On this episode of Industry Focus, Sean O'Reilly and Vincent Shen are joined by Motley Fool co-founder David Gardner as they circle back on his favorite picks from companies previously featured on the show.
From the food safety scare at Chipotle (NYSE:CMG) to the entertainment evolution driven by companies like Walt Disney (NYSE:DIS) and Take-Two Interactive (NASDAQ:TTWO), tune in as David breaks down recent developments and what they mean for long-term investors.
A transcript follows the podcast.
This podcast was recorded on Jan. 19, 2016.
Sean O'Reilly: Greetings, Fools! Sean O'Reilly here at Fool headquarters in Alexandria, Virginia. It is Tuesday, Jan. 19, 2016. Joining Vincent Shen and I in studio is a very special guest, Motley Fool co-founder David Gardner. How's it going, David?
David Gardner: I'm really pleased to be with you guys. Thanks a lot for the invitation. It's going well, Sean, thanks.
O'Reilly: I can't tell you how excited we were here to have you on the show and everything.
Gardner: Thanks! I think this is my debut on the show.
O'Reilly: On Industry Focus, yes.
Gardner: I'm going to try to not screw up.
O'Reilly: Well, I'm sure you'll be fine. You've been doing this for 20 years, right?
Gardner: Yes, although, all of us have been doing podcasts much less recently. It's a new thing. And I'm really excited about Industry Focus and what you're working on. And I'm happy about all our Motley Fool podcasts. We have about five now, I think, and all well listened to. I think more than 1 million downloads or so last month for all of our podcasts taken together. I'm excited about that. We used to do a lot of radio, my brother Tom and I.
O'Reilly: I was going to ask you, yeah.
Gardner: A coast-to-coast A.M. radio show, three hours --
O'Reilly: How many years did you guys do that?
Gardner: That was ... a lot of years. It was probably five or six, but it felt like 50 or 60. We were doing live coast-to-coast A.M. call-in for three hours on Saturday afternoons.
O'Reilly: Not allowed to have a cold, not allowed to stop.
Gardner: That's right. And you know, other people are out playing wiffle ball or hoverboarding these days, and you're in there just doing the call-in radio thing.
O'Reilly: Telling people the importance of long-term investing.
Gardner: Yeah. And no regrets, that was really fun. And then we did an NPR show later on. But I'm really excited about all we're doing online. So, thanks a lot for the invitation.
O'Reilly: You bet. Everybody have a good weekend?
O'Reilly: Vince? Went to New York?
Vincent Shen: Yes.
O'Reilly: Said hi to mom, got some home cooking ...
Shen: It was nice, I got to see some of my old banking colleagues, actually. It was nice catching up, hearing what life is like on the other side, sometimes.
O'Reilly: Oh, that's right! We have a former Wall Streeter here, David, I wasn't sure if you knew.
Gardner: I know a little bit about Vince. Actually, I know one of Vince's superhero powers, I don't know if that's really come out in this medium, but, Vince is amazing with PowerPoint and visual display of things.
O'Reilly: He does all our show notes. I don't do anything. I just show up.
Gardner: OK, good, because I think of a podcast as mainly audio, but I know that's something Vince does very well, and that probably fits with the Wall Street background.
Shen: Yeah, absolutely. It definitely comes from that.
O'Reilly: So, David, Vince and I are particularly excited to get your thoughts on a number of consumer goods stocks that we've talked about in the past, that also happened to be picks in the Motley Fool services that you head up.
First up is a company that's in the news a lot these days, unfortunately not for good reasons, Chipotle Mexican Grill. You wrote back a little over a year ago: "Chipotle keeps posting stunning growth at both new and existing stores, even if that growth slows down in the future, we still think that burrito chain is on a roll. As consumers demand higher-quality fast food, Chipotle seems ideally poised to satisfy this big shift in dining trends." You also note Pizzeria Locale and ShopHouse concepts. [Chipotle is] all over the news, obviously not for their delicious burritos. This definitely feels like a short-term hiccup in, obviously, an amazing business. Again, we're all Fools here, so we know the importance of long-term thinking. What's your opinion on how they're handling this little E. coli -- I shouldn't call it little, because people are getting sick.
