop of potential profit out of the business. And his shareholder is going

to be worse off. Potentially debt holder is going to be worse off. I just see the train wreck coming a mile away, and it's sad. Tim Hanson, where is the value in this business? I'll think the other side of this. I mean, there's still a Beeper company listed on the NASDAQ that's making $100 million a year. So, I mean, these technologies can take a long time to go away. Research Emotion has $1.4 billion in cash. Sales declined to this quarter, but they're still, you know, generating about $2 billion a year in free cash flow.

You know, do the math on that. And with an $11 billion market gap, they could buy back the entire company in five and a half years. Do all the BlackBerrys go away in five and a half years? I don't think so. You know, they've got some interesting prepaid offerings and emerging markets. And obviously, the U.S. sticking with them because of the security features that they offer.

So, you know, at the present valuation, I'm actually a little bit intrigued. I agree with James. The business is in decline, but even declining businesses are worth something. Intrigued? Are you saying this could be your stock on your radar this week? It could be. Seth, what do you think? Just play that funeral dirge, I think.

I'm with James on this one. Coming up, the latest development on the business story our listeners can't seem to get enough about. That's right. I'm talking about Tang. You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here in the studio with Seth Jason, James Early, and Tim Hanson.

London police have charged a UBS trader with fraud after he lost $2 billion on unauthorized trades. Seth Jason, UBS is calling this guy a rogue trader. What else are you going to call him? If he made a lot of money, they would have quietly not called him a rogue trader and sort of ushered him out of the building or promoted him. or promoted him, yeah. There aren't a lot of details out about this gentleman. So far I read a bit of his bio, and he seems like he was a conscientious student from a prestigious private school in England, and worked his way up through the ranks, and was working on a low-risk, delta-1 or something trading gas.

Yeah, so it was a low-risk trading desk, but the name of the trading desk was Delta 1. Yeah, so the risks themselves that that desk was taking were apparently judged to be low-risk, But, of course, if you are committing fraud, which is the accusation here, and then you can have some real high risk for the company. And that's exactly what happened. They're talking about a $2 billion loss. They may get a credit downgrade. That's just everyone's getting a credit downgrade.

At least this is a fine time to have to stomach one of those. Yeah. I mean, on the other hand, what can you do there? No matter how good your security is, there are going to be people who work from the inside, who will try to figure out ways around it. So I don't know that I'm too hard on UBS for this, but I will note that the acronym stands for used to be smart. James? And you might think, well, this is just a little bit of rogue trading.

How bad can it be? But $2 billion is enough I've read that would match up the equivalent of laying off 3,500 workers, which is a pretty big impact for one guy to have. Warren Buffett announced his latest hire this week. Ted Weschler, a hedge fund manager with Peninsula Capital Advisors. He'll be joining Berkshire Hathaway to run a portion of its investment. James Early, one thing we know about this guy is that for two years in a row, he won a charity auction lunch with Warren Buffett, paid more than $5 million to do so.

What else do we know about this guy? It was a $5.3 million job interview essentially, and it worked out. This guy wasn't angling for a job, apparently, but Buffett was so enamored by him that he pursued him and made him an offer. This guy's accepted, obviously. This guy has $2 billion in his hedge fund, in Charlottesville, Virginia, invested in just nine companies, Chris.

And that's very interesting to me. And they're mostly, like half of them are media companies, like DirecTV, TiVo, Liberty Media, some kind of coupon company. TiVo. And that's kind of a different wheelhouse from what Warren Buffett does currently. So I would expect this guy will get some kind of small, a couple billion dollar allocation at first and get a chance to prove himself over time. Tim?

