In this episode of Market Foolery, Chris Hill asks Motley Fool analyst Bill Barker about his favorite CEO of the year. Plus, they talk about one of the worst investments for investors this year, how a media giant bungled a great opportunity, and much more.
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This video was recorded on December 23, 2020.
Chris Hill: It's Wednesday, December 23rd. Welcome to Market Foolery. I'm Chris Hill. With me today: Mr. Bill Barker. Good to see you.
Bill Barker: Thanks for having me.
Hill: You and I are together, we are together in a universe that doesn't have a lot of business news in it, not in the way that we talk about business news on the show. So we're going to do what we do on those occasions. Occasionally we'll dip into the Fool mailbag, but I thought it'd be interesting to get your take on something that we did over the past weekend on Motley Fool Money, when we were doing our year-end review, I wanted to get you to weigh in. Yesterday, Maria Gallagher weighed in with her pick of CEO of the year, and I made the point to her, I don't envy the people at Forbes magazine who had to come up with their CEO of the year, because I feel like this was a tougher year than most to do that. I feel like there were a lot of really strong candidates. But if you had to vote, who gets your vote for CEO of the year?
Barker: I'm going to share the award, and give one honorable mention, runner-up, since we are so low on news today. But who's your CEO of the year, before I go into that?
Hill: Mine was Kevin Johnson at Starbucks, because I feel like he elevated himself this year into that small list of business leaders who other business leaders want to hear from. I feel like he has now joined the ranks of people like Jamie Dimon and Warren Buffett, among others.
Barker: So I'm going to start with my honorable mention, which is Bob Iger, and to criticize that choice.
Hill: He's not actually a CEO.
Barker: Yes, but he was until February 25th. And as you know, my preferred superpower, were I to ever be granted one, would be the ability to leave at the right time; an argument, a stock, a relationship, a job, whatever it is, if you had consistently the ability to leave at the right time, that would be a superpower. And Bob Iger left at a pretty good time.
But the reason that I would give him honorable mention is that Disney+ (DIS 0.93%), which was in place at the end of 2019, wow! Wow, did that save this company, because it was, between theme parks, hotels, cruises, boy! This was squarely in the crosshairs of the worst places to be for all of 2020, but for Disney+.
Hill: It's a great point. And you know how much I hate, actually, giving you credit for stuff, but I think that if Iger leaves the company, I forget what his original date of leaving was going to be. It wasn't 2020, he kept extending a couple of times, so I want to say it was maybe 2017 or 2018. But if he had left at that point, he would have left, you know, big shoes to fill, a very impressive legacy. And I think the first paragraph of that legacy includes the major acquisitions Disney made under his leadership, buying Marvel, buying Pixar, Star Wars, that sort of thing. To your point, it is those acquisitions that lead to his shepherding the launch of Disney+, which was delayed at least a year and a half from when they were originally hoping to get it off the ground. And, yeah, it really has ...
Although it's interesting. I mean, I totally get Iger as an honorable mention. What I just said about Kevin Johnson, I would say the same thing, and I have said the same thing about Bob Chapek. Bob Chapek has been the CEO of Disney for less than a year, and in that time, he has 100% [laughs] made this his company.
Barker: So I was trying to think, originally when the question was formed, the CEO of the year, I thought, well, I'd like to look for people who couldn't have been prepared for this and had to scramble around and did a great job rather than people whose actions ahead of time had put them in a good place for this, which is I think where a lot of some of the choices that you had sent me about who's already been mentioned were. They were in industries that benefited from the 2020 dynamic of staying at home and more tech.
And so I really couldn't think of somebody,.I was looking to, like, is there somebody out there in an oil company or hotel, somebody who has done remarkable things despite the odds being against them and not being able to change 90% of their business to adapt? So maybe Starbucks, Chipotle, kind of, they had taken some actions ahead of time that put them in a place to take advantage of where people were going to do their buying.
But my actual CEOs of the year, I don't know, I don't think, to me, there's really any choice other than the heads of Pfizer, which is Bourla, and Stephane Bancel, I believe, of Moderna. You know, if I'm thinking of people, I don't want to give too much credit to a CEO for a vaccine rather than the scientists, although they both have scientific background. But look, you're up against the entire world in terms of competition, huge companies, and the ability to meaningfully get something done before anybody else is literally saving lives.