O'Reilly: How do you think they're handling it? What are you focused on?
Gardner: I think they're doing a great job. Steve Ells and Monty Moran, they've been public through media, they've made all kinds of statements, they've also invited in best-practice analysts, the government, etc. to say, "What can we do better?" They've essentially adopted all of those suggestions. The stock is down about 35% or so, just in the last few months. This is a stock that was over $750 in October, and today it's just right around $500, a little bit below. That's a remarkable drop, 1/3 in value, for something that's really just a -- relatively, because, as you were saying, Sean, it's a serious problem, and they're taking it much more seriously than I'm about to.
But I think this is going to be kind of like the Tylenol scare, which really depressed Johnson & Johnson for a little while, then of course, we all look back and forget. Or, BP. People said, "I'll never go to BP again," but I think a lot of us are going back to BP to fill our cars. I think it's one of those situations. So, I really, obviously, like the stock a great deal. In fact, it's in for the running -- we're down to two stocks in Supernova for the so-called "top stock of 2016." That's an annual thing we do in Motley Fool Supernova through our Explorer mission. Last year, the top stock was Amazon.com, and it was a pretty awesome year for them.
O'Reilly: Ugh, why didn't I listen?
Gardner: It was up about 120%, which was truly remarkable. We're not nearly that good. But, for Chipotle to be down ... also, Under Armour, which I think we might talk about as well today. Those two are the finalists for stock of the year for Supernova in 2016, and that says a lot about what we think about Chipotle.
O'Reilly: Feel free to chime in here, Vince, but I actually loved it when I heard that they were going to close all their locations for one day for a companywide meeting. I love that. That's awesome.
Gardner: It's remarkable. It's one of those things that you don't expect companies to do, especially when it's that large. We talked about, you mentioned, ShopHouse and Pizzeria Locale, I mean, it's a company that has a number of additional brands beyond just a Chipotle. But even though Chipotle has been in the news for all the wrong reasons for the last couple of months, the truth is, there were a ton of happy burrito-eating customers yesterday and the day before. Far more than people who are troubled or staying away from Chipotle.
So, I think it remains a really great company. And in some ways, I think it's an even better company based on the problems that they've had and the reaction that they're having to those problems. So, I obviously admire Chipotle. It sounds like I'm not the only one. It's just a stock. If we get it wrong, if we say it's the top stock for 2016 and it has a so-so year, I'll still like it for the next three-plus years.
Shen: I'll echo David's sentiment there. Overall, there's a Chipotle right in my neighborhood, and every day, I get off the Metro --
O'Reilly: And I buy a burrito. Just kidding (laughs).
Shen: And I see it around dinnertime, just before, and the line, every night, would be to the door or out the door. And now there's maybe two or three people. So, there's undoubtedly that slowdown. They talk about how comps fell during the holiday season --
Shen: -- like 50%, almost.
Shen: But overall, love it or hate it, I feel like the public and a lot of consumers in general have short memories. And this time next year, with how well the company's addressed these issues, how open they've been about communicating about working with government safety organizations and making sure they're implementing these best practices ...
O'Reilly: It definitely seems like the company's heart is definitely in the right place.
O'Reilly: It's really long-term, with what you need to be concerned about with conscious capital and all that good stuff. So, David, we've had a couple of shows about this situation, and I can't wait to get your thoughts. What do you think of AB InBev's (NYSE:BUD) move to buy SABMiller? It's a big company.
Gardner: It is.
O'Reilly: And you usually don't go for big companies.
Gardner: That's true. The market cap of the company is just short of $200 billion. The reason I like and have recommended the stock wasn't that, Sean, it was just that I look backwards and see 100-plus years of a successful company, and really a few thousand years of commitment by the human race to beer. I look at a company today that has 17 $1 billion beers. 17 different channels for different types of beer at that kind of scale, and I just look for the next thousand years or so, which, I'm sorry to say, not all of us will be living during. Although, we are all living longer, and technology proceeds at pace.
O'Reilly: Fingers crossed.