He has a great track record, though. You know, his returns have been unbelievable since inception of his first. fund, and he interestingly actually enjoyed this in his shareholder letters. He compared his funds returns to the Berkshire B-share. So not just against the market, but against another smart investor, which I think is a nice methodology and one that more money managers should adopt. Seth, let me ask you this. He's a marathon runner also, and he did, I think, three hours and 30 minutes for the New York City Marathon. Is that good? How old is he? He's 50. 50? Yeah, that's decent. That's pretty decent. Go Ted. All right, I'm going down to challenge

Ted from Charlottesville Marathon this coming spring. Come on, Ted. Let's do it. This week in alternative energy. The White House is dealing with political fallout this week from granting more than $500 million in federal loans to Cylindra, a solar energy company that recently went bankrupt. Tim Hansen, there are a lot of aspects of this story that you really find it enjoyable. This is a train wreck on so many levels.

From the vetting process down through the decision to lend the money, down to, you know, there was actually a recommendation against this loan from bureaucrats in the government, career, government officials that said basically, don't make the loan, we suspect the company will run out of money in September 2011. And they were wrong. They nailed it. They ran out of money a few days before that. September 6th, they officially declared bankruptcy.

I mean, this thing was doomed from the start. Its business model was that it made solar panels that cost $6. They cost $6 per watt to make, and they sold them for three. Wow. And then they got a $500 million loan from tax. fair is at no interest rate. They could do a lot more of that. To expand capacity. This is, I mean, there's a lesson for investors here, which is, you know, a lot of hype surrounds the green tech space, but business models matter, and they don't all, you know, blow up in a period of 16 months,

but they will blow up. Yeah, remember all those car companies, the hundreds of car companies that existed at the dawn of the automobile age in the United States? No, nobody remembers them all. Now, if they'd all gotten $500 million interest-free loans from the government, they would have survived. Oh, wait. And finally, we had talked earlier this year about the fact that Tang is the latest billion-dollar brand for Kraft. Recently got a letter from Michelle Leroy of New York City. Hope I'm pronouncing his name correctly. Michelle.

He and his wife are regular listeners to this show and to our daily marketfulery podcast. They were traveling in Mexico and picked up a packet just for us, sent it our way, of tuna tang. Sweet. Now, just in case you get a little screamish, as I first did when I got an email from him saying, I'm sending you tuna tang. It's tuna, which is Spanish for cactus flour. So it's not fish-flavored tang.

Oh, this is so much better. Yes, yes. And we actually mix some up. And we're going to compare it. We're going to compare it to what did you get to some Colombian tang that we got a month or so ago from Nick Slepcoe who starts his letter to us, dear MFers. He had me at MFers, of course. Hopefully he's referring to Motley Foolers. So we're going to compare the to the flavor of this one.

So I refer to Seth also. Yeah. It's something called Lulo Orange or Naranjia, which is not actually an orange, but it's an orange-type fruit with a weird green inside. Which one should we do first? Let's do the Lolo Orange because... Which one is it? The dark one? The dark green, the Colombian one.

It's sort of a dark green... Wow, that's sweet, among other things. Well, I didn't measure, but it's not terrible. No. It's rejuvenating. If somebody gave this to you and it was the only thing you had to drink, you wouldn't turn it down. Absolutely. Let's move over to the tuna tang, which is a lighter shade of

green. Oh, this smells weird. I need a pellet. This, oh my God. Oh, wow. There was a blogger online, a dude of the beard, who's trying all these flavors of Mexican tang. I'm going to drink more Colombian tag. And he said of this tuna one, he said, if they had tried to make it

taste like actual fish, it would have been better, and I think he's right. Our colleague, Aaron Kennedy, One of our editors actually smelled the tuna tank, and she said, and I quote, it smells like crayons mixed with gummy bears. That ain't what it tastes like. I was going to say it. It looks like Mr. Queen.

And I wish it tasted that good. It has an after taste that I can only compare to when you're putting on cutter bug spray and you keep your mouth open. I was going to say it's like something you accidentally drank at the end of a college party. Drop us an email. And please send us the weirdest tang from your content. Thank you. I'm glad you got the chance to try this day. Your horizons are expanded.

They are. We've gotten more mileage out of this Tang topic than I would have ever... And notice how we did not go the low route on the Tang jokes. No, other shows would have done that, but not us. Not a car talk. Exactly. Seth J. Serberts. James Early. Tim Hansig, guys.

