April 30, 2010: Furry Vengeance, A Nightmare on Elm Street

The summer season is not quite here, but almost! Next week the blockbusters start, with Iron Man 2 heralding the arrival of the usual bumper crop of explosions, hot bodies, and CGI. Should be fun!

Meanwhile, tho, we've got a couple of movies being dumped into the netherworld of pre-blockbuster movie season. The competition will heat up very quickly, so studios are releasing movies that they don't expect will do very well, anyway.

I finally started up my spreadsheet to judge movies. Neither of these scored very well. Both are going out on lots of screens.

First up, and probably the first to disappear, is Furry Vengeance (FURYV), starring Brendan Fraser, master of the midrange movie. It also stars - if "stars" is the right word - Brooke Shields, who must need a paycheck. Her name is nowhere in the marketing, which is probably a plus for her. Fraser is a real estate developer who wants to clear a forest to make way for a shopping mall or something. The local animals have different ideas. It's almost a clever premise. Well, not really. The stock has been dropping like a rock, and is just below H$25, from a high of H$46. This is what we call a "meltdown." Strike price is H$10, a usually lowball price, but it seems almost quaint with the price of the stock where it is. The call (FURYCA) is just above 50 cents, confirmation of aforementioned meltdown. Put (FURYPU) is at H$3 and change, suggesting an opening weekend barely above $6 million. Which should just about pay for Brendan Fraser's drycleaning. The CX derivative is at H$30, presumably because it just hasn't dropped far enough yet. It has a 3.2 rating on IMDb. Critics are doing their worst, with a 0% (yes, that's a zero) rating on rottentomatoes.com. There are only 13 reviews on Thursday afternoon, which implies that it was not screened for critics. Which absolutely would not be a surprise.

Stock: Short

Call: Short

Put: Long

CX: Short

On the other side of the aesthetic scale from family movies about cute animals is A Nightmare On Elm Street (NELMS), a place where it is dangerous to fall asleep. Not being a connoisseur of the genre, I'm not sure how well this is going to play. It's iconic enough of a franchise that even I know the name Freddy Kreuger, but I'm not sure if this reboot will work as well as others have. The stock is at H$93, down from the high of H$96, but just barely. But the director is fairly new, at least to movies - he's made a lot of music videos. So we can expect it to look good, but we're not sure about the plot. The writers are also a little thin in the movie credits department, so my guess is that the studio didn't put a lot of money into the script, and they hired a journeyman to make it. Neither is all that inspiring, although not all that crucial. CX derivative is H$93, almost exactly the stock price, but down dramatically from the absurd high of H$115. Strike price is H$35, right on target. Call (NELMCA) is riding nice and high at H$4, almost H$5. That gives us a $40 million opening weekend, and an adjust of H$108. However, the put (NELMPU) is not doing badly either, just under H$3. So slightly mixed signals there. No mixed signals from the critics, who basically hate it - all of a 6% rating on RT. Harry Knowles, on the other hand, loves it, so there's hope from geekdom. The key producer is Michael Bay, and his production company made the very successful Texas Chain Saw Massacre and Friday the 13th remakes. We're going to go with that record.

Stock: Long

Call: Long

Put: Short

CX: Long

Update Friday morning: FURYV is down to under H$22 - I don't think it can go much lower, but you never know, so I'm staying with that short. Freddy and friends are up H$4.50 this morning, so that long looks good, too. There must be a lot of people out there desperate for some good horror. Maintaining all positions.

Update Sunday night: Another split weekend. Brendan Fraser's career continues to crater, as FURYV only pulled in $6.5 million, while Freddy was successfully resurrected from the dead, or wherever he was, as NELMS pulled in $32 million. Way to go, Freddy, although that wasn't quite as good as I was hoping. I was optimistic about Nightmare's prospects when it opened with $15 million on Friday, but I forgot how skewed the results are for horror movies - Friday accounted for 49% of the weekend's take. And, of course, it will drop quickly from here on out. Shorting to delist is a sure thing this time around.

My mistake this weekend was not using a checklist as well as the spreadsheet. One item I will have on my checklist when I make it is this question: Is there greater potential on the upside, or the downside? The answer for Freddy et al. would have clearly been that there was more potential on the downside, as it was trading near the high for this kind of movie, and there wasn't a lot going for it, besides the franchise. It's a good franchise, and we have seen other horror franchises rebooted of late, but we've also seen horror franchises sputter. And I forgot about the tendency for horror movies to drop so fast. OTOH, I am happy with my FURYV prediction, because that was trading way down low, and I wasn't sure how much potential there was on the downside. So I'm happy I recognized a complete bomb in the making.

April 23, 1990: The Losers, The Backup Plan

Two moderately interesting movies this week, not great, but should be good. We're waiting for summer blockbuster season.