Gardner: I just think it will be around forever. And I think it's a really successful company. And I don't really have a strong reaction or thought about Miller. Vince, what do you think?
Shen: Well, the issue there, and what we brought up last time when we talked about when this deal was first announced is, I guess, ultimately, what their position will be in terms of the regulatory environment, and the fact that, as David mentioned, they have so many of these huge brands, combining that with SABMiller, which commands its own strength in certain markets that AB InBev wants access to.
When you have this massive conglomerate with that much concentration in terms of its market share and its dominance over the industry, what concessions are you going to have to make? What are they going to have to split off? It's going to be really interesting to see what ultimately, if the deal goes through, that final entity looks like, where their strengths are, what brands they'll be able to hold on to.
O'Reilly: Yeah. The one key takeaway I remember from that show, Vince, was that we concluded that they're basically trading SABMiller's U.S.-based businesses for the growth markets of Africa and South America. Their economies are growing a lot faster, people's incomes are going up. And, like David talked about, it's about the next 100 years, not the next 5 years.
Gardner: Certainly, there's always regulatory risk when you get that large. I always like to think about the companies that we're recommending in all of our services being stand-alones, and in most cases, not expecting them to need to merge, or hoping that a sugar daddy comes along, or there'll be some super-merger that causes this company to take over the world. So, this is just a great company on its own. It's one of the lower-risk companies you can buy. In Motley Fool's Supernova, one thing we do is we put a risk-rating number on every one of our stocks, and it's a scale from 0 to 25. Lower is lower risk, to be simple. So, 25 would be crazy, insane risk, really a stock we'd never recommend. Apple is a 5. AB InBev is a 7. That's a very low-risk stock.
O'Reilly: Did Apple win because of its huge bank account?
Gardner: That's definitely a factor. Our 25-point scale is basically 25 yes or no questions, and we ask the same question of every single company. And every single no is a +1 for risk. In other words, every no is riskier. So, we only had 7 no's for that system. And I'll mention that, maybe, for a few other companies we talk about. But it just reminds me that this is a company that pays a solid, stable dividends, and, if you're a 3-5+ year investor, the chance of you losing money on this investment is very low, in our opinion.
O'Reilly: So, Mr. Gardner, pivoting back over to the Supernova service, we talk about it around the office a lot, I get emails about the opening. Supernova is currently going through an open right now. As I understand it, you're the chairman of Supernova. What can you tell our listeners that may not be super familiar with the services beyond Stock Advisor, about Supernova?
Gardner: Sure. Supernova basically brings together all of the stocks that I've picked over the last 10+ years. So, I pick against my brother in Motley Fool Stock Advisor, and I hope some of our listeners are Stock Advisor members. That's our largest service at The Motley Fool, and in it, I've picked a stock every single month since March 2002. So all my winners and all my losers right there, bing bing bing, through good markets and bad. Then, the Rule Breakers service, which I also pick four. And so, you bring all those together in a single service, Supernova.
I think we're answering a need in Supernova that is maybe the greatest expressed need among many of our members, which is, "Would you just do some of this for me? Could you just create portfolios for these stocks? And could I mirror those portfolios?" So, with the Motley Fool's own real money, we invest in the companies, the ones we're talking about today, and we say, "We're going to give a high allocation to that one, a low allocation to that one." So, it's portfolio-level thinking. And a lot of our members, especially here at the turn of the new year, might have a resolution to be better or do better in the year ahead with their investing.
So, I think for a lot of people, they don't have a lot of experience building a portfolio, or confidence. We can talk about Chipotle or AB InBev. The question then is, how much would it be within your portfolio? And if you're young and have a long time ahead, what should that allocation be? Versus, if you're, like me, a little bit older than you guys, I'm sorry to say, but it's been a great run here, I'm 49. I still have, I hope, at least 50 years left to invest.
But for people who are getting nearer to retirement, how should they invest in these companies? So, that's what we do in Supernova. It is an exciting service. It's in its fourth year. All of its real-money portfolios are beating the stock market, which is really the aim of Motley Fool Supernova -- to help you beat the market, to make it brainless and easy for you. And we open the service once or twice a year. So, this is a special time. We're launching a new mission called Odyssey 2. We have kind of a NASA framework. We call these missions, not portfolios, and we name them things like Apollo ... let's not go with 13.
