Though the summer is wrapping up, amusement park operators are hoping that fair weather extends well into the fall season to boost attendance (and in-park spending) at the hundreds of parks spread across the U.S.

In this episode of Industry Focus: Consumer Goods, Vincent Shen and Motley Fool contributor Dan Kline take a first pass at understanding what it takes to run a theme park with three of the biggest names in the industry -- Six Flags (NYSE:SIX), Cedar Fair (NYSE:FUN), and SeaWorld (NYSE:SEAS).

A full transcript follows the video.

This video was recorded on Aug. 14, 2018.

Vincent Shen: Welcome to Industry Focus, the podcast that dives into a different sector of the stock market every day. I'm your host, Vincent Shen. It's Tuesday, August 14th. My guest today is Motley Fool contributor, Dan Kline, who's connecting with us via Skype. I have to say, Dan, I've been spoiled by your frequent visits to HQ. It feels weird not having you in the studio with me.

Dan Kline: Well, I would have been there, except it's the first week of school. Frankly, I would have been there, because last time I was there, you paid for dinner and we went for Korean BBQ, which was absolutely fabulous. [laughs] Next time.

Shen: The first week, I imagine, is always kind of rough for you, as a dad.

Kline: Yes. Yesterday, my son took a bus to the wrong high school and didn't figure it out for two hours. Today, the bus didn't come at all! [laughs] 

Shen: Well, I hope he has a little bit better luck for the rest of the week.

Kline: It's a joy!

Shen: Our topic of discussion for today is definitely influenced by your experience from this past summer. Last time you were on Industry Focus, you mentioned making trip after trip to the major theme parks in your neck of the woods down in Florida to keep your son entertained for the summer. Did you have a good time?

Kline: I did. I believe I personally am up to 25 days spent in either a Disney park, a Universal park, or a SeaWorld park.

Shen: Even with the long lines, the heat in Florida, I always wonder if something like that grows old -- even something as fun as roller coasters, does that grow stale? I know you're not a roller coaster guy, but you get the idea.

Kline: I'm not. But, if you come down and visit, you're here for two days, and there's a pressure to get everything in. If I go to Universal with my son, usually, I get up early, I work for four or five hours, we go to the park, we do a ride or two, we have some lunch, we do a show, a couple of more rides. If the line is really long on something, maybe we'll do a single ride, or maybe we'll just skip it. We'll come back to this when we talk about annual passes -- as a local, there's just not that same vacation pressure. I never enjoyed theme parks when it was vacation. Now it's like, "We're going to Epcot for lunch and maybe we'll ride Mission: SPACE." It's very different, and a lot more enjoyable.

Shen: Listeners, that's a very relevant lead-in to our main topic for the show. Dan and I are going to look at three companies from the amusement park industry -- those are SeaWorld, Cedar Fair, and Six Flags. Though we've mentioned some of these companies in the past, this is the first time we're going to take a closer look at the industry beyond the Parks and Resorts division at Walt Disney. That division generated $18.5 billion of revenue last year. That's more than 4X the revenue of SeaWorld, Cedar Fair, and Six Flags combined. It's a good reminder of the massive shadow that Disney tends to cast over the industries it plays in. These are the pure plays, and they're really going through some interesting changes and adjustments, especially at SeaWorld and Six Flags.

We'll look at SeaWorld first, ticker SEAS. SeaWorld Entertainment shareholders have really had to buckle down in the past few years to stomach some of the volatility with this business. Shares plummeted in 2014 because of growing controversy regarding the main attraction at SeaWorld theme parks, their whales and other animals. Year to date, the stock has rallied about 80%. A decent portion of that gain followed the company's second quarter earnings report from last week, which we'll dig into more in a few minutes. 

A really brief overview for SeaWorld, the company currently operates 12 parks in the U.S. across several well-known banners, including its namesake SeaWorld, Busch Gardens, Sesame Place, and a few others. In 2017, almost 21 million people visited the parks. Its top line last year came out to $1.26 billion, which was down 6% year over year, making it the fourth consecutive year of revenue declines. Breaking down the top line, SeaWorld and its peers make money, generally, not only selling tickets for admission to their properties, but also selling food, beverages, other merchandise in the parks. Between those two categories, for SeaWorld specifically, tickets made up about 60% of the top line, concessions and merchandise making up the remaining 40%.

