Motley Fool Money - Motley Fool Money: 09.27.2013

Episode Date: September 27, 2013

Government shutdown looms, JC Penney does it again, and Nike hits an all-time high.  Our guys analyze the latest on Microsoft’s next CEO and share 3 stocks on their radar.  Plus, craft beer pioneer Ken Grossman takes us inside the industry with his new book, Beyond the Pale: The Story of Sierra Nevada Brewing Co. 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 Fool Money. Thanks for being here. I'm your host Chris Hill. Joining me in studio this week from Motley Fool 1, Jason Moser, for Motley Fool Supernova, Matt Argusinger, and for Motley Full Funds, Tim Hansen. Good to see you guys. Thanks for me. We have got the latest on retail, consumer goods, and more.

They'll tell you who the frontrunner is to be the next CEO of Microsoft. And as always, we'll share a few stock ideas that you can put on your watch list. We begin this week across the river in Washington, D.C., where, Tim, I'll just start with you, the looming government shutdown. Who knows if we'll even be here next week to record the show? Who among us? Who among us can know? This seems, though, with the countdown to September 30th, the possibility of the federal government shutting down, maybe it's just me, but it seems like Wall Street is just sort of shrugging its shoulders and saying,

you know what, we're not really interested. We're not worried about this at all. You know, this is one of those situations where the difference between having money on the line and just speculating leads to very different conclusions. So you turn on the TV and it's like, you know, I've got no money in this game, but man, there could totally be a government shutdown.

And then you go to Wall Street where people are actually investing presumably based on the health of the economy, and they seem to think this is not a big deal. I agree with the latter more than the former. As I say in Texas, this is all hat, no cattle. The people are out there in Washington. It's just they're bloviating on and on, and it's all about having a big public persona. But I think at the end of the day, neither side wants the government to shut down.

There's no good reason why the government should shut down. But I think, you know, the phrase, we're not a politics show. But if there's been a more dangerous phrase, I think, to the political discourse over the past four years, then rally your base. I'm not sure what it is. Maddie, to Tim's point, it seems like in terms of Wall Street, the debt ceiling, which I think hits on October 17th, that potentially has some effect for investors. But in terms of the government shutdown. Right. Well, as we were talking about before the show, I think we're all looking for the better commutes next week potentially.

So maybe a little bit rooting for a government shutdown. But no, I think, yeah, to Tim's point, government shutdown, I think it's mostly a non-issue. The debt ceiling, a little more important because you wonder what's going to come out of that, what decisions are going to be made or what deal is going to be made for it to raise the debt ceiling. And it seems like that's the way it's been going in Washington. It's extracting sort of policies and issues using the threat of not raising the debt ceiling. So what happens, where are we in two weeks? That's the bigger question. Yeah, I mean, what Tim says is spot on. I mean, you've got to figure at the end of the day,

I mean, it's not going to be much that comes to this. But I think that's something that probably sneaks under a lot of people's radars is a little byproduct of this. When you have the threats of this government shut down and furloughs being enacted, you know, that's when these employees, federal employees, are then deemed either essential or non-essential. And you have to figure, with this happening, it seems like every six months to a year now, I mean, you keep on having to deem a lot of people non-essential. And I would think at some point, those people who, you know, just reiterated time and time again that you're non-essential. You're worried about the eco's of federal employees?

It's a bitterness factor there in your employee base at some point, right? I mean, I'm just speculating. So the government's glass door rating is going to take a big hit next week. It's distinctly possible. I will say on the debt ceiling, if you look at where the money, the smart money is, like nobody's buying credit default swaps on U.S. government debt, right? So, I mean, everybody's going to get solved. Let's move on to actual companies.

J.C. Penny continues to be in the headlines and not for good reasons. The stock had a 13-year low this week. At one point, it was the most traded stock in the public market. It's, Maddie, it bounced back, but then it fell to another new low after announcing it will be offering, do I have this number right? 84 million new shares? It's about right. Because they need the money?

