Wednesday, December 9, 2009

December 11, 2009: The Princess and the Frog, Invictus, and Lovely Bones

We're finally getting into the swing of things in the holiday season, with three good, potentially great, movies opening this weekend. Oscar season is here!

First up is a classic Disney movie, told in classic Disney hand-drawn animation.The Princess and the Frog (FROGP) is a variation on the fairy tale about a handsome prince who is turned into a frog, and needs to be kissed by a princess to turn back into a prince. One difference this time is that the princess is African-American. Disney is taking a bit of a gamble by going old-school with the animation, but I wouldn't bet against Disney and animation. The stock has been progressing nicely, and is at H$87. The strike price is nicely set at H$30, and the call (PFRCA) is, as expected, well above the IPO, currently at H$4. Put (PFRPU) is, as expected, below IPO, currently about H$1.50. Strike price for the Holiday Warrant (HWPRF) is H$100, and the price there is also above the IPO, about H$16. So far, so good. Where it gets interesting is the CX and Cantor derivatives. CX on HSX is about H$107, or 20 points higher than the stock. On Cantor, it's still a little higher, about $111. It's going out on 3,300 screens, a good wide release. It's scoring 83% on rottentomatoes.com, with lots of critics weighing in (it was released in LA and NY last week). It's already made $2.6 million. The last thing you should do is best against Disney animation. It needs to do $32 million to meet the HSX price, and $41 million to meet the Cantor price. WALL-E, which did not have a story anywhere nearly as easily sold to small children, opened with $63 million. $50 million is entirely possible for the Princess and her frog.
Stock: Long
Call: Long
Put: Short
Holiday Warrant: Long
CX on HSX: Long
Cantor: Long

Coming down to earth, we have Morgan Freeman and Matt Damon staring in a Clint Eastwood movie with a weird name, Invictus (INVIC). That's a great combination right there. Throw in Nelson Mandela and a world championship in a very tough sport, and you've got a powerful combination. There's another movie out right now that combines race and sports that has been an absolute smash - The Blind Side. I am currently realizing a 200% profit on that on Cantor. Apparently when Morgan Freeman met Nelson Mandela, Mandela told him that he wanted him, Morgan Freeman, to play him in a movie. Morgan Freeman played a black American president years ago, so playing Nelson Mandela is a natural progression. Where do you go from playing an American president? Nelson Mandela is about the only step up. I love the trailer for this movie. There's another trailer with a scene of Matt Damon rallying his troops after a defeat. Based on just that clip, I think Matt Damon is a front runner for Best Actor. The market is not quite as optimistic as I am about this. The stock is at H$43, down from a high of H$66. The strike price is H$20, which should seem unrealistic. The call (NVCCA) is dropping, and is barely above H$1. The put (NVCPU) is doing well, aiming at H$4. Strike price for the Holiday Warrant (HWINV) is H$70, and that's dropping, down to H$5. CX derivative on HSX is down to H$57, from the same high as the stock, H$66. On Cantor, it's below the CX price, down to H$52. All signs, in other words, point down. It's going out on 2,150 screens, a good release, not fantastic. But there's one very good sign: it's at 82% on RT. I think it's sinking for two reasons: 1, it's about rugby, which most Americans are not familiar with, and Obama's popularity is sinking, and many people are a little tired of inspirational rhetoric about a black president. But this also sounds like a damn good movie, Clint Eastwood has become a great director, and even if Americans don't understand rugby, they sure as heck understand winning. I'm willing to bet that lots of the women who are seeing The Blind Side don't particularly like football, but they get the story. I think that will be the case here.
Stock: Long
Call: Long
Put: Short
Holiday Warrant: Long
CX on HSX: Long
Cantor: Long

Last is a movie that is going into limited release this weekend, and going wide in January: Lovely Bones (LVBON). I have to be honest: this movie totally confounds me. It sounds incredibly depressing, but I've heard rumors of it being very highly anticipated, particularly by high school students. The stock is sinking, down to H$41, from a high of H$60. There are no options on HSX, and I'm not sure there will be. Strike price for the Holiday Warrant (HWLVB) is H$70, and that's sinking like a rock, down to H$7 or so. The CX derivative on HSX is down from H$69 to H$64. On Cantor, meanwhile, it's at $83, down from a high in the $90's. The reviews are in, and they're not good: it's at only 50% on RT, with 40 critics weighing in. Moreover, the good reviews are tepid, and many of the negative ones are strongly negative. It's only on 3 screens this weekend, and goes wide January 15th. That gives us lots of time for word of mouth to spread, and it doesn't look like it's going to spread well.
Stock: Short
Holiday Warrant: Short
CX on HSX: Short
Cantor: Short

Update Friday morning: INVIC and FROGP are both up about H$3, a good sign. It looks like INVIC might not make the strike price, but I am expecting some upside. LVBON, OTOH, keeps sinking. It's still in the high $70's on Cantor, which confuses the heck out of me. One thing I thot of yesterday writing this post is that I was highly optimistic about Peter Jackson's King Kong. I bet on Intrade that it was going to open above $100, and it opened with $66 million. We also have to remember the Wachowski brothers syndrome: they made a great movie, The Matrix, but followed it up with some real duds. So Peter Jackson is still flying on the success of the LOTR movies, but he's human. I thot King Kong was a little too ridiculous, and I haven't heard anything about it since the release. Clint Eastwood, however, has a great track record as a director. So does James Cameron, so I am very much looking forward to Avatar.

Update Sunday night: Sigh. Totally wrong on both movies.FROGP adjusted downwards, to H$77. Not a big drop, but $25 million is not the $50 million I was predicting. Can't believe I predicted something so way off from the market's prediction. INVIC continued its downward trend, only making $9 million this weekend. I think it will bounce back, but that's a long way from the $60+ that the Cantor option was trading at. Maybe it isn't a good movie to release during the holiday season. I also noticed this weekend that both of these movies star black characters (the Princess and Nelson Mandela). That would be black as opposed to African-American, because Nelson Mandela is not an American. Lesson for the week: respect the market.

No comments:

Post a Comment