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The Week in Review/The Week Ahead: The Universal Fund [UNIVX], Episode 15

Posted by: UNIVX (a.k.a UNIVXFund) on Dec 28, 11:16

Please excuse the report being a day late from the seemingly now-regular Sunday posting day.  Holidays and traveling have made things a little more complex than usual.  We actually had a decent week this week (not great, but decent) with a 4.9% increase, largely because of Sisters.  While the movie underperformed during opening weekend because of Star Wars, I paid attention and bought it as it experienced a rather significant bounceback.  Sisters did more business over the Christmas holiday and following weekend, and the stock shot back up from $36 to $51.  Now we're out of it, but we made more money off of that movement that the film's opening weekend, adjust, and derivatives.  As I mentioned last week, there just haven't been too many movements or too many news items for Universal-related stocks, so we've been relying more on long-term holdings over the holiday season.

It looks like The Danish Girl won't be going wide after all, but it is opening significantly wider that the 4 theatres in which it made its first $400K.  Christmas Day saw it expand further from 81 theatres to 440, and the film is now up to $3.2 million.  Considering its upcoming Oscar campaign and the fact that the release is still gathering steam, we'll probably continue to hold it for a bit.  I think it should be able to at least double its current take, which would put it well above its current $4.55 trading price.  And with The Forest and Ride Along 2 opening soon, both of those stocks are starting to gain a little more pre-opening momentum.  I also went ahead and picked up Hail Caesar! when it dipped as low as $39, so that puts us with max shares of all films opening between now and the release of London Has Fallen, and additionally with max shares of Neighbors 2.  I'm looking forward to the calendar passing January 1st and breaking into 2016, when hopefully we'll start to see more regular news items once again.  That said, let's look ahead to 3 more upcoming Universal releases.

 

Despicable Me 3

Again, DM3 is too far out for us to be investing in considering our limited portfolio size.  But the Despicable franchise is a well-made and reliable one that doesn't seem to have lost steam yet.  Past releases DM1, DM2, and Minions made $190, $305, and $287 respectively, during their 4-week HSX periods.  An average of the three would put DM3 at a target of $261, well-exceeding its current $186 trading price.  A great investment for the long-term investor, but not something that will benefit this iteration of UNIVX with anything other than slow, gradual movement between now and our August cashout (the film doesn't release until June 2017).  And because Universal, Illumination Ent., and the Despicable Me films have built such a strong brand to begin with, it's not like the current trading price is significantly undervalued and an outright steal.  This stock will probably climb another $100, but it will take 18 months to do so.

 

Pitch Perfect 3

Another sequel within an already-strong IP that's too far out to really benefit us right now.  While critics knocked PP2 for not being as good as the first, that didn't affect box office numbers.  PP1 did $51 on HSX, PP2 did $161, and there's no reason PP3 shouldn't at least duplicate the performance of the second.  The franchise took some time to grow its audience on DVD and streaming after the first had already left its initial theatre run, so I don't think we'll see figures anywhere near $50, but even being pessimistic and using it as part of an average gives us a target for the third of $106, which I think is very low.  Currently PP3 is trading at $102, and while it's likely the film will eventually take in $150+, perhaps even $200, it's not a good investment for the fund at this time.  But for the long-term investor, another solid stock that should only continue a slow climb between now and summer 2017.

 

The Snowman

A wide release thriller starring Michael Fassbender, and an adaptation of one of Norwegian novelist Jo Nesbo's thrillers staring detective Harry Hole.  The script should be solid, coming from Matthew Michael Carnahan, brother of director Joe Carnahan.  Matthew previously penned The Kingdom for his brother, Lions for Lambs, State of Play (the American adaptation), and worked on World War Z.  And the film is directed by Tomas Alfredson, who previously helmed Let the Right One In and Tailor, Tinker, Soldier, Spy.  TTSS is probably a pretty good barometer for The Snowman, as it did open wide, featured a stellar cast, similar genre/tone, and yet probably more widely-recognized source material than The Snowman.  Despite its high pedigree, TTSS only did $20 in its first 4 weeks of wide release, and was treated much more like a foreign prestige picture.  It's possible that this film will get a huge marketing push, or that Fassbender will be box office fire after Assassin's Creed hits, but Fassbender has already been starring as Magneto and has featured in Prometheus, and that didn't exactly help Steve Jobs do big numbers.  I'm personally very excited for anything new from Alfredson, and an adaptation of a Nesbo novel with Fassbender in the lead has enormous potential.  But that may not necessarily translate to box office dollars, and there's no guarantee that a stock currently trading at $15 will ever end up going past $20-25 without many more elements coming into significant play.  So mark the release date for this one on your calendars, but hold off investing your HSX dollars for now.


And that brings another episode to a close.  Join me again next weekend for Episode 16, and be ready for our next release on January 8th when The Forest opens wide.


Tag(s): UNIVX





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