And given all the challenges there are with the regulatory environment, and the pressures, and people, you know, looking at did you sell stock at a certain time or buy, what are you doing? I would just say that, I don't know that Pfizer or Moderna would have gotten there any faster or slower with a different CEO. I'm thankful we don't know the answer to that, because it seems like this is about as good as we could possibly have hoped for.
Hill: Yeah, the stakes really couldn't have been higher. I mean, every business was looking to survive 2020; obviously some did not. It's another thing when your business succeeding means the rest of the world can be safe, so kudos on those choices.
Another thing we did on the show last week was dumbest investment of 2020, and whenever possible, I like to give folks more than one direction to go in. So it could be a dumb investment that you made in 2020, or it could be a business investment that you saw and just thought, oh, boy! I don't know that that was a wise use of capital. What's your choice?
Barker: I guess I'd give it a slightly different take, it is not an investment that I made, it could be, I guess. It's just that Kodak (KODK), to me, stands out as the investors that invested in Kodak after the news came out that the government had awarded a $780 million chemical manufacturing contract under the Defense Authorization Act to Kodak, and the stock went from $2 to $60. And the people who were buying at any of those points in the $40s, $50s, $60s, it didn't on its face seem to make any sense.
It immediately was surrounded with controversy about the selling of shares, and there were awards of options to management at precisely the right moment. And to date, we don't know whether the actual loan is going to go through or not. So I just thought, you know, the people jumping on the Kodak bandwagon, a company that has kind of survived bankruptcy, who came out of bankruptcy about eight years ago, I just don't know what they were thinking.
Hill: It's interesting, because you look back on 2020, and in terms of investing and investor narratives, one of the stories of the year has been the rise of Robinhood -- younger investors getting into the market for the first time for a number of reasons, including the ability to buy partial shares. And there was a lot of talk on financial television about, essentially questioning the run-up of some businesses, and it was being attributed to Robinhood.
And you raised a good point, which is, hey, look, you can look at the run-up of a business like Tesla, you can look at the run-up of a stock like that and ask questions about it. And obviously the run-up of Tesla is greater in pure dollars than the run-up of Kodak.
That being said, to your point, the run-up of Kodak is really pretty absurd. [laughs] The going from $2 to $60 was just like, wait, what? Okay, yeah, sure, let's say the loan goes through. Really? We're going to 30X this company off of this one loan?
Barker: The investment is not dumb, what has happened with AT&T's (T 0.89%) investment in HBO Max, which to me is something that should be working out better, and is sort of universally lambasted as for the execution, not for what is there necessarily when you somehow manage to get to HBO Max, which takes work. [laughs] But that's a brand name and a content stream and a set of experiences which should have made it a worthy competitor. Whereas Disney and Bob Iger get to take victory laps for Disney+, HBO Max not doing the same.
Hill: It is pretty amazing how AT&T has bungled this. And maybe I shouldn't use the past tense with "bungled," because there's still a very good chance that the bungling continues into 2021.
When you think about the way that Reed Hastings methodically grew -- and Ted Sarandos -- methodically grew original content with Netflix, taking that patient approach over time, the way that Bob Iger and his team, you know, took some heat, and rightfully so, for the delay of the launch of Disney+. But their thinking, and they were correct, is that, no, we got to get this right, we have to make sure [laughs] that everything is right when they're live.
And AT&T comes in with HBO with an established content, a great brand, and right out of the gate somehow manages to create four separate apps with the HBO name attached to it, so that people who -- and you know this about me: I'm always mystified whenever businesses make it difficult for people to spend money on their products and services. For the people who really want something, they should be able to just get it as quickly and easily as possible. It's something that AT&T, I think, does very well with its core business of wireless service.
As someone who is an AT&T customer, they make billing very easy. And the way that they have just been handed this, just all of this wonderful, rich library of great award-winning content on HBO and just have managed to screw it up. And then, with the recent announcement of what they're doing with their movie slate, because AT&T owns Warner Studios, their movie slate of 2021, they've somehow, in one fell swoop, managed to infuriate pretty much everyone in Hollywood. It doesn't matter -- writers, directors, producers, pretty much everyone is mad at them.