I haven't finished my new spreadsheet for evaluating opening weekend numbers, but I did come up with what I hope is a good insight. I noticed that there are a number of movies that peak on HSX (and Cantor) a few weeks before release, and then drop. Part of the reason for this, I suspect, is asymmetrical information. Those of us outside the studio know very little about the movie, and what we do know is mostly the result of marketing: who's in it, who are the key creatives, and what it's about. That's what the studio wants us to know. But the studio knows a lot more, specifically the most important piece of information about a particular movie that will determine its success: whether or not it's any good. I haven't developed this theory much beyond this, but I wanted to post about it today.

The first movie we have this weekend is The Backup Plan (PLANB), which actually has not peaked and then dropped. I suspect that because it's not subject to much hype. Jennifer Lopez, the star attraction here, doesn't have the luster that she used to. Stock is H$31, or about an $11 million opening, and has been moving steadily up. Strike price is H$10, a tad low, but not far off. Call (PLANCA) is doing quite well, at H$3 and change. Put (PLANPU), as expected, is dropping, just above a buck. CX derivative has followed just about the same trajectory as the stock, which is a good sign. Critics are not enthusiastic, with a 20% rating on rottentomatoes.com. There are only a few reviews up as of this writing, but I don't expect that to improve by much. It's going out on lots and lots and lots of screens. So what do we know about this movie? It stars Jennifer Lopez, who has some goodwill left over, but has also burned some of her star power. The guy is some handsome dude that I've never heard of. The plot is a variation on the romantic comedy. In these kinds of movies, there has to be a good reason why the couple is being kept apart. She's pregnant, the result of artificial insemination, but doesn't want to tell him. My guess is that this results in her coming up with all kinds of weird excuses for weird behavior. It's not hard to write these kinds of gags, and it's not hard to shoot them. Expectations are fairly minimal, but they should not be hard to overcome. Jennifer Lopez has one thing going for her: she is by far the most mainstream Hispanic actress in the country right now. That gives her a good marketing hook for a good segment of the population. The studio knows a lot more about how to market her than I do. But I suspect they will do that well.
Stock: Long
Call: Long
Put: Short
CX: Long

I'm more interested in the other movie opening this weekend, The Losers (LOSRS). The trailer looks like a lot of fun. This stock has followed the trajectory I outlined above, peaking and then dropping quite precipitously. It's currently at H$34, down from H$57. That's quite the cliff. Part of the hype is, I'm sure, due to the genre. Looks like a fairly generic action adventure movie, with a good B-list cast (although Zoe Saldana is close to being A-list) and lots of excuses for sex and explosions. Good times! Of course, it does star B-listers, most of whom are flying well under the paparazzi radar. Part of the problem for it this weekend will be competing with Kick-Ass, which also looks like a generic genre movie, but is quite the surprisingly good movie. That's going to steal a chunk of the audience. Strike price was set at H$20, which presumably made sense three or four weeks ago, but is close to ludicrous today. So, easy money playing the call and put this time around. Call (LOSRCA) is dropping like a rock, while the put (LOSRPU) is above H$4. CX derivative has also dropped off a cliff, but is still around H$40. Critics are almost kind, with a 50% approval on RT. Once again, low expectations, at least after too-high expectations were purged. I have to admit that I love the trailer, and I am somewhat optimistic about it just based on that. Of course, this is the asymmetrical information in its purest form: we're only seeing the cool shots. But I like how the trailer was put together, because it's not just a fast-paced smashup of lots of explosions. It's got a great mix of action, humor, and even some character development. I like trailers that take some time to show enough of a scene that you have to listen to get the joke. There are some good lines ("Blagyver!") and a few good shots. Love the guy who shoots people with his hands, and then they drop. Very simple, but cool. That suggests that it is well-produced, always a good sign Great production value there - simple, cheap, but cool. I also like the shot of Zoe Saldana opening up coffins. That makes we wonder how they ended up in those coffins. I am not all that much worried about how good the plot is. This is not a movie you watch for the plot, although it helps if it's not completely ludicrous.
Stock: Long
Call: Short
Put: Long
CX: Long

Ironically, I apparently don't have permission to embed the video for the trailer, so watch it at HSX.com if you're interested.

Update Saturday morning: I was traveling yesterday morning, so I missed LOSRS dropping H$4.50. Whoa, not a good sign. Guess that trailer isn't making up for the lack of stars.

Update Sunday night: The Losers unfortunately lived up to their name, not quite clearing $10 million, while J.Lo pretty much met expectations, opening at $12 million and change. I didn't predict the opening for the documentary Oceans, because it opened on Wednesday, and there isn't much data or experience to go on predicting opening weekend box office for documentaries. I probably should have shorted The Losers several weeks ago, then I would have felt comfortable staying short. My big mistake this weekend was staying long on an overpriced CX derivative on LOSRS. But a good weekend overall, as I got everything right about PLANB, and the options right on LOSRS. 6 out of 8, or 75%, ain't bad.