Dan, SeaWorld is the underdog here for the three companies, given its turnaround recently. Can you talk about some of the evolutions the company has undergone recently?

Kline: Let me jump in with one ... I don't want to say misconception, but. The Blackfish Scandal absolutely hurt SeaWorld from a marketing, public relations, attendance point of view. But it wasn't the only reason it went on a steady decline. It's really Harry Potter at Universal that should get some of the blame of this. There used to be, Disney, you went for four or five days, and then you either did Universal or SeaWorld for a day or two. They were your No. 2 park. Now, obviously, that doesn't affect the whole company. That's just the flagship here. But, you had this major change in the Florida market, where SeaWorld became a clear also-ran because Universal invested so much and stepped up its game. 

It really changed the thinking for the whole company for SeaWorld, in addition to having to answer a lot of questions on how it treats its animals. When you go to SeaWorld, I would say about 60% of the messaging is to remind you that these animals have a better life than you do. It's over the top. They used to talk about how wonderful the shows were, now it's all about the work they do to save, and they show you videos of them releasing things, and orcas having steak dinners, whatever you could possibly do to counteract that image.

They fought a lot of bad publicity. They were building in the wrong direction, and they've had to pivot. The SeaWorld parks have become more thrill ride parks, in addition to animals. They used to be very focused on shows and animals. They still have all of that, but they tacked on a lot of roller coasters to make those parks a little more appealing to more people.

Shen: There's also been a leadership transition for SeaWorld that came up in February. It makes an interesting situation for the company. For three-plus years, we had CEO Joel Manby, he had to manage a lot of the backlash and helped rebuild the company's public image. The turnaround was slow-going for several years. He actually announced his departure from SeaWorld back in February. Then, you have the results from this past week, which were very encouraging. Attendance was up 4.8% to 6.4 million guests for the quarter. Revenue was up 4.9% year over year to $392 million. Per capita in-park spending gains, basically the spending per customer, offset some of the declines that they saw in the actual admission pricing. 

The results are turning around, but the company still has to look for someone to take the reins. SeaWorld is in a position where they need someone who can follow through the recovery process, but also start looking out a little further, shifting gears and thinking about longer-term growth.

High-level, I've heard management talk a lot about changes to SeaWorld's marketing strategy, which you've mentioned, to their ticket and pricing strategy, plus some of the new ride openings, as the big drivers of their attendance growth. On that third front, interim CEO John Reilly said in June, "We have a revamped capital strategy that we believe will also help drive attendance growth with the goal of offering a new ride, attraction, show, or event in every park, every year." I'm curious, Dan, have you tried any of these new attractions?

Kline: You know I'm a fraidy cat. I'll do most rides that aren't roller coasters. The new ride at Aquatica is called Ray Rush. I actually did it, and it's super-duper terrifying. It's in water, you're in a raft with two or three other people, I forget what the limit is. There's a bit of a drop, and then you go into a bowl thing and slide up and down. It's not something I would typically do. But, I would say, it's absolutely on par with Miss Adventure Falls, which is the new addition at the Disney Typhoon Lagoon. Maybe the Disney one is a little bit more themey, but the actual ride is right on par.

That's where SeaWorld has been very smart. They're adding rides where they can compete. Some of their rides are subpar. Their whole penguin experience, the penguins are awesome, but the actual ride feels regional, it feels very small compared to a Disney attraction. But in roller coasters and water slides, they can offer world-class attractions, and that's what they've been doing. Infinity Falls, which is the new ride at SeaWorld -- which has unfortunately missed the summer season, in terms of an opening -- looks to be an absolutely tremendous flume-style water slide with the biggest drop. I'm not going anywhere near it. They've gotten very smart. 

They've also stepped up their game in terms of offering more shows, more nighttime activities, more one-day events. There's a thrill ride event coming up. They're also really giving passholders reasons to come back. I went back this weekend because they offered a half-off Aquatica deal, and I had family in the area who didn't have an active pass to any water park, so for half the price of a regular ticket, they both got to come, and we spent the day at the water park. 

