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20 Frequently Asked Questions About The Motley Fool’s Government Funding

Motley Fool Staff
March 31, 2009

The cat's out of the bag! Happy April Fool's.

1. Why did The Motley Fool apply for and receive government funding?

The Motley Fool believes the Treasury’s $25 million cash infusion will help strengthen our business and improve our long-term success. While our Chief Financial Officer and our Board of Directors unanimously agreed that we have no urgent need nor critical use for this capital, we are still a financial services company that has been affected by the overall market conditions and felt that we deserved government assistance as well. For their part, the Treasury was impressed with the comprehensiveness of our proposal, our considerable value-add to the overall financial market, and our enthusiasm for unprecedented transparency into how we managed your taxpayer dollars.

2. Why does The Motley Fool qualify for government funding?

While many readers and taxpayers are most familiar with our robust financial website and offerings, we are also a middling participant in the automobile industry. In light of unprecedented challenges to the financial system, the U.S. Treasury Department, upon consultation of the New York branch of the Federal Reserve Board, felt it prudent to provide financial help to The Motley Fool because of our dual-business strategy.

3. What’s the formal program name under which The Motley Fool qualified for assistance?

The program’s official nomenclature is HAFD, Hedonic Asset Funding Distribution.

4. Why $25 million?

According to our accountants, EVA = $50M - $25M x WACC, where WACC = (90% x 0.1% + (10% x Kc), where Kc = 2.6% + 1.4 x (6% - 2.6%). Moreover, our original request for $30 million was attenuated.

5. How will the money further the broader economy?

The Motley Fool is assembling an action plan that would employ mark-to-model quantitative easing of one-star stocks in CAPS. For instance, should a company’s CAPS rating fail our stress test, we shall employ granular, targeted quantitative easing to improve its said score. We believe this could help ease pressure on the stock market from worrywart shorts who continue to dampen market enthusiasm.

6. Will this affect my CAPS rating and score?


7. Will this change the Motley Fool’s ability to provide unbiased news commentary and analysis?

The Motley Fool continues to stand by its solemn pledge and 16-year history of advocating for individual investors and bucking conventional wisdom. While we have the utmost confidence in the Treasury’s promise not to use its financial leverage to interfere with our free editorial voice, we will call out shenanigans as they arise.

8. How does this benefit me? How can I give someone a bailout?

The Motley Fool is excited to offer unprecedented transparency into the allocation of our government funding. Since we’re big fans of our Foolish community, we’re giving you a chance to participate by voting to apportion the final $1 million. Click here to vote now!

9. Will the Fool be nationalized?

Dialogue is ongoing, but at this point, we are not aware of any plans by the U.S. Treasury to increase its 83.2% stake in The Motley Fool.

10. Which companies didn’t receive funding?

To our knowledge, we know that the following companies did not receive funding: Caprica Primat insurance; Specific Electric; Snuggly Blankets; McCloskey Inc.; eMeringue.

11. How much leverage does The Fool employ?

We think taxpayers are receiving a great deal here. Not only are they getting the opportunity to support The Motley Fool’s mission to educate, amuse, and enrich, but they are solidifying hundreds of well-paying American jobs, and are also receiving an ownership stake in one of the industry’s premier brands. It’s truly a win-win.

12. Who are your counterparties?

Caprica Primat Insurance; Specific Electric; Snuggly Blankets; McCloskey Inc.; eMeringue.

14. How will this affect The Motley Fool’s disclosure policy?

The Fool has a 16-year history of devotion to transparency, and with the Treasury as a new counterparty, we’re excited to be able to offer more transparency than ever before. Supplementing our existing disclosure policy and trading restrictions, writers will be required to disclose any beneficial interest they may have in Treasury bonds at the end of each article. To further mollify our new partner, writers will be prohibited from trading in government bonds 10 days before or 10 days after using phrases including, but not limited to, “government bond,” “Treasury,” “Federal Reserve,” “United States,” “yield curve,” “risk-free rate,” or any materially simil