Gardner: Let's go with Apollo 1. So, that's what we do. So, there's a new portfolio kicking off for people who are regularly investing money. So, that's what we're doing at Supernova.
O'Reilly: Cool. You might have to switch to a SpaceX kind of theme someday.
Gardner: It's a private company, as you guys know, and it had a difficult result over the weekend.
O'Reilly: What was it? A stand broke, or one of the supports or something?
Shen: Another explosion, unfortunately, but they've also made a lot of progress, too.
O'Reilly: They had that successful landing.
Gardner: That's the thing, when you're trying things that no one's ever done before, it's going to happen. Of course, we all remember that from NASA and what it's done over the years. But, yes. That's a company we admire. We love companies that are innovating. And a number of the ones we're talking about today are companies that I think are real innovators. Even, I would say, Anheuser-Busch was a real innovator, especially when you think about the branding and marketing that it brought, and driving down prices and making beer increasingly affordable over the course of the 20th century. There's a lot of innovation in these companies. And that's really what I think separates great investments from not so great investments, are the companies that really truly innovate and can do so over time. That's the hardest thing to do in business.
O'Reilly: Yes. So, before we came in here, Vince said to me, "We've got to talk about what's going on in entertainment." My sister emailed me last night and said, "Hey, have you ever heard of Sling?" I was like, "Yeah." And she was like, "Can you tell me about it?" My son and I watch Winnie the Pooh every morning on Netflix (NASDAQ:NFLX). We do not have cable, we just have the Internet. Big things are happening right now. A couple of your picks are, in ways, a little bit slightly connected, but a few picks are involved in the future of entertainment, which I want to talk about, which is Starz (NASDAQ:STRZA), Take-Two, and Walt Disney. Whatever you want to talk about, but I'd love to get your thoughts on these.
Gardner: It's a conversation. I'll say a few things. First of all, I really like content companies. There's a great false argument that goes on about, which is king: content or distribution? And the truth is, you need to have both. Both are always going to be there, and if the scale ever tilts too far and everyone's saying, "Distribution is all that matters," I'm going to start saying, "No, content matters a lot." Sometimes, people go the other way, and say just having great content is all that matters. But you have to be on Netflix. You need Netflix if you want to have a lot of viewers.
The good thing about Netflix, which we're not talking about today, is that it has both. Companies that do both are really powerful [...] But yeah, Starz, Take-Two, and Disney. Of those three, Disney is, of course, the largest and most successful with both content and distribution. And so many channels to take those entertainment properties, whether it's a lunch box or a --
O'Reilly: Can you believe the success of Star Wars? The speed!
Gardner: I could believe it, Sean, in the sense that ... maybe we talked about this before it came out, but I mean, a lot of people expected it to be the biggest movie of all time, which, it has been. But I have to admit, I haven't actually really kept up with the numbers. What's blowing you away?
O'Reilly: The speed. It got to $750 million domestically in less than two weeks. Crazy numbers. It took Avatar ... Avatar was crazy, but it didn't have any competition, it was a summer movie, all this stuff. I just couldn't believe the speed, because --
Editor's note: Avatar was released in December 2009.
Gardner: I know we took out a theater for some employees here at The Motley Fool right nearby. Did either of you guys attend that?
O'Reilly: We both did, thank you very much.
Shen: I could never turn down that opportunity.
O'Reilly: I think we told our listeners about it, right? Because it was on a Friday?
Shen: Yeah. It broke a record for me, too, personally. It's the first movie I've seen three times in theaters.
Gardner: Nice, Vince.
O'Reilly: You have a problem.
Shen: Contributing as much as I can to those record-breaking box office numbers.
O'Reilly: Disney thanks you.
Gardner: What's funny is, that shows a bit of a generation gap here at the table, because, having grown up myself in an age where they weren't even VCRs yet, when you went to the movie theater, that was your one shot to see that movie. You usually would go, for me, at least three times to the original Star Wars, because you didn't know that it would ever come back. It would be on TV five years later, maybe. You would see it once you're there.