Their new CEO is going to need to be able to do two things: you absolutely have to manage capital expenditures. You cannot put in a new top-tier roller coaster at every park. Some of them have to be lower-price shows or smaller additions. Then, you need someone who's really a master marketer. The challenge is, there are two people you're trying to reach -- the one-day visitor who's going to buy a full-price ticket and spend a bunch of money because they're not coming back all year, and the person who buys an annual pass that's going to come a lot and can eat and drink and buy hats and who knows what many times a year.

Shen: You've brought up pass holders a few times. I want to touch on season pass activity. That came up as a bright spot recently for the company's results. Reilly mentioned on the earnings call that season pass revenue growth was in the double digits thanks to some better features that are given to pass holders, and some of the pricing for those customers, as well.

A few final points before we move on -- management also shared 2020 targets in guidance recently as part of its latest earnings release. In 2017, SeaWorld reported about $300 million of adjusted EBITDA. By 2020, management hopes to grow that figure to $475 to $500 million. Components of that growth are in attendance, revenue per capita, and cost savings.

First, SeaWorld wants to grow that annual attendance about 1%, while also recapturing part of the 3.6 million customers that it lost since its peak attendance in 2012. Then, with per capita spending, they're targeting that increase to come partially from ticket pricing, and also some of the stronger in-park attractions and food offerings that you mentioned. Finally, management is looking for $50 million of cost savings to flow down to the adjusted EBITDA line. That's on top of $40 million of costs already cut since 2016.

You mentioned capital expenditures. To open the new rides, events, attractions, that the CEO wants at every park each year, annual capex estimated at $150 million for the next three years. Any final thoughts before we move on?

Kline: Their costs savings scares me. The one thing you notice at SeaWorld or Aquatica, they're both lovely parks, but the line to get food is often very long. Their drink service, you buy the all you can drink cup, it doesn't have the chip reader the way the higher-end theme parks do, you have to wait in line. So, it scares me that they're pursuing cost cuts at a time where I think they could increase visits by actually doubling down on a more Disney-like customer service experience.

Shen: I'll end with this note. SeaWorld has put up huge gains in 2018, one of the strongest performers in the broad market. The investments in the parks, they do need a steady guiding hand. Keep an eye out for the new CEO announcement. Next up, we're going to turn our attention to Cedar Fair and Six Flags, the peers in this space.

Cedar Fair is up next, ticker FUN, which is awesome. This one is unique among the three companies because Cedar Fair is an MLP, or master limited partnership. Fool.com offers a detailed overview of MLPs and how they work, but in short, these are publicly traded partnerships that operate in specific industries like oil and gas and real estate. MLPs pay out distributions to its unit holders. That's the MLP equivalent of dividends and stockholders. There are tax advantages to this organizational structure. 

For Cedar Fair, the company has a distribution yield of 6.7%. Pretty attractive to any income-focused investor. Size-wise, the company is pretty similar to SeaWorld and Six Flags, for that matter, about $1.3 billion of revenue for the trailing 12 months. Dan, can you walk us through the business, some of Cedar Fair's properties, and recent updates?

Kline: Cedar Fair owns very traditional amusement parks -- Knott's Berry Farm, the various ones with the Cedar Fair name. They're your mix of roller coasters, kid's rides, classic merry go rounds. As a company, they've struggled. Their attendance was down slightly, although spending per person was up a little bit. They illustrate a major problem for this industry -- seasonality. It was a rainy July, the summer was too hot, there were some different issues. Cedar Fair Parks, almost all of them are not open full-year. 

Through the first six months of the year, they're actually down. While they haven't changed their guidance for the full year, they will in September, there's almost no way to catch up, because a lot of their parks close. This shows you that, in this business, unless you're in a market like Florida with a year-round tourist base, you have a set up where if you lose three weeks due to hurricanes or bad weather or rain or early snow, you're not going to be able to catch up. That's what's happening to Cedar Fair this year.

Shen: Yeah. Looking at the company's second-quarter results, you notice themes that tend to stretch across the industry. There were the weather impacts that you mentioned, there was also a shift, in terms of the Easter holiday, which affected the distribution of revenue between the first and second quarters. Also, rising labor costs, which is something we'll talk about a little bit more. Revenue was down 3% year over year in the quarter. Attendance specifically fell 5%. This was the third or fourth consecutive year of poor weather for the opening months of the summer season. Analysts really pressed management during the earnings call to gauge how the company will adapt if this less-than-ideal weather becomes an ongoing problem. 