Well, this is an absolute train wreck, and there's so many ways to go with this. But I kind of want to – there's two words that are coming to mind that were looking at this JC Penny story, Chinese wall. Let me explain. So earlier this summer, you remember that Goldman Sachs helped JCPenay raise about $2.5 billion in new debt. It was kind of a CEO Ollman had come back. It was kind of a way to keep things rolling and hopefully, you know, lead to improving conditions, improving liquidity conditions at Jay C.C. Penny. Well, just earlier this past week, Goldman came out, you know, put a bad rating on the stock and actually put an underperform rating on a lot of Jaycey Penny's debt, which really hurt the stock. C.O. O'L.M. came on and said, hey, look, we're good. I know the stock's sticking a big hit today, but we have all the cash we need, which turned out to be totally false, because as of As of this past week, we know that they're also needing to raise what amounts to about a 38%

dilution to the stock. And raising that amount of money at a 13-year low is just one of the worst things you can do. But I think it's great that Goldman Sachs is also leading the sale on those shares. And so there's two ways to look at. Either Goldman Sachs is great at playing both sides of trade, as we know, or you can almost say, hey, the Chinese Wall is actually working. Goldman Bank is doing things.

At the same time, its analysts are sort of taking the opposite view of things. So it's interesting. How is this stock not at zero, Tim? I mean, who is making any bet with the debacle? Yes, all of the stuff that Maddie illustrated for this past week, but really just the last year and a half. Well, you know, it's not even just what Maddie said about the debt. Well, we've got all the money we need,

which, given the proximity to this capital raise, is something the SEC is undoubtedly going to look into. Got to. Yeah, got to. But, and then on the other side of that, they let Ackman and Vornado, who previously owned large stakes in the company, sell at between 12 and 13 before they dropped this offering out on the market.

So, I mean, they were letting insiders get out ahead of destroying their common shareholder base. I mean, so add to the heap of horrible concept, debt-laden balance sheet, comps, tanking, like a severe corporate governance issue. Yeah. I don't know who owns it. Throw up my hand. I have no idea. George Soros, right?

I mean, who else is in this? Kyle Bass. Kyle Bass got hammered. Terry got hammered. Those guys can't be happy. Yeah, but they're not selling, at least as far as we know right now. Well, I mean, the flip side. There's a lot of volume today.

We don't know. Maybe they already sold. Maybe they already sold. We've got a pretty easy comp they're coming up on, so there's that. Yeah. I know. I will say, in December, they're going to have some incredibly easy same store sales numbers. It's not making me want to buy.

It's not getting more of it. I think what Tim was saying yesterday on Twitter was just so good because it's like, well, they might not even get through the holiday season. I mean, if they have to raise this type of money, they might be struggling to make payroll, make payroll, payables. I mean, they might not make it to those good comps. Yeah, the people in the country who should be most worried about this, besides JCPenney, common shareholders, are anybody who has a receivable at JCPenney. I mean, because you've got to be panicked, especially if you're a small business who relies on that sort of 30 to 45-day payment window to make your payroll. That's for the, those are the people who should be very panicked.

Shares of Nike hitting an all-time high this week after first quarter profits rose 38%. Jason, they're still not getting a lot out of their China operations, but things are looking really strong in the North America and Europe. Yeah, I mean, it shows you the power of, really, the global brand that Nike has built up to this point. I mean, they saw a little trouble in some of their emerging markets in Korea and Mexico, I think, was some shipping issues. And China sales were down about 3%. Though I think, and Tim, I don't know if you saw this, they apparently over the summer shipped out a bunch of NBA All-Stars, Kobe and LeBron and guys like that to really push the Nike brand as they kind of try to rebrand their consumers out there. there in China. But, you know, again, I mean, this is a very strong company. And I think one

of the stories that they probably doesn't get enough attention, but it's something they're really focusing on as the direct-to-consumer part of their business, which is, you know, you buy your Nike stuff online or whatever from Nike itself. And I mean, those are higher margin sales, which really help bring that down to the bottom line. That growth in that segment was about 20 percent this quarter of the same quarter last year, which was significant. And I think that's something you'll see them continue to focus on. But gross margin, you know, saw a benefit there from improved materials costs and that direct to consumer. So all in all, a very powerful brand and a big market opportunity continues to do well.