We'll see you later in the show. As always, you can drop us an email, radio at fool.com. And yes, by all means, send us the more exotic flavors of tang you've encountered. Coming up, Nell Minow on Costco, Apple, and the state of the movie business. Stay right here. This is Motley, Four. Money. Welcome back to Motley Full Money. I'm Chris Hill.

Nell Minow is with Governance Metrics International. Business Week has called her the Queen of Good Corporate Governance. And when she's not grading boards of directors, she is reviewing films as the movie mom. Nell, welcome. Thank you very much. Always great to talk to you. I want to talk boards of directors and movies, but I want to start with Warren Buffett,

who made news with his latest hire Ted White. Wechler, a hedge fund manager who first met Buffett after he was the winning bidder in a charity auction to have a lunch with Buffett. You've interviewed Warren Buffett. What did you make of this news? I thought it was excellent news. Everything I've heard about Weishler makes him sound like he is truly a kindred spirit of Warren Buffett.

He's got humility. He had a three-person office in Charlottesville, literally above the store. and just, you know, as a true believer in fundamentals, which, of course, I'm sure makes Warren very happy. And I love the idea that not once but twice he was the high bidder. Over $2 million of time. So that's $5 million to get a job interview, I guess. Now, Berkshire has said that it may hire one additional manager. Wessler met with Buffett, got a job out of it.

You've recently met with Warren Buffett. I'm just curious. Are you scoping out houses in the Omaha area? I would do it in a heartbeat, but I'm afraid I am not good at fundamentals, and I don't think that would work out. Along with Ted Wessler, Todd Combs, was hired by Berkshire in the last couple of years. So when it comes to succession planning, there are a lot of possibilities. I'm curious, who do you think is going to succeed Warren Buffett? I think that the only way to succeed Warren Buffett is to divide up all the various things he does among more than one person. He has said that to me, and he has said that to other people as well. It's not a secret. And so I would not be surprised if all three of them, including the player to be named later, got the job.

You're listening to Motley Full Money talking with Nell Minow. Apple, obviously, in the news recently, Tim Cook has replaced Steve Jobs as CEO. And as a bonus, Cook got 1 million shares of Apple stock worth 384 million. These are shares that vest over the next 10 years. You said that this bonus is disappointing but not surprising. Why do you say that? Well, because this is another serial offender, particularly in the area of CEO compensation. and I think it's a horrifying message to the new CEO and to the market.

I really was hoping that they would have some sort of performance-based pay, but just to essentially give him all that money up front, which even if the stock goes down substantially, it will still be a tremendously large piece of compensation, I thought was very, very disappointing. Just stepping back from Apple, but I'm going to use Apple as an example, in your work looking at boards of directors, do you often see this kind of disconnect? Because when you look at Apple as a company, and the way the business has been run, it has been a very well-run business over the last 10 years. Certainly the stock has been a monster performer for shareholders.

And yet, getting your take on it, their board of directors. really is not as strong as the management and business would indicate. I'm curious if that's sort of the norm. I don't think it's the norm, but I do think it is not unusual for a founder-led company. It's what happens then. That's the problem. So companies that are founder-led, first of all, are obviously new. They're fairly young.

There's a tremendous amount of momentum there. The vision that got them successful in the first place is still at the helm. and even though I strongly disagree with the compensation for Steve Jobs, the fact is that he was emotionally and financially invested in the company above and beyond the compensation and therefore very focused. Where corporate governance really becomes much more critical is after the founder leaves, and of course Jobs is very much still there. But when the manager takes over for the visionary, that can be a real problem, and that's when you really need a strong board of directors.