Related to that, Cedar Fair also spoke to the importance of season pass customer, which ultimately serve to smooth out the volatility from these stretches of bad weather. CEO Richard Zimmerman said that the season pass channel makes up about 50% of park attendance. Another interesting detail from that customer contingent, which you talked about, in terms of the local contingent, most season pass holders live within 30 to 45 minutes of the park. You're a good example of that, Dan, right, in Central Florida?

Kline: My main home is about 2.5 hours away, but, yeah, we do have a place that's between 20 and 45 minutes, depending on which park you're going to. Let me explain how this works, because I think it's important. If you're visiting and it rains, they don't operate most rides. A roller coaster, even if there's lightning within ten miles, they shut them down. Water-based rides have to shut down. Disney and Universal can weather that because they have tons of shows and high capacity. SeaWorld, to an extent, has covered venues that can run some of its shows. 

At the Cedar Fair parks, while there certainly are some non-ride things to do, if it rains, you're a park with very little capacity. If I'm a local, I might just go home. I have a pass, I'll come back. If I'm a tourist, I either don't go that day and never sign up, and that's just revenue you completely lost, or I bought a ticket, but I don't stay all day, so you don't get lunch and a beer and a giant pretzel or whatever it is I'm going to spend money on later in the day. 

Having those annual passes is so important for the company because they can do things. The way Starbucks emails you and says, "Hey, it's 03:00 o'clock, do you want a half-priced Frappuccino? "Cedar Fair can say, "Hey, the weather is nice now, do you want a free beer to come to the park on Wednesday?" SeaWorld actually does that. Having that base that you can market to and entice them to come during slow times is of absolute importance across the entire theme park industry.

Shen: I'm glad you shed a little bit more detail on that. Management talks about how their guests will adjust or change their visitation to fit their schedules because of things like that. They'll make a shorter afternoon or evening visit instead of spending a full ten-hour day at the park, depending on what works best. It's a little harder to get away for a full Saturday at a park, in terms of their visits.

Kline: There's also an ability to control guest flow. I mentioned I'm a SeaWorld pass holder. SeaWorld, every month, does different promotions. Sometimes it's cheap tickets for friends and family, sometimes it's a free meal, sometimes it's get to ride a new ride before other people, whatever it is. All of the different park companies can do that. If Cedar Fair says, "Sales are slow in Cincinnati," which they were in the past six months, they might be able to take people who are members at a park that's two hours away and offer them 75% off the Cincinnati park, and then it's worth traveling to try the different roller coasters, sample the different food. And if you've traveled, you're probably going to spend a full day, so you'll spend a decent amount of money. 

The stronger relationship you have -- I know, as a pass holder, I do the math. I've been to SeaWorld four times on my $200 pass. A regular one-day ticket is around $135, so my earn-out is already there. Every time I go, it gets cheaper. That's what they're pushing you to do. But, of course, I reactivate my soda glass, I probably eat, maybe I have a drink. My son probably has a cookie or a thing of fries. The money adds up, even if you're not paying an admission.

Shen: That goes to the in-park spending, which is obviously a big part of the revenue streams for these companies. I'll close with a broad note for Cedar Fair. The company is in a holding pattern. Given its generous distribution, investors will always want to track the company's free cash flow to see how sustainable the 4% annual distribution growth is for unit holders. Any other thoughts on Cedar Fair before we move on to our final company, Dan?

Kline: I think Cedar Fair largely has a branding issue. They have lots of different theme park brands, they don't have the overriding -- Cedar Fair is a corporate name. It's not the name that's on all the parks. Whether they should be rebranding as Knott's Berry Farm or Cedar Fair or whatever it is, it is a little bit harder to communicate the value of passes when parks that are nearby maybe don't share the same brand name. And, they've also struggled. They've had a couple of roller coaster openings that did not go as well as planned. Once those get smoothed out, you could see the uptick of people who travel for those major new coasters.

Shen: That brings us to Six Flags, ticker SIX. The company operates 20 parks across the U.S., Mexico, and Canada, not to mention licensing deals for parks in China, Dubai, and Saudi Arabia, some of those being relatively recent. Revenue in line with competitors, just over $1.4 billion for the trailing 12-month period. 