I agree. Nike is, for the most part, a well-run company, obviously a brand behemoth. I'm surprised that the market is as excited about these results as it is today. It's up like 5 or 6 percent because we were talking about joking about JC Penny rolling over an easy comp. Nike was rolling over really easy comp, particularly on the profitability side, the margin side, due to some really bad inventory management they had about a year ago, which caused a bunch of markdowns in some of those markets. So, you know, this is a bit of a return to normalcy in terms of the profitability level of Nike, but the market is now pricing it as though it was a big improvement,

and it should be a premium valuation. So I think there's a little disconnect there, and I would actually say, I'd probably say that the strength they showed in Western Europe is probably more positive for the forthcoming Adidas results, where obviously they're very big in Western Europe, more so than to get too excited about Nike, It was a good quarter. It's a good point.

I mean, it's at about 27 times earnings now, which is, it's excessively high for the stock, which normally trades more in the 20 to 21 range with the pop today. I think you've got to be waiting on the sidelines when you see a pop like this today, but, yep. Blackberry is going private in a deal for 4.7 billion. That is a whopping 3% premium on the stock when it was announced, Tim. It's a group that's led by Fairfax Financial, which already owns 10% of Blackberry. As far as I can tell, though, they're not putting in any new money.

No, I have a conspiracy theory about this. Oh, bring it off. If you'll entertain it. So Fairfax owns 10%. And Fairfax, people may or may not know this, is a Canadian conglomerate. Some people refer to like the Berkshire Hathaway, but they're not quite as good as Berkshire Hathaway. It's run by this guy, Prem Watsa. And in the past, but they're, unlike Berkshire Hathaway, they're pretty heavily levered.

And in the past, they've done some, let's call it, creative accounting with some tax laws, carry forwards and things like that to make sure that. to make sure that they avoided large losses in order to make sure they didn't get downgraded, basically. This year, their insurance business isn't having a very good year. They've been taking pretty big mark-to-market hits on Blackberry, and the stock, obviously, after the guidance announcement they gave last week, and the weak earnings they put out this week, you're probably staring down more losses. People who like the deal will point to the net cash on the balance sheet and the value of the patent portfolio and some ongoing enterprise contracts that I think they have.

But, Mike, you know, as you said, Fairfax isn't put up any more money. They haven't found anybody else to put up any more money yet. I wouldn't be surprised that this is a bit of a ruse to keep the stock stable through the end of the year so that they don't have to market. Just run out the clock? Run out the clock on their fiscal year so that they don't show a big loss on their financial statement and risk another credit down grid. I think something that may substantiate that, too.

There's no breakup fee on Fairfax's side. I mean, they can walk whenever they decide. They may want to do it. There's no breakup fee there. You know, and dragging out, you know, what is it, 90 days looking for bidders? Stranger things have happened. Meanwhile, you've got the executives at Blackberry who stand to rake in $80 million if they essentially get shown the door when it goes private.

No, this is win-win for Fairfax and Blackberry. If they, for whatever reason, this bid prompts somebody else to come in and make a bid, because Fairfax stabilizes the stock, doesn't put up any more capital, and walks away. the guys of Blackberry get a huge payday, and then whoever is stupid enough to come in and buy this gets left holding the operations bag, which is like a cash furnace. It's the best way to describe this business. I think that's beyond a conspiracy theory. I think that's a good theory. I mean, it sounds like it makes sense.