So, the idea that you'll eventually have a DVD that you can buy and watch at anytime you want would have been magic to me at the age of 10. So, for that reason, I think I've only seen it once, because I'm expecting to see it many time afterwards. But to go to the theater that many times is outstanding. I would say it was almost de rigueur in 1975. But yeah, it was a fine movie. I thought it was very derivative of the first Star Wars, the new hope --
O'Reilly: It definitely structured itself a lot after that movie, yeah.
Gardner: No spoilers! For those few who possibly haven't seen it yet who want to see it. But I do feel like it was a very safe approach to the reboot. I thought it was powerful and important, obviously, to Disney. But getting back to all three of these companies, they all have content. I think in a world where distribution is getting easier and cheaper and more global all the time, you just pin something up on a website and anybody can watch it or rewatch it multiple times. We hope that website is a legal website. In fact, piracy is largely going away because of the cheapness and accessibility of so much of this content.
Anyways, I like all of these companies. Starz and Take-Two are much edgier and nice compared to Disney and its content. Another company we have, Lionsgate is also another example, Hunger Games, where they're not going for Winnie the Pooh -- which, by the way, I'm a huge Winnie the Pooh fan. But, they're going for usually sci-fi. Or, Starz, with Outlander. These are companies that know their audience and are creating content that lives in libraries for a long, long time, and just keeps creating recurring cash flows for the companies that create good content. So, yes, I like all of these. I realize I'm rambling, so we need to keep moving--
O'Reilly: No, that's fine.
Gardner: I mean, I really love video games. And why do I love video games? Not only because I'm a gamer, but because I love interactive content. I think that's one of the great developments of my lifetime, is content going interactive, being able to be a character or tell your own story, and do it, maybe, socially with other people online. It's very different from just sitting there, looking at a screen, a carefully curated and directed non-interactive bit of fiction that we all grew up with and still enjoy today, movies and TV. So, I really love interactive content. And as things proceed into virtual reality, the next big medium and channel, that's going to be even more valuable. So, a company like Take-Two, of course, I have a special feeling for.
O'Reilly: Vince, in your research, did you come across any particular games or trends toward virtual reality from Take-Two?
Shen: The interesting thing, in terms of gaming overall, from my personal experience is, I've played games for a long time, high school, college, and then I stopped for some time.
Gardner: Vince! What happened!
Shen: There was about five years where I just didn't have time, I kind of lost interest ...
Shen: The last six months, I've gotten into PC gaming again --
O'Reilly: Have you lost the touch?
Shen: Notice, in that five years, there has been a ton of changes in the way that it's delivered. David mentioned piracy. They've reduced piracy with games a lot by making it so easy and seamless for you to get that game. People are willing to pay that price because the delivery is so simple now. You can have that game in two hours, downloaded. You don't have to go to the store or worry about anything like that.
Also, what's really interesting is, before, you'd have a new release, you'd have a ton of sales in the month or two after, and then it would bottom out. But now, they have this longer tail because there's all these DLC packages, expansions, for one title, you can really extend the revenue it generates. And I've gotten hooked into that as well with some of the games I like. If I spend a lot of time on it but I get tired of certain maps or gameplay styles, I'll download and purchase some of the newer ones, and it's really interesting to see how that's allowed ... Take-Two, they have their megatitles like Grand Theft Auto.
But there's other ones as well, like they've introduced an online currency into their NBA games, which has really been successful for them. When I was playing games in 2010, sure, there was online multiplayer and things like that. But having that sophistication --
O'Reilly: Now there are free agents, what's going on? (laughs)
Gardner: Exactly. It's fun. Very well put, Vince. I agree. You think about this company, its ability through downloadable content, DLC, to extend the value of just brands and franchises that it has, it kind of reminds me a little bit about what's happened with television, and why I think we are living in the so-called "Golden Age" of television.