One of our favorite CEOs here at DeMontley Fool is Jim Sinigal, the CEO of Costco. And in keeping with his style, he very recently announced that he was stepping down. But, of course, it was done so buried in a press release that was about August sales figures for Costco. I'm curious what thoughts you have about Jim Senegal and the legacy that he's left at Costco. Yeah, he's one of my favorites as well, and really he is an exemplar of what I like to see in a founder's CEO. He did not go crazy about pay because he correctly said that he was already deeply invested in the company and had every possible incentive to make it work. I love the way that he paid his employees a little bit better, a little bit better benefits

and the competition because he correctly said that that would make them more motivated and more loyal. And of course, I love it as a consumer as well. And, you know, I hope he is as good at CEO succession planning as he was in creating and running that business. You're listening to Motley Full Money talking with Nell Minow, corporate governance expert and film critic. Let's talk about movies. How is the movie business doing these days? The movie business is sort of in a Dickensian best of times, worse of times. You know, they had very, very good box office returns, but if you peek a little bit into it, you see that there's some concerns there, some red flags there.

There were a lot of 3D movies this summer, and that ups the box office price. So if you adjust for that premium, they weren't. not as good as last year. And a lot of the things that were very reliable last year were not as successful. I'm going to tell you something that may really shock you, which is that the, it certainly shocked everybody in Hollywood that the superhero movies did not do as well as the R-rated comedies this summer. And of course, they cost lots more. A couple of movies with a lot of buzz that are coming out this fall. I want to get your thoughts on. First, this is one that I was telling you earlier, I don't often root for movies, but I'm really rooting for this one, because

because I very much want it to be a great film, and that's Moneyball. It is a great film. Yay, I've seen it. And it is just absolutely terrific. And Brad Pitt, you mark my words, he's going to get an Oscar nomination for this. I thought it was excellent. But how are you going to go wrong? It had the director from Capote and two of the best screenwriters of all time, Aaron Sorkin, of course, of West Wing and Social Network and Steve Zalian of Schindler's List

and searching for Bobby Fisher, and it is extremely well done. And I want to give big props to whoever did the casting for it, because I'll tell you, the guys who play the baseball scouts, they really look like they have spent a lifetime out in left field, you know, catching pop-ups. And it's just beautifully, beautifully done, really smart. And, of course, I have to say that there is always something very satisfying about a sports movie where the nerds come out ahead of the show.

Jacks. Now, for those listeners who may not know, Moneyball is based on the Michael Lewis bestseller about the Oakland A's, and in particular their general manager, Billy Bean, and the ways that he was able to essentially crack the code on scouting and find value among players that didn't cost a lot of money. When Michael Lewis was here at The Motley Fool, one of the things he shared with us, that Billy Bean was upset about one part of the book in particular, and I'm curious if this has made it into the film. Okay. And that was that apparently,

Billy Bean drops F-bombs just left and right in real life, in the office, that sort of thing. And that made it into Michael Lewis's book, and Bean was worried that his mother was going to be upset by that. I'm just curious. Is this now an R-rated film because of Billy Bean's language? I think it's a PG-13-rated film, and he comes across just great in the movie.

He comes across, and the scenes with Billy Bean and his daughter are absolutely wonderful. So I think his mom will be very proud of him. Yeah, it is a PG-13. I just checked. You're listening to Motley Full Money, talking with Nell Minow, corporate governance expert and film critic.

Before we wrap up with a round of buy-seller hold, as I said, this is when the Oscar buzz starts to heat up. Do you have any early predictions for Best Picture? Oh, for Best Picture? That is tough. I think the help may get a nomination, which is unusual for us.

summer film. And I think that sort of my absolutely out-in-left-field suggestion is that at Cannes, a movie called The Artist, which would be the first silent film release in 80 years, got a ton of awards, and everybody's very excited about that one. So you may see that one at Oscar time. And just one or two movies that maybe you've got a beat on that there's not a lot of buzz on? Well, one that I'm really interested in is the skin I live in. Antonio Banderas is back with the director who really got him started, Pedro Almodar. So anything the two of them do together, I think, is going to be absolutely fascinating. And then here's one that should be very dear to your heart, Kevin Spacey in Margin Call.