It just goes to something I've said before, which is my dream in life is to be a former CEO. Coming up, fire up the DeLorean called Doc Brown. We are going back in time to 1983. This is Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser, Matt Argusinger, and Tim Hansen. You'd be hard pressed to find a bigger winner this week than MAKO surgical. The robotic surgical device company was bought out by Stryker for $1.65 billion. Shares of MACO up more than 80 percent on the buyout. Why the premium? MAKO wasn't really, actually, what's

the word, profitable? Were they? No, I've never been consistently profitable. And, you know, I looked, as we talked earlier in the week, I thought the Stryker deal, the premium they paid was essentially just that they wanted to mow through any potential competing bids, just really put a high price out there. And Stryker is such a large company. I mean, their orthopedics business is almost $4 billion a year, and that's about triple the size of what they're eventually going to pay in total for MACO. The deal makes sense.

You know, Macoplasti, which is Maco's sort of robotic knee surgery implant technology, it was always kind of a little bit of a threat to Stryker or an opportunity, I guess, and that's how they viewed it. It could be creative to strike her going forward. It's a fast-grim company. I'll just say, though, I work on the Rule Breakers team. This was a three-time wreck for us. Really not really successful.

Our first wreck happened at a much lower price tended to work out. But this has been a heck of volatile stock. And, you know, I don't see I feel that bittersweet about it. You know, I was almost kind of relieved. You're not sad to see it go? No. You know, obviously great for members who bought within the last year because it would make it was really low. This week, Amazon unveiled the new Kindle Fire HDX tablet.

It is faster and cheaper. It is much cheaper, Jason. The $6 million man. The cheapest version is $139. I don't own any of these Kindle fires, but I'm questioning how well functioning is a tablet that's $139. Well, I believe that $139 tablet is like the first iteration, simply the small Kindle Fire, which, I mean, that was decent for when it came out.

We have a couple of Kindle Fires in our house. My daughter's got them last year from Christmas. And so for a 7- and 8-year-old girls, it works very well. I'm a little bit more married to my iPad, and I don't think Amazon necessarily is levered to the rollouts of these devices like Apple would be to its iPads, for example. I mean, Bezos is more focused on monetizing the use of the tablet, whether it's an iPad or a Kindle or whatever it may be. I think these Kindle fires give him a chance to experiment and try new things. And a good example of that would be the integration of the Great Reads acquisition there into their sort of ecosystem there. and the May Day button, which is supposed to bring up a very interactive customer service experience

with the tablet. So, I mean, that's why you didn't see any big reaction one way or another with the tablets themselves. But I think it's something that he likes to do. It gives him a chance to innovate and try new things. And they'll probably continue to do well because he does such a good job of making them affordable for the masses. Tim, there's a birthday coming up in your family.

You're thinking about a kindle-fired tablet? I was just, I was giggling about the prospect of Amazon changing the tagline to Kindle Fire. It's great for 7-8-year-old girl. And it is. I think a couple techies just died at Amazon. Hearing that. The website, All Things Digital, is reporting that Microsoft's search to replace Steve Bomber as CEO has landed upon the CEO at Ford Motor, Alan Malolli. He appears to be the lead horse now.

I was saying earlier today, Maddie, it seemed like whoever replaces Steve Bomber, I feel like they almost have to go outside the company. I think you're right. I think Microsoft is at the point where it's just there has to be some kind of shakeup or some kind of clash of cultures to really get the company moving. Al-Molle came in and he left Boeing. He was head of Boeing's commercial business, came in as CEO of Ford about six years ago, I believe.

Yeah, I mean, it's been a dramatic turnaround at Ford. But that was really an operational thing, I think, at Ford. I'm trying to struggle to find out why, what Alamoly could do with Microsoft. He has a home in Seattle. He's worked with Steve Balmer before. So it makes sense. Both. It sort of makes sense.

And they've given up a lot of what I would have thought, like Don Matrix, who went to Zinga, head of Microsoft's Xbox business, which really the guy responsible building that business into a multi-billion dollar business. I thought he might be the guy in the future, but he's now gone. So it might make sense. It seems like the problems that Microsoft are more innovative. related as opposed to something like culture or operational, which is, you noted Malali's more focused on.

