Playing & Trading Strategy

Well, it's looking more and more like hitting that H$25-30 range before the end of October won't happen, however, the fund is still on track to beat last year's cashout of $199.06, and that has been and will always be my primary goal.  Presently we're sitting at $16.57; last year at this time the fund was at $14.22.

Crimson Peak was certainly a box office disappointment, but I watched it closely and was able to ride it up to its max, short it, and then ride it back down as the weekend projections hit.  The problem, as with The Visit, were the derivatives being locked in a day prior and the fund going long on them.  We tempered those losses with profits from the cashouts on The Green Inferno and Everest, as well as the trailer news on Race and Ratchet & Clank.

It's funny, because Crimson Peak seems to have taken a big hit for not delivering on the horror many fans wanted, and the way that it was marketed.  However, if it had been marketed more on the gothic romance and production design angles, might it have fared much, much better?  I have personally seen Crimson Peak, and think it was simultaneously brilliant and a misguided mess for many, various reasons.  And while it wasn't the masterpiece or near-masterpiece I'd been hoping for, it's still a solid film that I'd probably rate around a B or B-.  And I wonder how it would have fared if it were the exact same movie with Tim Burton's name on it, and marketed similarly to Alice in Wonderland (featuring the same lead actress, no less).  Crimson Peak was certainly a better film than that empty nothing, so why didn't Universal marketing try to chase the box office marketplace of Cinderella and Maleficent with a tweak towards "dark" fantasy, instead of chasing a harder horror audience they could only disappoint?  If it was simply because of the R rating (and I'm surprised they couldn't get a PG-13 rating with the content that was in the finished film), it seems at though it would have required only minimal changes or edits.  And if sticking with the R rating was the result of del Toro trying to make the case via this film's performance towards finally getting a greenlight for In the Mountains of Madness, boy did he shoot himself in the foot.  Which isn't to say I wouldn't have preferred a very gory, hard-R Crimson Peak from del Toro that delivered on its punches more, but this film was never that.  I just believe that for what it was, Crimson Peak would have been much better served with a PG-13 rating and a different marketing campaign, which might have resulted in it doing several times the business it did.

In general, my plan to play news items a bit more conservatively has been going well.  I also have a good portion of the UNIVX's funds invested in shorting upcoming releases, testing out the hypothesis that almost all of them are overvalued and hit max a month or two in advance of their release.

The biggest money loser this week that has really knocked us back is Steve Jobs.  And here's the sticking point.  For me to sell the stock, short it, then cover the short and reinvest long would translate to $2.00 of the fund's money in transaction fees.  That's a huge hit when we're trading in the $15-20 range.  And I believe Jobs will end up in the $55-65 range after the weekend, well above where it currently sits.  Most of the downslide, in my opinion, is not based on metrics of any kind, but on widespread trader panic, largely the result of some of the underwhelming box office performances of the fall, which certainly includes Crimson Peak.  If Everest and The Walk disappointed with a prior earlier release, why won't Jobs?  In this case I believe we're talking apples and oranges when comparing an early IMAX release with a limited, tiered rollout of a prestige picture.  Also, reviews for Jobs have been glowing, and the same can not be said about Everest or The Walk.  There's also been an insane amount of marketing for Jobs, and I think it's going to include the AARP crowd in a way the other fall releases have not.  I don't even think Hanks and Bridge of Spies are going to take much of a bite out of it, considering the way Jobs has been rolling out and generating press and positive reviews in the past month.

So there's never been a particular moment in time where it looks like Jobs has a reason to dip down (or a reason to bounce back)... it's all arbitary, and impossible to predict.  Instead, I've chosen to sit on Jobs rather than to lose more money trying to predict the volatility movements.  I wish it were possible to make accurate predictions and profit on the way down and then again on the bounce back up, but in this case (when you factor in that $2 trading fees price) I think we'll have to settle for the profits after Jobs catches back up to itself and then continues to top itself off before the weekend adjusts.

We've also lost a little cash reversing positions several times on Jem and the Holograms, as I've been uncertain which way it will end up going.  A $5 million opening doesn't seem like a hard target to hit, nor a $10-12 box office total.  The youth of today (or at any point in time) generally does not care about yesteryear, so should today's tweens care that the film bares such little resemblance to its source material, or that it has its original fans in a livid rage?  The borrowed brand name, make-up, and hair styles don't matter; all that matters is that young girls show up for this particular story of otherwise-unrelated youtube success.  And Chu's earlier, somewhat similar Step Up movies have far exceeded where Jem is currently trading at.  Making a judgement call between the potential of this particular entity on its own selling points, or weighing a portion of it with its source materical, has been my quandary.  But as of now, I feel ready to accept Jem as a box office flop that won't even hit its minimal goals and projections.

So I think the fund will see a good weekend with Jobs, and a significant bounceback on that stock.  I also believe that Jem will be rather inconsequential one way or the other.  Right now we're short on it, but if early numbers come in significantly higher than current projections, I can always reverse position one last time.  I've also started putting money into other upcoming releases in lieu of tradable news items.  And in addition to shorting the limiteds, we're also currently short on By the Sea and Sisters.

And now it's time to take a look at 3 more releases in the upcoming Universal slate.

Race

I think Race should do very well for itself.  It comes out in February, which is not over-cluttered, and it has the dual distinction of being both a sports picture and a story of historical importance.  It has a solid, supporting cast that includes the likes of Jeremy Irons, William Hurt, and Carice van Houten.

On the flip side, audience are not used to seeing Jason Sudeikis in a straight role, and this isn't like Steve Carell in Foxcatcher where the performance is at the center of the film and meant to be a talking point and Oscar bait.  And director Stephen Hopkins has been mostly absent from cinemas since his 90's action/thriller run, instead working on television projects like 24, Californication, and House of Lies.  And finally, lead Stephan James is almost an unknown.

The only real selling point on this one is going to be the story itself, and the effectiveness of the trailers and early reviews.  But so far things look good, and I think $40-65 seems fair.

London Has Fallen

Haven't seen the original, which looks like pretty dumb, high-concept, unoriginal action fare, but mildly entertaining for what it is.  So here I apply my rule of sequels, and the original grossed $98 million.  The early March release date and the fact that this is coming fairly close on the heels of the first one should only help.  Both Race and London Has Fallen could be very solid, unexpected performers in the spring.

My Big Fat Greek Wedding 2

This one is a much different beast.  The original, like Titanic, made its money over many, many months.  A similar performance won't amount to much on HSX, particularly in terms of opening weekend adjusts (the first made $241 million domestically, and another $127 in foreign, but cashed out on HSX at H$23 after its first four weeks).  On the other hand, the original now has its fans, so it doesn't need to grow the audience at this point.  Except that the original came out 14 years ago.  Begging the question, does anyone still care?

To add to the ennui is the fact that star (and writer) Nia Vardalos has almost disappeared from the landscape as well.  She's written and produced a couple of smaller films, and worked here and there in supporting roles, but she certainly never rose to anything resembling mega-stardom.  Vardalos' Connie and Carla, coming out only 2 years after the original Wedding and co-starring Toni Collete, did not carry the original's box office torch and only grossed $8 million domestically and $3 mill in foreign on a $27 million budget.  MBFG2 is already trading at $38, and I can't see any reason why that wouldn't be a fitting final take.  Whether it goes up or down from that figure requires further investigation and is beyond what I can currently predict, so I'll be looking to the analysts on this one as the release draws closer.

The fund's next releases (and next wide releases) are Jem and the Holograms and Steve Jobs on October 23rd.