April 16, 2010: Kick Ass, Death at a Funeral

Two movies opening this weekend, one fairly original, and the other a remake. Both comedies. Both looking good.

Kick-Ass (KCKAS) is based on a comic book, sort of. I'm not quite clear on the turn of events, but apparently both were conceived/written at the same time. The Original Fund is not investing in this, much as I would like to, because it's not completely original. It is, however, one of the most anticipated movies of the year. The only star is Nicholas Cage, but he doesn't have a starring role. It's about a teenage boy who decides to become a superhero, despite having no superpowers. It sounds deliriously fun. Stock is at H$95, down from a high of almost H$130, because the hype was just through the roof for a while there. Of course, every now and then hype is justified. The strike price is H$40, which would have been perfectly reasonable at H$120, but is a shade high for where the stock is now. Not surprisingly, the call (KCKACA) is sinking, below the IPO, while the put (KCKAPU) is above H$4. It's opening on 3,000+ screens. Critics are mostly very enthusiastic, with a 74% rating on rottentomatoes.com, although Roger Ebert hated it. Harry Knowles, on the other hand, not only loves it, but posts a long rebuttal to his friend and hero Mr. Ebert. The CX derivative is slightly below the stock, which is somewhat unusual. One factor to consider is that it's rated R, which should technically limit the box office, since many of the target audience allegedly will not be able to see it on their own. Not terribly worried about that one. There is one essential question that has to be asked when evaluating movies and how well they might do at the box office: why is this movie being made? Is it being made because a studio wants to make money? If that's the case, it's probably a very safe, generic movie, the kind that is entertaining, but doesn't take too many risks. Or was it made by people who are passionate about the story? That's the kind of movie that takes risks, and sometimes hits very, very big. The movies that make the most money are usually the movies that are so distinctive that they become part of the cultural consciousness - they become touchstones, the movies that people use as references. My favorite example is Thelma and Louise. It's not a complicated movie, but it's unique and interesting enough that I can refer to it and be confident that even people who haven't seen it have heard of it, and know what it's about. The other great example, of course, is Pulp Fiction.

I have a feeling this is going to be one of those movies. The director, Matthew Vaughn, raised the money himself. It's not being sold on the basis of the stars, writer, or director. There is a big name involved with this movie: Brad Pitt is one of the producers. But his name is nowhere in the marketing - I've only read one mention of his involvement. Which strongly suggests that he is producing this just because he likes the project, and he doesn't want his name used in the marketing, because that would distract from the movie itself. Good for him.

I'm betting against the market on this one, because I think this one is going out of the park.

Stock: Long

Call: Long

Put: Short

CX: Long

The other movie opening this weekend is "Death at a Funeral" (DEFUN), a remake of a British movie from just a couple of years ago. The original movie was based on an original idea, and a rather funny one: a funeral home delivers a casket with the wrong body to a funeral, and bizarre family secrets are revealed. It was funny, but rather dry. It wasn't particularly successful in this country, only pulling in $8 million, but it made $38 million overseas. Chris Rock must have absolutely loved it, because he is the one who decided to remake it. He stars in it, co-wrote the script, and produced it. It's directed by Neil LaBute. Yes, that Neil LaBute, known for depressing dramas. Stock is at H$68.16, the all-time high. This one has just been rocketing up in the last couple of weeks. Strike price is H$20, which almost looks underpriced at this point. Call (DEFUCA) is moving up nicely, aiming at H$4. Put (DEFUPU) is down below the IPO. CX derivative is at H$65, almost perfectly in line with the stock, although it has dropped, from some astronomical heights. Like Kick-Ass, this is a passion project - really can't see any studio executives clamoring to do this. Remaking a British arthouse movie with an African-American cast? That's got to be a first. It's opening on 2,400 screens, which should be more than enough. Critics aren't very impressed, with only a 43% rating on RT, but there are only 9 reviews up at this point. I liked the original, although I didn't love it, but my guess is that Chris Rock can make this one funnier than the original. I don't bet against Tyler Perry, and I'm sure not going to bet against Chris Rock.

Stock: Long

Call: Long

Put: Long

CX: Long

Update Friday morning: I have to admit that I was slightly nervous about DEFUN, since the reviews have not been great, and the original was, after all, an arthouse flick. But it's up H$5 this morning, a very strong sign, so I am maintaining that position. KCKAS, on the other hand, is down H$5, usually a sign to bail. I'm maintaining my long position on this as well, because the buzz is just so ridiculously strong. It's a gamble, and I don't like betting against the market, but I have a good feeling about this one. What particularly appeals to me about this one is that it could appeal to most demographics: the fanboy crowd, parents with teenagers, even regular adults who just want to see a fun movie. I have every intention of seeing it, possibly this weekend. It's got an A- so far from users Yahoo! movies. I take that source with a large grain of salt, assuming that there is a strong contingent of studio plants, but it's still a good sign. It's also doing quite well on IMDbpro, with an 8.4 rating from almost 8,000 users. That's enough that it is legitimately a wide user base, not just studio plants. So still planning to go long to delist.