Oh, yes. I think we're going to have a special screening at the Motley Fool from Margin Call. Excellent. And then I have to say my guilty pleasure thought of the upcoming months, I have to be a to say that I think real steel, the Rockham Sockham Robots movie, looks like a lot of fun. Really? Yeah. This is the movie where boxing among humans is outlawed, but boxing with robots is okay. Yeah, it kind of looks like the champ. You know, I like it. I think the Harold and Kubar movie, now that's going to be a 3D. I think that's going to be funny. And I think the worst movie of the year,

clearly, is going to be Adam Sandler playing boy and girl twins in Jack and Jill. You get no argument for me on that one. All right, let's wrap up with the round of Buy Seller Hold. She plays Margaret Thatcher in The Iron Lady, which will be in theaters in December. Buy Seller Hold, another Academy Award for Merrill Streep. You know, she gets nominated every year. It's been a long, long time since she won. So I think this could do it for her.

The trailer looks tremendous. This company has recently come under fire for its price hike, but it does have 20 million subscribers. so buy-seller-hold the future of Netflix, the service? I think I would go with a sell on that. I think that they are going to be overtaken by Hulu, which looks like a stronger service going forward. So I think Netflix handled their price increase very poorly. This might be the most divisive candy in the theater lobby.

Buy-seller-hold Twizzlers. People like Twizzlers. because there's no fat in them. So I think that's definitely a buy. And finally, we've had a number of books about him. Buy Seller Hold, a full-length movie about Warren Buffett. Oh, my goodness. He would deserve a miniseries.

Absolutely. It would be great. Who do you think should play him? At Asner. He did a good job playing him in The Too Big to Fail. She is the Queen of Good Corporate Governance at Governance Metrics International. She is the movie mom, and she is one of our favorites.

Nell Minow, thanks so much for being here. My pleasure. Coming up, we'll give you an 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 ourselves stocks based solely on what you hear. I'm Chris Hillen.

Back in the studio with me, Seth, Jason, James Early, and Tim Hanson. Time for the stocks on our radar, brought to you by by OnCore insurance services. Do you have life insurance, but think you might be paying too much? Encore may be able to help. For a free rate quote, visit their website at smartterm.com or call toll-free 866347-5748. They'll compare rates to help you save licensing and disclaimer information can be found online at smartterm.com.

All right, guys, we're going to bring in our man, Steve Brodo, from the other side of the glass with a question for you about the stock on your radar. Tim Hansen, we will start with you. Is it research in motion? No, it is not. I promise to read more about the company, but on my radar this week is an Indian bank called HDFC Bank, which is a fast-growing retail bank in India. They have promised over the last few years, and for the next few years, to grow faster than the industry average. They've achieved that, but at the same time, maintain one of the best capital and loan performance ratios in the industry. It's always been expensive, but the price has recently been dropping with the downturn in the Indian stock market. And so this is an opportunity to get a great company with a great growth story at a relatively historically low price tag.

And the ticker symbol? Is HDB on the New York Stock Exchange. Steve Reuters. Question for Tim. Sure. So I've heard that banks are relatively unpopular right now. It's just a rumor. Are they as unpopular in India as they are here?

They are not as unpopular in India because, as you might guess, from a relatively underbanked culture in India, they haven't yet gotten into sort of exotic credit default swaps and things. Rogue traders. What about rogue traders? Nor rogue trading. The core of Indian banking is sort of home loans and motorbike loans. So as long as you can assess the quality of the person you're lending to, it's a pretty plain vanilla business. And the nice thing is that the biggest competitor in the Indian market for HDFC is the State Bank of India run by the state. If you know anything about the Indian state. They're not the best competition. So it's a nice opportunity for HDFC.

Tim, do you have a question for Steve? Yeah, Steve, how are you doing today? You've been a little grim recently. Oh, no, I'm doing fine. The baby's coming, so it's just a lot on our minds. Wow. When is that baby coming out? November 6th. All right. Mark your calendars. We will plan accordingly. Can we do a Motley-Fill money baby pool? You know, Mac is not a broadcast from the delivery room.

