Playing & Trading Strategy

Yesterday we passed $20 for a doubling in stock price since IPO September 10th.  At this rate (a double every 54 days) the stock would cash out $736!  While that's unlikely to happen, considering the higher the stock price grows, the fewer choices we will have for investing and we'll simply have to hold or short many/most of the Universal/Focus stocks and ride their increase/decrease rates, it's still a great fantasy number.  On a more realistic level, we remain ahead of last year's fund tracking, and look to cash out above $200.  The big hurdle in that goal will be doing it without a runaway success like Jurassic World... unless of course, we end up having one.  But there are no guarantess in life, so I'm trying to find a way to get us there regardless.

The end of the year is somewhat uneventful for us.  We've got Krampus and Sisters in wide release.  My bet is that Krampus will outperform current expectations (even if the film itself isn't that great), and that Sisters will underperform.  Consequently, we're long on Krampus and short on Sisters while continuing to short limited releases.

This past week we've had two other success stories for the fund: By the Sea and Warcraft.  It was always by belief that By the Sea would underperform when general audiences came to understand this was an arty vanity project on the part of Angelina Jolie.  However, this week the film was announced that instead of going wide, it would only release in 3 cities: New York, L.A., and Toronto.  The stock price took a huge dive, and as we were already fully short on it, we raked in the profits.  It currently sits at $8.20, and I'm continuing to hold the short because, if it doesn't go any wider than that, it really has no hope of making more than $1 million or so.  I did have to cover the stock and reshort it at one point to free a lot of the money that was locked into it to free that up for Warcraft.

Warcraft has its first full trailer hitting Friday (I beleive in association with Blizzcon).  From what I've seen, it looks pretty amazing, and I'm hoping for the fund's sake that the world will perk up and come to the same conclusion over the weekend.  Even if Warcraft doesn't become the next LOTR franchise, there's plenty of room between the current trading price and say, a $150 million take.  And just as I'm writing this, there's been the announcement of the London Has Fallen trailer hitting tomorrow, so I've moved the Sisters investment cash over the LHF for the time being.

The next week should see us continuing to profit from these moves while we look for the next smart November plays, wait for our 2 December wide releases, and then our spring releases.

For now, let's look beyond those to 3 more Universal releases.

Neighbors 2

With the same creative team from the first (and the additions of Chloe Grace Moretz and Selena Gomez), I fully expect this one to duplicate the former's success.  The first one did $150 million, so there's plenty more upside from its current trading price of $73.39.

Connor 4 Real

It's a Lonely Island movie, and basically the same creative team that made Hot Rod.  That movie grossed $14 million, and Connor 4 Real is currently trading at $16.  Andy Samberg has a much higher profile these days after his live action Adam Sandler movies, the Hotel Transylvania films, and Brooklyn Nine Nine, but it's unclear how much that will translate into additional box office.  There's the possibility of it becoming a breakout hit, but as of now I'd have to guess it remains more of a smaller, cult film.

Warcraft

And here we circle back to Warcraft.  In some ways, Blizzard probably missed their ideal opening by about 10 years on this, but 10 years ago we also didn't have the technology of a post-Marvel, post-LOTR, post-Hobbit, post-Avatar world.  World of Warcraft is still going relatively strong, and if all of the current players and all of the players from years past bought tickets, that alone would take it past its current trading price.  From the early stills and trailers, it looks as though they've really captured the universe of Warcraft, from landscapes and backgrounds to character design.  Of course, that doesn't tell us if the movie will be any good, but visually it looks amazing.  Blizzard as a company is very hands-on, and it seems they've found a director in Duncan Jones who both has the chops to direct something on this scale that delivers, and is willing to do it while collaborating with the company proper.  I do think there's already a case to be made between him and Colin Trevorrow (who delivered on Jurassic World), versus guys like Josh Trank who couldn't make that jump from indie budgets to huge studio picture.  And unlike Trevorrow, whose only previous feature had been Safety Not Guaranteed, Jones has previously already jumped from Moon to the larger-budgeted, studio-produced Source Code.  That gave him a step in between that Trank (going from Chronicle directly to Fantastic Four), Trevorrow, and Jordan Vogt-Roberts (The Kings of Summer directly to Kong:Skull Island) did not have.  My prediction here is that we'll make plenty of cash after the trailer hits on Friday, and that there's a definite possibility Warcraft could end up being next summer's Jurassic World.

The fund's next release is By the Sea on November 13th, and next wide release is Krampus on December 4th.