Barker: You're going to be watching Wonder Woman over there on Christmas?
Hill: Maybe not on Christmas Day, but ...
Barker: Kids back home and ...
Hill: Yeah, over the break.
Barker: Caught it in the theater, did you?
Hill: And not that I'd catch it in the theater, but... oh, the original one, yeah.
Hill: Saw that in the theater. No, I think Christmas Day might be watching the new Pixar movie, Soul, which looks pretty great and a pretty great collection of talent. But just to put a bow, just to bring this back to your answer. Yeah, thank you for calling out the people [laughs] who invested in Kodak, because, yeah, that was not a -- you know, buying Kodak at $60; not a great investment.
Barker: No. Now, if you bought it -- like, it did almost double about two weeks ago when the news came out that the investigation of management had cleared management regarding the loan, it's still not clear whether the loan is going to go through. And with the new administration coming in, I would not bet heavily that it will. So it still could fall further again, but at least they seem to be out of the criminal prosecution crosshairs for the moment.
Hill: It's always nice when you can get out of the crosshairs of criminal prosecution. I don't say this from experience, I'm just, I'm assuming that's great.
Barker: [laughs] You've heard.
Hill: [laughs] I've heard.
Real quick before we wrap up. I want to mention for listeners, we're going to have another bonus episode of Market Foolery coming this Saturday. It is not another Apropos of Nothing, it's something else that I'm cooking up with Dan Boyd, so that's coming on Saturday. But speaking of Apropos of Nothing, a lot of nice emails and comments from people who listened and enjoyed, even if, in some cases, the people that they live with weren't happy about the fact that they were listening. We got a couple of those [laughs] emails. Like, "Yeah, I was laughing a lot, and the person I lived with was pretty annoyed and had to go to another room."
And although some people, I was going to say, took issue with it, I don't think it's that some people were hoping that we were going to come to some final resolution on the Mount Rushmore of soups. And I'd just like to say to those people, that was never going to happen. That you and me and Bill Mann, we were never going to agree on the Mount Rushmore of soups. So that was...
Barker: I think we all could have provided our own Mount Rushmore. And maybe, you know, that is a request that I think we can say could have been delivered, but I don't think we were ever going to get to grand council level on what was actually would I assume is some day to be an actual thing, which is something carved into a great mountain in the form of four bowls of soup. Big soup will make sure it happens.
Hill: Well, wait a minute, big, is that a ...
Barker: Like a Mount Rushmore thing, but soups ...
Hill: No, I know, but when you say big soup, isn't Campbell's big soup?
Barker: Well, yeah, they are big soup, sure. So they're going to be going with their stuff. And by the way, they make gumbo in a can; and you said gumbo is not a soup. So Campbell's big soup is there to squash you and your, you know, comparatively worthless opinion on the matter. [laughs] I'm just saying, I'm just channeling big soup for the moment.
Hill: Look, Campbell Soup is based in Camden, New Jersey. I think it would be a great tourist attraction to just, you know, put it right there in front of Campbell's HQ, like, yeah, you give us the Mount Rushmore of soups.
Barker: Beloved sister city of Philadelphia; Camden, New Jersey.
Hill: Yeah. So you go to Philadelphia, you see the Liberty Bell, which I know you're a big fan of, and you go to the Franklin Museum; and then it's like, hey, let's hop over the river, we'll go to Camden, kids! We're going to check out the Mount Rushmore of soups. "We're going to Mount Rushmore?" "No, that's in South Dakota; we're going to the Mount Rushmore of soup."
Barker: But to echo what you said, thank you to everybody who wrote in [laughs] with anything complimentary about that or anything else. I got to say, we've talked in the past, it's always great to hear anybody appreciating the work. I know the criticism, that is sometimes constructive and leveled, either by email or posted publicly, it really is, like, the pain of any criticism is 8X to 10X the joy of getting a single [laughs] complimentary email. So take that out there, not to us, to everybody else, if you want to make their day and you appreciate what they do either in podcasts or in real life.
Hill: It's a good sentiment to end on. Bill Barker, thanks for being here.
Hill: 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 or sell stocks based solely on what you hear.
That's going to do it for this edition of Market Foolery. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.