Playing & Trading Strategy

Price history chart (courtesy KaiGee)

Firstly, a month into my stewardship of Fox Studio Fund, I’d like to take stock of where we are. Hopefully investors are happy with the return on their investment, which currently shows a 123% increase since IPO, equivalent to a bankeable profit of 30% week in and week out. This has been achieved despite the fact that we have been trading intensively across a narrow range of stocks (including IPO’s). As can be seen from the above chart the trend line has been very consistent, which is testament to how closely day-traded this fund is. Except in very rare circumstances we are in the right stocks at the right time and you have my assurance that this situation will not change as long as I am looking after your money.

Going forward you will see the fund’s investment strategy begin to evolve. Already we are beginning to take strategic positions in high profile projects. Whereas we shorted The Martian (MARTN) early last week we immediately flipped after the adjust and then took some profits but like our position on the stock my attitude toward the movie has done a ‘180’. Whereas last week I implied that The Martian was a further grim instalment in an already tired genre, I now appreciate that it is an inspiring and uplifting family film that has single-handedly resuscitated the careers of both Ridley Scott and Matt Damon, at least as far as their box office potential is concerned. I had also cast doubt on the film’s prospects based on its supposed limited 3D appeal and lack of IMAX outlets. In fact 3D comprised 45% of the OW revenue and the lack of IMAX doesn’t appear to have had a significantly detrimental effect. The almost universal acclaim of the critics and audiences alike (an A grade from Cinemascore augers well for word of mouth ahead), along with a distinct lack of competition in the coming weeks means we will likely stay long on this one.

Last week’s other release He Named Me Malala (HNMAL), which took $60K in its four locations, is still a solid short for us. The only error was taking a position too early but I’m still confident that it will turn profitable. I think HNMAL can be filed away amongst the large number of platform releases that inexplicably have their share price boosted up to multi-dollar status before eventually cashing out for pennies. The secret is shorting at the top and enjoying the ride down - which I hold my hand up to say we got wrong in this instance.

Hot on the success of The Martian we have also gone ‘all in’ on Prometheus 2 aka Alien: Paradise Lost (PRME2), which is widely reported to be Ridley Scott’s next movie. The first chapter was unsatisying but if they get this one right, which means successfully cross-pollinating the Alien franchise, we could be talking blockbuster territory so I see this one as a long-term hold.

Our next upcoming major release is The Peanuts Movie (PENUT), another superior animation from Blue Sky Studios, which opens November 6 and should have a widespread appeal. It looks like Fox have found the perfect release schedule for this one with no fresh competition right up to Thanksgiving weekend. We have taken an initial stake in this one and I anticipate bolstering our position as funds allow.

Also of interest in the coming week is the IPO of Hidden Figures (HIDNF), which will highlight the African-American women mathematicians working at NASA during the Cold War and Civil rights movement. This one launches on Monday and, needless to say, we will be all over it like a rash!