If you are a busy professional, let's give you a spouse and maybe a child or two, and you only have 45 minutes of entertainment for the night, you're much more likely to select characters that you know, a continuing story that you appreciate, and a bite-sized chunk of 45 minutes than you are a traditional 2-hour movie.
O'Reilly: Possibly commercial-free.
Shen: On Netflix.
Gardner: Possibly commercial-free, indeed. So, that's such a compelling value proposition. You have television just blooming with that. And it's kind of the same a little bit with video games in that, if you already have the character in the game, now you can extend it and keep playing it with new content, as opposed to buying the next video game. So, we're essentially seeing the extension of valuable franchises into deeper value for the company that only characters and these stories. So, yeah, Grand Theft Auto is obviously a prime example within the world of video game. But as Vince mentioned, Take-Two has a lot of other games besides.
Borderlands is a really fun game for people, a cartoonish role-playing game shooter, a real-mash up. Really, that's a fun game. The NBA game is a big success for them. We should probably keep moving guys, because I could talk too long about video games.
O'Reilly: Oh no, that's fine.
Gardner: I'm really glad that Vince has come back. He came home! He had five years off from the medium.
O'Reilly: Well, I stopped playing for a couple years. I played the second or third Halo when I was in college then stopped and came back and these 12 year-old kids were destroying me on Xbox Live. It was a very humbling experience.
Gardner: That's one fun things about playing games on the Internet. First of all, basically, you don't know who you're playing. But, you're playing really the best players in the world, potentially. Unlike the NFL, where I would never be able to get down in the field with any NFL player. But online, multiplayer, you're playing people who are unbelievably great at these games. Of course, good systems match you up at appropriate levels. But that's one of the fun things, I think, about playing online video games. You can play people who are way too good.
O'Reilly: So, this next company really quick, and we'll probably cut these last two companies short.
Gardner: I'm rambling.
O'Reilly: My mother and my sister will love that this company is a pick by the Fool, which is Blue Nile (NASDAQ:NILE). Really quickly, why is it a Foolish company? Aren't they in the penalty box for Rule Breakers? And what the heck is a web room?
Gardner: Okay. Blue Nile is a company that's one of our longest-running recommendations at Rule Breakers, and that's bad news, because it's not been a great stock. So, it's still kind of sitting about where it was --
O'Reilly: Hanging out there, yeah.
Gardner: -- in 2004, when I first picked it. I have owned shares all the way through, so I've just sat on a lemon. It had a really good first few years with Mark Vadon, who was the founder. It preceded really well. He left the company and went on to start Zulily. He made a lot of money through that. Public market investors didn't do so well with that company, nor have public market investors done really well with Blue Nile.
But I do like the company. I think the reason you're talking about your mother and your sister and your wife being happy that you were talking about this is that this is the engagement ring company, it's jewelry online. I mean, it's a good business. The problem is, it's had very little growth. I was taking it at a time when I thought they would make real inroads into Tiffany and others. Kind of the traditional "using online to defeat bricks and mortar." But it's not really happened. I think part of the reason is, a company like Tiffany has such a strong and revered brand that it can't be as well undermined by the online medium as many other verticals in retail.
O'Reilly: Yeah, and it almost seems like you want to buy certain things in person no matter what. And an engagement ring is the perfect example.
Gardner: I'm still -- Vince, go ahead.
Shen: Well, I think that feeling definitely extends --
O'Reilly: Vince is recently engaged, by the way.
Gardner: Yes. Were you a buyer?
Shen: I was not a buyer. I had an heirloom ring.
O'Reilly: Oh, I'm sorry, I apologize, I thought --
Shen: But, I have been doing the research, just out of curiosity. And it's true, the higher cost of the item, the more I feel like there's going to be greater reluctance to pull the trigger, click the mouse, submit your payment. And I think that's part of the reason why they've introduced the idea of the web room, and why they're trying to expand on that, to give people that physical, in-store presence, to be able to handle some inventory, because spending those several thousand dollars or even more, it can be hard when you don't actually see it in person. And with something like a diamond, where the way it plays in the light and the clarity and all these things, it might not translate that well on your computer screen, frankly.