When I think about an amusement park, or when I picture one, I definitely think Six Flags, having grown up about half an hour away from Six Flags Great Adventure New Jersey. This is my rare opportunity to brag about New Jersey, because that park is still home of the tallest roller coaster in the world at 456 feet, and also the second fastest. It's a pretty incredible experience, going from 0 to 120 miles per hour in less than four seconds. I highly recommend that if you're in the area, you check out Great Adventure, the roller coaster is called Kingda Ka. 

For the company's performance, it also reported results recently. Can you walk us through some of that, and recent initiatives that stood out to you?

Kline: This was absolutely stunning to me. I remember when Six Flags was struggling, its advertising wasn't connecting. But the company has actually had eight years, and expects to have nine years, of growth. It was a little bit tricky to look at its earnings from the last six months, because overall, sales are up, and attendance is up, but, they bought rights to five parks. When you take those five new parks in, spending per customer was actually 2% down. It's a little bit wonky that, if you take those results out, spending was up. 

Six Flags has the clearest strategy, in terms of, you know what it is. I don't think there are too many Americans who have seen a Coke can or television commercial for Six Flags that don't understand this is a rollercoaster-based thrill park that also has some kiddie rides and traditional fair elements, cotton candy and funnel cake, that kind of thing. 

Their strategy with their annual passes has been very smart. They use different pricing, different passes, to get you from your park that's 30 minutes from your house to the park that's two hours away, maybe even to the big parks, the ones that are a bit of travel. They work really hard at building that audience. They start at a pretty low price point. I know in Connecticut, I could get a Six Flags annual pass, if I watch for the deals -- which were usually on Coke cans, which is why I mentioned that -- for $69-79. Their goal is to get you in the door and get you spending money.

Shen: I absolutely remember the time when, as a kid, I was hunting for Coke cans to get a 50% discount on entry for the one-day ticket sales. You mentioned eight or nine years of consecutive strong results. That really coincides with how season passes have driven the attendance strategy at Six Flags starting in 2010. That's evolving now even further as we look out beyond 2018. There's a great quote from CFO Marshall Barber, he breaks down the company's thinking on its memberships for season passes. We're going to talk about that a little bit more. He said, "The base membership is, say, around $8 a month. For an extra $2, you can get unlimited drinks. For an extra $3, you can get a front of the line pass every time you visit and preferred parking. Then, for an extra $6, you can get two front of the line passes, preferred parking, discounts on spending in-park. What we've found is that we're pretty confident we can get people into the membership program, and we have. We've been very pleased with that. We are very pleasantly surprised at how many people would move into those upper tiers." At highest tier, you're paying $230 a year, vs. $70 for a season pass. "We think this movement to membership is really the next progression on how we sell tickets to our customers, and I think that will be as impactful as the season pass was."

Season pass penetration for unique visitors is currently around 40%, while the one-day tickets sit at 60%. With the ongoing membership, where, in this case, it's kind of like a Netflix -style business model, where you buy into a certain tier for whatever perks you want. The big thing here is, management mentions that the benefits of this membership style ticket strategy is, you don't have to resell the season pass holders each year. The churn can be really bad with renewal rates, as low as 25%. Given the adoption that they've seen at some of the higher-priced tiers for these memberships, that's another boon in terms of what they're seeing in revenue per customer.

Kline: It becomes an auto-pay. That's all of my passes. There are better terms for Florida residents, but all the theme parks down here offer the ability to either pay a deposit and pay for 12 months, and when renewal time comes up, there's usually a deal. They might give you 20% off, 90 days free, whatever it is. In general, it's such a relatively low amount per month -- even my Disney passes for my son and I, it's $40 a month or something for the two of us. It's not that big of an expense. When you look at it, you're just not going to get rid of it. It becomes like a gym. Even if you haven't been to Six Flags in six months, mentally, you remember how much fun you used to have there, so you promise yourself you're going to again and it'll be worth it next year. 

All those little add-ons that can now be controlled via web or app make it so much easier. It used to be, you had to wait in a line to get a bracelet for the all-day dining or free drinks or parking or whatever it was. Now, it can all be done through your membership card, through the app. It's become a really easy way to spend. I fall for the $14.99 all you can drink cup every time, and then feel like it's a game of how much soda we can drink in a five-hour visit.

Shen: [laughs] Not the healthiest thing there, Dan.

Kline: [laughs] My son got mad when I got a Powerade once. We have to stick to soda.