Yeah, I'm sure Steve's lovely bride would love that. James Early, your stock this week. Chris, I'm going with a stock that has not raised his dividend in a long time. It's been sucking wind operationally. Its name is Violia. The ticker is VE. And this is a French company that does water and sewage and garbage trucks and some public buses and streetlights, mainly a water and sewage company and also some de-stallization stuff, taking the salt out of the water. This stock has like an 11% yield now because the price has been beaten down. It used to be an income investor recommendation.

I sold it. I'm glad I did. But I'm wondering if it's a good time to buy now that it's been whacked so hard. Steve, question for James? Sure. what's the biggest opportunity moving forward for this company? Steve, really has a lot of stable business in France, but it's also very strong internationally and emerging markets, and those are really going to be the driving markets for this company going

forward because these, a lot of these people don't have running water and they definitely don't have sewage. So that's going to be a priority, and once you get that, you don't want to give it up. James, do you have a question for Steve? Steve, what is your opinion on the water and sewage industry in the U.S.? Is it something that you would avoid investing in? because that's something that we always think about in income investors. It's something that people don't really think about, and it's not really on their radar,

and that's the reason we like it. Has it been on your radar? Yeah, absolutely. I think water and sewage stuff sounds like a lot of fun. Just in general. Everyone needs toilets, and everyone needs running water, and it's, you know, even if the economy... Half the world would debate you on that. If the economy turns sour, the last thing we're not going to pay is the water bill, I think.

Fair enough. Seth, Jason, stock on your radar this week. I'm going to have to go with radaring Netflix and radaring research in motion. And I wouldn't say short them. And I wouldn't even say buy the short options because I think it's going to take a long time for them to unwind. But I would sure say stay away because I think both business models are undergoing some change toward less profitability if not complete obsolescence. And so there's easier money to be made out there. Steve, question for Seth?

Sure, in terms of Netflix, you know, everyone makes this big deal about Netflix and streaming movies. Where do you see the world going in terms of, where will I watch streaming movies in one year and let's say 10 years from now? Well, I watch them on my computer, on my flat screen. Well, you'll watch them everywhere, I think, because right now, I mean, I've got, you know, Hulu on my Xbox. I've got it on my TV upstairs. Downstairs, I've got an internet ready. Samsung TV, which has its own built-in Hulu app. You can get a Hulu app on, I think, your iPhone and your iPad.

You sound like a Pitchman. Well, yeah. I think you have to be a pitchman for all the other services. There's voodoo. There's iTunes. There's Amazon Unbox stuff, which doesn't come on a lot of devices right now, but it certainly could. So I think the competition will be everywhere, and I think that's, in essence, the real problem for Netflix. Question for Steve?

Can I interest you in some fine tuna tang, Steve? I'm not interested at all. I heard that segment earlier. It was terrible. I would like to not ever drink that. The segment wasn't terrible? Chris tried his best. The segment was fine.

The tuna tang was bad. The discussion of the beverages was for a whole thing. I thought Chris sold it well. Thank you, Tim. Thank you. All right. In the one minute we have left, let's just go around the table. Something you're working on next week on Motley Full Global Gains, Tim.

We've got some neat scorecard data called My Scorecard that lets us know how many members of our service own which stocks. And so we're looking at the least owned stocks and trying to cross-reference those with the stocks we think are the best buys in our service now and then try to highlight those. little owned goodbye stocks to our members. James Early? Fascinating. One thing in income investor? I am looking at dumpster diving in Europe. I think there are a lot of steady businesses that are not.

Yeah, exactly. Or sewage diving, whatever you want to. That's probably more accurate. I think there are a lot of good companies, good yielders that are going to bounce back. Seth, what about hidden gems? I'm going to sit down and think a little bit more about Chipotle's valuation in light of the recent opening of their new concept. Which you went to? Which was, yeah, shophouse, East Asian.

Asian kitchen they call it. The name is too long, but the food was amazing. And I think it's got real potential. I only wish Chipotle had plans to open more than the one. All right, Seth Jason, James Early, Tim Hanton. Guys, thanks for being here. Thank you, Chris. Thanks for our guest this week, Neil Minnow. That's it for this edition of Motley Full Money. Our engineer is Steve Broido. Our producer is Mack Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.