I mean, that's why I think he was so successful at Ford because they're not really trying to innovate past the car, so to speak. But with Microsoft, I mean, it does seem like the innovation side of things is causing them more problems. So it's kind of why I'd be curious to see if he got the position exactly why. We will keep watching. Before we wrap up, our producer, Matt Greer is back in Houston this weekend for his 30th high school reunion.

And he was kind enough to share a... 30? 30. Just check it. Mac looks good. Congratulations, Mac. For a guy pushing 50. He looks good.

But he shared a page out of his yearbook about his classmate in high school, Michael Dell. And I'm just going to read here, this is 1983. It's a little profile on Michael Dell talking about computers and saying... Talking about computers. I think it would be very difficult for anyone in the future to have a job that did not, in some way involve a computer. Nailed it. That's a good call by an 18-year-old here.

Bam. We got a minute left. Thirty years from now. What's a kid, a senior in high school right now, thinking about that's going to be big in the future? Genetic sequencing. Really? I think it's going to bring up a lot of moral and ethical dilemmas, but I think it's going to be a huge technology that people are going to be going to rely on.

Mac, what the heck have you done? No, second. Second, you know, I think alternative energy, or at least getting to a point where we're completely completely renewable that it's going to happen. Mac comes up with bits like this, by the way. Yeah, yeah, that's what Mac does. That's what Mac does. There you go. Jason?

I think we just continue to see the roll out of the smart home. More smart home functions as kids get older, ovens that cook your dinner for you while you're at work or at school and fridges to talk to you and all that stuff, the proliferation of that. Steve, what do you think? Flying cars. Boom. Steve nailed it. Up next, we're going inside the beer industry with Ken Grossman,

the founder of Sierra Nevada. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Time to talk about the business of beer, so let's start with a little history. In 1980, there were eight. That's right, eight craft brewers in America. Today, there are more than 2,300 with another 1,500 breweries in the planning stages.

One of the leaders of this movement has been Sierra Nevada, one of the most successful craft breweries, producing more than 800,000 barrels of beer every year. Ken Grossman is the founder and president and author of the new book Beyond the Pale, the story of Sierra Nevada Brewing Company. Ken, thanks so much for being here. My pleasure. You brewed your first batch of beer before you were in high school. Do I have that right? Oh, I was fairly young. What got young Ken Grossman interested in brewing beer? Actually, I had a neighbor of mine, one of my best buddies actually going through elementary and then junior high and high school, and actually later moved to go away to college with him.

But one of my neighbor's fathers was a very accomplished home brewer and home winemaker and actually a rocket scientist. And his hobby was brewing beer at home. How did that go over with your parents? I don't want to delve too much into your personal life, but I just know how surprised I would be if one of my kids came home and said, hey, I've been over at my friend's house brewing some beer. Well, actually, it was a science experiment I was conducting.

And of course, I told my mother wasn't going to drink it. It was just an experiment I was doing. As I said in the opening, 1980, really the beginning of craft brewery, there was very little success out there. How did Sierra Nevada buck the trend? I mean, at that point in time, did it seem like an uphill battle for you? Or did it just seem like brewing beer that you really liked and cared about? was just something you wanted to do. Actually, the year we started, we brewed our first batch, November 15th, 1980.

There was only 44 breweries that were brewing companies anyway that were in operation in the U.S. It was really just about the low point in U.S. brewing history since Prohibition, since repeal Prohibition. And there were actually six of us who opened between 1976 and 1981. there were a couple of existing small brewers, certainly around the country. But as far as the new upstart brewers, like myself, who pretty much were home brewers, you know, we had started essentially with the glorified homebrew setup. And the marketplace seemed like it was ready for something different than American light logger, and that was about all you could buy from the mainstream brewers back then.

