Playing & Trading Strategy

As marketing campaigns for both Crimson Peak and Steve Jobs are kicking into high gear, we're finally starting to see the stocks stopping their ping-ponging and settling into upward gains.  Along with some well-played trades off the trailers for Hail Caesar! and Race, we're already up 6.96% this week.

My guess is that both Crimson Peak and Steve Jobs are going to be quality films.  Whether or not this will translate directly into box office remains less certain.  With Jobs, I'm fairly confident it will, and that the stock will end up passing H$100.  I'm anticipating it will beat The Social Network.  Now, before that film came out, a lot of people were very skeptical that The Social Network would do as well as it did.  Everyone seemed to think a movie about Facebook was a joke, while not giving the benefit of the doubt to Sorkin and Fincher.  While history proved their skepticism misplaced, Facebook's appeal remains somewhat limited to those under 40.  And while people may not personally like Steve Jobs, his success story spanned decades, and I believe there will be generations of audience goers in attendance for Jobs who still don't know much or care much about Facebook.  Steve Jobs may not look as sexy a film as The Social Network to audiences under 40, but I expect it to still pull most of them into theatres, along with the older Tom Hanks crowd.  And I expect all of my audience theories to be buoyed by the film's performances, already the centerpiece of a very large marketing campaign.

Because Peak seems to be more gothic romance than scary horror movie, that may affect the film's box office grosses, and as a result, I'm more wary of this one.  I think with del Toro directing, the film's main cast, and the richly budgeted look of the movie, it would easily outgross The Visit in an ideal world.  But I think it's very possible it may not fully connect with its intended audiences for a variety of reasons.  So I have hopes it will perform as it "should," but I'll be watching it closely to adjust in case early numbers suggest otherwise.  On the other hand, if reviews continue to be very good, and if word of mouth is positive, I may look at holding onto this one past opening weekend and through Halloween, as it could experience substantial support from the end of October and not be as front-loaded as most movies.

My hope and goal is that with these two films opening over the next 2 weeks, and with well-timed side plays, we'll be able to double the fund's stock price by the end of October, which would put us two months ahead of last year's performance.  I'm shooting to get us into the H$25-30 range before November 1st, doing it largely with the long plays between Jobs and Peak, as well as other very select investments.

Now let's take a look at three more of Universal's upcoming releases.

The Forest

Our first 2016 release, this horror film is set in Japan in the Sea of Trees, from a story by David Goyer and starring Natalie Dormer of Game of Thrones.  I think audiences are ready to embrace Dormer, but she's still on her way up and certainly not a household name yet.  And Goyer is always a wild card.  Sure the Batman films he worked on with Nolan did well, but he's also responsible for things like Blade: Trinity and The Unborn.  We've already made H$1.3 mill off of The Forest as the trailer hit, and I'm not sure how much more box office potential this film has beyond what it's currently trading at.  The film's director is relatively untested with a few shorts to his name, and the other writers (besides Goyer) have a variety of miscellaneous credits to their names from things like Hannibal and Last Resort.  It opens in a usually dead January, but this year is not so dead and it's opening against The Revenant and The Hateful Eight.  That could take a bite out of its genre audience or help to seed it.  I think we'll have to wait until much closer to release to get a better idea of how it can or will ultimately perform.  It will likely be a modest hit; there just may not be too much play left in it from where it currently sits.  If I had to take a wild guess now, I'd put it at H$30-40.

Ride Along 2

Kevin Hart is very reliable these days, so I'm sure RA2 will do well.  But it's already trading at H$72.  Considering the first movie cashed out at H$105, we can probably assume RA2 will at least match it, but it's not something the fund can throw money into this early out with that kind of current sticker price.

Hail, Caesar!

The Coens have become increasingly difficult to predict in the latest section of their career, and arguably less accessible.  Caesar looks to be the breeziest, most fun movie they've put out in quite some time.  I like the old Hollywood archetypes and tropes they're playing with in the trailer, but the plot seems to be recycled from other, previous movies of theirs.  We made a very nice chunk of change on Caesar this week, and it's now currently trading at H$42.  It seems a bit of a reach to expect the film to gross much beyond this.  It's certainly possible if the stars align, but the Coens have had too many movies gross under $10 million to bet the bank on it.  True Grit cashed out at $128 and Burn After Reading at $51.  Splitting that would put Caesar at $90.  On the flip side (and I won't even touch the limited releases) Inside Llewyn Davis did H$12 and No Country for Old Men did H$33.  The mid-point there lies at $23, with Caesar currently smack in the middle of the range between that point and the Grit/Reading average.  Personally, I'm happy to see the Coens doing something bordering on comedic lunacy once again, but as for box office potential this will also be a wait-and-see.

The fund's next release (and next wide release) is Crimson Peak on October 16th.