O'Reilly: Cool. Before we go, Mr. Gardner, I did want to get your thoughts on Taser International (NASDAQ:AAXN). We recently did a firearms show basically because of the huge sales that the corium industry has had of late. What can you tell us about Taser and why they are a disruptor?
Gardner: I know we're closing out here, so let me just say before I go that I'm really excited to hear each of the shows and the themes you've picked out. You guys are going deeper into these stories than I do. One of the things I do is, I'm basically overseeing about 205 companies in the Supernova universe. So, I kind of like in myself a little bit to a mutual fund manager, where I have a huge, wide waterfront. They're all my picks. But I guess, when Peter Lynch was investing in Fidelity Magellan, he had 800 companies in that.
You'd ask Peter about one of the stocks, and he wouldn't necessarily have that much, but he could talk about trends or groups. That's kind of how I feel. So I really appreciate the deep dives that you guys are doing in Industry Focus. So, I bet you've covered more in firearms and Taser than I'm going to say right now. But I do want to say that I like this company a lot, because the megatrend, clearly, of transparency in our law enforcement is an unstoppable force at this point. And Taser does stand to be a beneficiary. It's not the only company that selling body cameras to the police. But it is, I think, an excellent weapon, and I really do feel that way. I really do believe that Tasers are superior to guns, because they don't kill --
O'Reilly: They're non-lethal.
Gardner: They're non-lethal. There are some very edge cases where people have died being tased. But there are so many people who are dying every day from gunshots that I'm very persuaded it's a better answer for our country, and globally. It's a better weapon for law enforcement. And then, you unite that with body cameras, and that's a really awesome one-two punch. Taser has been up and down as a stock. We had it in Rule Breakers back in the day. It wasn't a good stock. We sold at a loss back then. We've recently brought it back because of the whole law enforcement transparency thing. I like the company. And here's one thing I like about Taser: I can't easily name the second-place competitor.
O'Reilly: Yeah, I got nothing.
Gardner: Whenever I know Coca-Cola but I can't see Pepsi ... if Taser's Coca-Cola, who's Pepsi? And I love it when there's no answer to that question. That's how I feel about Amazon. There's no clear competition. You could say Walmart, maybe, not really. There used to be Buy.com, which was a cheaper Amazon back in the day.
O'Reilly: Who? (laughs)
Gardner: But that's really it. There's no company like that. Or, even for Netflix, I would say, there's no clear company. In some ways, HBO. But not really. In some ways, Amazon Video. But not really. So,I feel that way about Taser.
O'Reilly: Awesome, very good. Well, Mr. Gardner, thank you so much for being on the show and giving us some of your insights into consumer goods companies and explaining Supernova. We pretty much need to do this all the time now. I'm just kidding.
Gardner: You know, you can have me back anytime. I really enjoy talking about these companies. I really appreciate what you guys are doing. And to close -- to double-close, because I think I said that earlier -- it's great to focus on consumer companies, especially for investors, especially for individual investors like me. These are companies that we can study and get to know much better -- Chipotle, Take-Two Interactive -- than a lot of the larger, more industrial, or business-to-business companies, which are more opaque and harder to read their financials. So, I really celebrate that consumer mind-set that looks for consumer retail stocks.
O'Reilly: Well, that's how you and your brother got started in investing when you were kids. Your dad told you to invest in what you know. And what was it, a grocery store trip or something?
Gardner: Yeah, exactly. We just went down our local Safeway here in Washington D.C. in Georgetown, and he said, "Hey kids, look, chocolate pudding." We were like, 7 years old. "We own a little bit of the company that makes that chocolate pudding. Let's go get more chocolate pudding!" So, it made him a very popular dad with us, it made it fun, but he was getting us in touch with the idea that you can be an owner of stock, you can be a part owner of the company for products and services that you like. So, when you have a son and you are watching Winnie the Pooh, that's a great introduction for him into Netflix.
O'Reilly: I'm going to buy him some Disney stock now.
Gardner: I bet Netflix will make more money than the chocolate pudding company did, actually. But, anyways.
O'Reilly: Very good. Thank you once again for your time.
Gardner: Thanks, guys!
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