What is the toughest part about brewing beer? and it can be about anything from the brewing to the bottling process, but I have to believe this is a pretty intense startup kind of business that you're doing here. It's not like today where pretty much anyone who wants can arguably start their own website. What were the big challenges for you early on? Well, back when I started, there was really no suppliers to supply to a little fledgling industry. you couldn't go buy a mashed ton or buy a kettle or buy little fermenters, at least not in this country. And so back in those days, all the home brewers who wanted to go pro pretty much had a billed-bill and equipment

or converted from dairy equipment in our case. We went around and scrounge dairies and soft drink plants and bought little stainless steel tanks out of a defunct dairy for a fermenter or converted some other kind of food processing vessel into a brewing piece. But as far as the challenges, besides having to build all your own equipment back then, we're dealing with agricultural products. So the barley is grown in different places, and the harvest are all a little bit different. We're using hops, which are also a natural raw material,

but maybe a little bit different to one year to the next. So trying to put all those things together and then rely on yeast to convert the malt sugars and alcohol and carbon dioxide and do that with the usual. of wild yeast or any bacteria that might spoil the flavor. So keeping a handle on sanitation as well as just trying to deal with varying raw materials with some of our earlier challenges. You mentioned consistency, and I have to believe that has got to be one of the biggest challenges, particularly as you grow. I would think that maintaining quality is easier when you're just starting out. But as Sierra Nevada has grown dramatically over the years,

You're now one of the biggest brewers in the country. What's the key to maintaining that quality? Actually, it's the opposite point. You're really small. It's pretty challenging to get the consistency. You know, you've got one batch going through the process at a time, and you maybe don't have any kind of accurate temperature control or automation in some areas where, you know,

controlling temperatures is pretty vital to a lot of steps in the brewing process. And again, maintaining that sanitation for, throughout the process is harder when you're very small and using primitive equipment. So as we've grown, we've invested significantly in quality control measures and state-of-the-art equipment. Our fermentation tanks are very hygienic and custom-built for us now. We're using brewing equipment built in Germany by companies that have been building breweries for hundreds of years, so they've got a lot more knowledge and engineering expertise.

piece, and so you can get a lot more consistent and actually better product with the modern engineering and equipment. We probably struggled a lot more with batch-to-batch variability, than automation and more hygienic designed equipment. You're listening to Motley Full Money talking with Ken Grossman, president and founder of Sierra Nevada, author of the new book, Beyond the Pale, the story of Sierra Nevada Brewing Company. It seems to me, and again, I'm not a beer drinker, but it seems to me like the craft brewers in general stick together, and yet at the end of the day, you are in competition with

one another. How do you view your competition? How do you think about who your competition is? Well, yeah, you're right. We do tend to stick together. And when I started, I mentioned there were only six small breweries in the United States. And we were all on a first name basis and would see each other regularly and if somebody needed some malt or some hops because they were short, or even yeast in some cases, your brethren would be happy to help you out and loan you what you needed. And I think the brewing industry historically probably, at least the brewers anyway, maybe not the sales guys, but the brewers will always have a lot of camaraderie. You know, we're in a business that's a mixture of art and science,

and there's been a lot of sharing of knowledge and helping brewers out, you know, both in the U.S. and we're friendly with brewers around the world, actually. And today, I think, you know, part of the success of craft brewing in America has been because of this camaraderie that's been fostered amongst the brewers. All sort of see that the rising kai is lifting all boats and sewers to share knowledge where we can to help each other out. So fraternity, most all of us get along very well. I've got a brewer visiting me today. Benny from Russian River, who's we're actually doing a real fun project next year to sort of kick off our new brewery that we're opening in North Carolina. We're doing 12 of our friends in the brewing industry come and brew beers that are to show that spirit of camaraderie and support for the industry.

You've got your standard Sierra Nevada pale ale, but you've also got a number of seasonal beers. I know that our producer, among others, is counting the days until your celebration comes out. How big a part of your business are seasonal beers? you know there's a significant part of our business and not necessarily just in volume they do contribute to some volume but it's more too exciting delight the consumers out there who want to experiment and want to you know cry you know wheat beers and stouts and dry hot beers and belgium style beers so we brew dozens of different beers and most of them

aren't widely distributed but we we do have a range of them that do get into a lot lots of markets and for us one it's fun to do as brewers and just like as a chef you would want to cook the same dish over and over again so we get a lot of enjoyment out of experimenting with with beer and brewing styles and what's made the craft brewing in this America in America is such a popular thing is you know all the fun and experimentation we've we've had as a as a group of entrepreneurs and brewers what's happened in the U.S. with the explosion of craft brewing, and there's essentially now more than one brewer a day opening up. It's spread worldwide.