Shen: Closing out, in terms of the memberships, what that ultimately amounts to, management said the lifetime value for its members is as high as 3X that of its season pass holders. The company pinned its membership base at over two million during the last earnings call. Definitely something to track going forward. 

The last thing I'll mention for Six Flags is, there's been a flurry of licensing agreements in markets like China, Dubai, and Saudi Arabia, that have been announced over the past couple of years. This is an interesting revenue stream for theme park companies that we haven't gone into as much yet. For Six Flags, the company doesn't put in any capital to develop the park. Instead, it initially gets fees for design and development, and once the park opens, Six Flags also gets a percentage of revenue for use of its brand and the management services. This is very similar to a fast food franchise model.

Kline: I like this model, because if you follow the theme park world, as I do, there's probably an oversaturation point. China and Dubai and the United Arab Emirates and all of these places that are building these massive areas that have 10, 12, 15, whatever it is different theme parks. And some of them are working, and some of them are not. If you're Six Flags, you're giving them proven concepts. They don't have to develop a new roller coaster, they don't have to come up with a new ride queue or pass system or any of that. And there's absolutely no risk on your part. If 75% of these parks work and 25% don't, it doesn't really hurt your brand.

Shen: I'll just add, in terms of the contributions these licensed properties make for the company, about $10 to $20 million of EBITDA annually, with an 80% EBITDA margin. Really, again, in terms of how it hits the financials, a very attractive prospect for the company, and attractive growth opportunity looking forward.

That brings us to the final part of our discussion for these theme parks. I'm curious to hear what you think, Dan. Of these three that we've discussed, who's your favorite?

Kline: I'm a little bit biased in both directions. I've enjoyed SeaWorld, but I've also had a lousy customer service experience. When you break down the financials, I really think it's Six Flags. It's close, but Six Flags has figured out the difference between the cheap getting a kid in the door and creating a feeling of membership with the higher level, which is much more like Disney or Universal. When you get a Disney or Universal pass, you feel like you're joining a secret family. There's a lot of interaction, Facebook groups, that kind of stuff. Six Flags has taken its traditional parks and built up some of that. 

They've also done a lot in the way of special events. So has SeaWorld, and Cedar Fair, as well. The Halloween Fright Fests and the beer festivals or barbecue festivals or whatever else it is they're having, to increase that value. If I only had to pick one, by a small amount, I'd say Six Flags. Though, frankly, there aren't that many rides at Six Flags I'm willing to ride.

Shen: Something I'll add, I was really impressed by the membership push, which we've already discussed for Six Flags. If you're not as confident in SeaWorld, given it's still in this ongoing recovery situation, and you're deciding between Cedar Fair and Six Flags, keep in mind, Six Flags also pays a pretty good dividend, 4.7% yield. Not that far off, in terms of the distribution you get, from Cedar Fair. Given the overall strength of the two companies, I'm also edged out with Six Flags. Any final thoughts, Dan, before we roll off?

Kline: There's one thing we didn't mention. SeaWorld operates Sesame Place, and they're adding a Sesame Place section to their Orlando Park. It hasn't gotten a lot of publicity, because we have Star Wars: Galaxy's Edge coming, and some very major Disney and Universal things. But when you look at the landscape, this is obviously the theme park capital of the world, there's very little for little kids. If you add Sesame Street attractions to a park that already has the dolphin shows and the whale shows and things that are family friendly, you might tip some of the traffic away from Disney and Universal, which don't cater to little kids as much as you would think they would. SeaWorld has an Elmo show now, but by building on that with some Sesame Street attractions, they might be able to inexpensively become a bigger player again, at least in this market.

Shen: It's been a fun discussion, introduce these companies, get a first look at these pure-play amusement and theme park companies. We're definitely going to track them and follow them going forward. Thanks, Dan, for joining us!

Kline: I think some field research is called for.

Shen: Fools, thank you for tuning in. People on the program may own companies discussed on the show, and The Motley Fool may have formal recommendations for or against any stocks mentioned, so don't buy or sell anything based solely on what you hear during the program. Fool on!

Daniel B. Kline owns shares of Facebook. Vincent Shen has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook, Netflix, Starbucks, and Walt Disney. The Motley Fool recommends Cedar Fair. The Motley Fool has a disclosure policy.