Now we've got Brewers, America, to see our industry so fun and exciting. Traditions like Germany are coming to visit Brewers in America to find out what's... You're listening to Motley Full Money talking with Ken Grossman, president and founder of Sierra Nevada Brewing Company. You are also the owner, and I am curious to what extent you have thought about taking your private company public because I have to believe that there are plenty of fans of yours out there who would love to own shares of Sierra Nevada stock? Well, I mean, over the years, we've been approached by a range of people wanting to take us

public or invest in the company or buy us. At this point in time, I've had really no interest in doing any of those things. I had a partner a quarter of a few years ago I bought out, And now I've got two of my children actively involved in the business. I've got a 35-year-old daughter named Sierra and to North Carolina to help head up that brewery out there. So it's a family business and building the company and a reason or a desire to either go public or sell out. One of the things we like to focus on as investors at the Motley Fool is the importance of corporate culture. I'm not asking you for a job, but I am curious. What kind of fringe benefits am I getting if I work at Sierra Nevada?

Am I getting free beer? Oh, yes. You're getting free beer. We have an on-side health clinic. We have a restaurant and employees get dollars to spend over there. We've got a daycare center on site. We've got gardens. We've got a couple acres of food gardens for supporting our restaurant.

We have a whole range of. We have a massage therapist on site. We put a bit of emphasis on health and wellness in our organizations. So we've got a couple of health care providers. So a whole range of things. Okay, I've changed my mind. Now I am asking you for a job. Kidding.

I would be remiss, though, if I didn't mention one thing that leaped out from your book, and that is something you refer to as beer camp, which sounds like something out of a dream Homer Simpson, probably has. What is beer camp, and for people who are interested, how can they sign up for it? Well, we started quite a few years ago. We've got a small tin barrel or 300-gallon research brewery, and that's the same-sized brewery. I started out with the 1980, and we do a lot of experimenting. We play with new hop varieties or different yeast grains and make a lot of small batches of beer in the small brewhouse.

And we came up with the idea of let's go and bring some of the store owners, restaurant owners, people who really maybe don't know a lot about beer and want to learn more. So we bring them to Chico. They spend a day sort of learning about the brewery, the brewing process. They get to then come up with a brand. They can name it. Come up with the label artwork.

Come up with a style. And they work with our brewers and come up with a restaurant. and they blew that beer the next day. And then we permit it and keg it up and get the label registered and try to send some beer back to their hometown so they can enjoy it with their friends. So we started doing that seven or eight years ago. And they've now taken it. So we have a contest.

You can win a trip to beer camp, and you need to produce a video that amazes us and submit it. It's actually a contest that's going on right now. judge your entrance and 20 people will get to come to Chico and get to brew beer with us. I'm looking at our engineer on the other side of the glass in our studio. His eyes are lighting up. I'm pretty sure he's going to be applying. Abraham Lincoln once said, I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis.

The great point is to bring them the real facts and beer. The story of Sierra Nevada Brewing Company is available everywhere. So go out and pick up a copy for the beer lover in your life. Ken Grossman. Thanks so much for being here. My pleasure. Thank you. As always, people on the program may have interest in the stocks they talk about, and

the Mountain Full may have formal recommendations for or against. So no buy ourselves stocks based solely on what you hear. I'm Chris Hill. Join me in studio, once again, Tim Hansen, Matt Argusinger, and Jason Moser. Guys, before we get to the stocks on our radar, I should mention for our Canadian listeners out there, and we do have them, dozens of them. I am hosting an event on Tuesday, October 1st at the University of Toronto. This is for Canadian investors. But wherever you are in Canada, you can watch the event. We're going to stream it online. All the details are

at fool.ca slash October 1. That's the numeral one. That's our Canadian website, fool.ca slash October 1. Let's get to the stocks on our radar. We'll bring in our man, Steve Brodo, from the other side of the class to hit you with a question. Tim Hanson, what do you got? I've been struggling with urban outfitters. Struggling? Well, I've been going back and forth on it. You know, it's on my radar, so it definitely fits here.

I can't say if I like it or not yet. On the plus side, they've got a very strong concept in anthropology and free people, and a historical great track record of inventory management, which is tough to do in a business like retail. On the other side, urban outfitters to me, which is their biggest concept, is a little bit on the trendy side. fashion risks there, and the stock still looks expensive even after some recent declines on some weak guidance that they gave for the duration of the year. So, you know, if those anthropology and free people concepts keep firing and the inventory stays clean, probably a winner from here, but there's still, there are risks. And the ticker symbol?

UR.B.N. I was going to say, before I turned it over to see, when you said you struggle with urban outfitters, I feel exactly that way whenever I walk into one. I'm just like, I'm not sure if I'm supposed to be there. What do I make of you? Yeah, exactly. Steve, question about urban outfitters? What is the highest margin item you could foresee them selling in the future? You know, I read this week that they're going to open a cafeteria in one of their, in bar in one of their urban outfitter stores. So I would say, as with all food service businesses, the highest margin item they could sell is alcohol. Matt Argusinger, what do you got?

Sure, I got a company, all of us are at the full here, are pretty familiar with, paychecks, ticker P-A-Y-X. disclosure, I own it in my IRA, and I don't know why I've just owned it for a long time. They report earnings on Monday. It's a little bit of a barometer for kind of what's going on in the small to mid-sized business economy. At the same time, paychecks is really struggled. You've got into it, not so much ADP, which is the other big payroll processing company because they're really focused on larger businesses, but you do have Intuit. And a smaller company called Ultimate Software, which is really kind of, they're taking a lot of share in the payroll processing and human resource market. So, just want to see what Paychecks asked to report on Monday.

It's also a taper play. It's a bit of a taper play. Steve, any questions about the sexy world of pay roll processing? Sure. Aren't there just cheaper competitors? What is paychecks offering that's superior than a lower cost provider? No, and that is the great point. I mean, like, Intuit's got... Thank you. Done. No, Intuit's got QuickBooks, which for a long time was not, wasn't sophisticated enough to really handle what paychecks did. But now it is.

And it's in the cloud. And a lot of companies are using it for their enterprise resource management. Launching next week, the Broido Short Fund. I will say, good brand, though. Good brand name. Paychecks, just a better brand name than it. Such a hassle to switch. That would be probably the biggest defense.

The switching costs are huge. Right on. Jason, what do you got? Yeah. So clean energy fuels, which is a ticker CL&E, has the backing of co-founder T-Boon Pickens and CEO and co-founder Andrew Littlefair. just bought another 127,000 shares in the company, which amounted about $1.5 million, but clean energy fuels is building out America's natural gas highway, which is essentially

just a network of natural gas stations around the country strategically placed to aid the trucking industry. And so they focus on the trucking markets as well as their other core markets of refuse and taxis and airports and other mass transits of local and state governments. So, you know, as they try to build out the network to bribeys, provide the natural gas for all of these vehicles and working relationships with companies like Cummins and Westport innovations, they stand a chance to be a big part of the energy infrastructure in the next 10 years. Steve?

Is natural gas sort of an infinite resource for us, or is it a cap one? Well, if 100 years is infinite, then yes. But those are just estimates, Steve, and we could certainly use a lot more in export more as well. There is a glut of it, they say, and so it's certainly something I feel like we're going to have to integrate into our policy at some point. All right. That's going to do it for this week's show. The show is mixed by Rick Engdall, our engineer is Steve Brodo.

I'm Chris Hill. Thanks for listening. We'll see you next week.