Update Sunday night: Well, damn. This may be the best and worst weekend of my prediction career. It's the worst because I went exactly the wrong way on both of my predictions - I bet against the market on KCKAS, and with the market on DEFUN, when I should have done exactly the opposite. Kick-Ass came in at just under $20 million, just a tad shy of the $30 million I was predicting, and DEFUN came in at $17 million, also well south of my $25 million prediction. I have been thinking of coming up with a spreadsheet/checklist of questions and issues I can and should ask around each release. I really, really have to come up with that. I need to be able to play devil's advocate with myself.

But it's the best weekend for me because I don't think I have ever been less worried about being so dramatically wrong than I am in the case of KCKAS. I saw it on Saturday night. My review is here. The actual viewing started out a little odd - we saw the first few minutes of Clash of the Titans, rather than this. Someone alerted the theater immediately, and they corrected the situation fairly quickly, but it still started a good half an hour late. Not unheard of, but a little odd in this day and age. And this was Pacific Theaters at The Grove, a fairly new facility.

The reason I am so not worried about being wrong about KCKAS is that I enjoyed the movie so much. It's a phenomenal movie. It may take a few days for word of mouth to build, but build it will. It's already at #166 on IMDb's list of the top 250 movies of all time. It's that good. Very, very highly recommended.

April 9, 2010: Date Night

Only one movie is opening this weekend, Date Night (DATEN), with Tina Fey and Steve Carrell. They play a married couple who go out on a date, escaping the kids. Something goes wrong with their reservation at the restaurant, so they pretend to be another couple. Said other couple apparently has trouble with certain elements of society who have nontraditional views on abiding by the laws and norms of society. So Tina Fey and Steve Carrell are suddenly on the run. I am a fan of both of them, and I am right in the target demographic, despite not being married with kids. Neither of them has scored big at the box office before, but they do, of course, have solid hits on TV.

The stock is at H$80, down today, and down from a high of H$99. The strike price is H$35, or a stock price of H$94. Call (DATECA) is right at the IPO, while the put (DATEPU) is at H$3 and change, and rising. The CX derivative is a bit higher, at H$93, but also falling. Reviews are mostly positive, but not wonderful, at 61% on RT. Shawn Levy, the director, previously made the Night at the Museum movies, as well as Cheaper by the Dozen and the Pink Panther remakes. Not an inspiring resume, but those movies have mostly made money. The fact that this is the only major release this weekend says that other studios decided to stay away from competing with this. One problem I expect this movie to have is that the real target demographic - young married couples with kids - tend to not see movies on opening weekends, specifically because, well, they're married with kids. But this could also speak to them. On the other hand, a $30 million weekend would be very good. I'm thinking somewhere between $25 and $30.

Stock: Long

Call: Short

Put: Short

CX: Short

Update Friday morning: The stock is down H$1 this morning, which is trivial. The call is barely above H$1, while the put is above H$4. Critics are still mildly in love, at 70% on RT, although most of the reviews are more excited about the stars than the material. I'm changing one position, and that is on the CX derivative. It's now at H$84, close enough to the price of the stock that it doesn't make much sense to try to split the difference.

I was slightly off, but not by much. DATEN cleared $27 million, right in the middle of my estimate. Of course, I drew a wide enough target - $25-30 million - that it's not a surprise that I got that right. My mistake was that the price of the stock on Friday morning - H$79 - was right at the high end of my estimate. Once again, I think I was letting my personal taste rule my decision a bit too much - I am a fan of both of these stars, and I want to see them do well. It has a 7.1 rating on IMDb, so I think the word of mouth will be positive. Staying long to delist.

April 2, 2010: Why Did I Clash With The Titans?

It's April Fools Day today, but I'm not going to spring any surprises on anyone. Looks like Miley Cyrus is doing well at the box office; The Last Song snagged $5 million at the box office on Wednesday, so the opening weekend should be solid. Also opening this weekend is Tyler Perry, back wondering why he got married, and a remake of The Clash of the Titans. The Original Idea Fund will not be investing in any of these movies.

Tyler Perry is a one-man moviemaking machine these days, cranking them out faster than Woody Allen. He's got a niche, he's milking it, and he's doing a great job. Why Did I Get Married Too (WDIG2) fits his formula and his plans for world domination. The stock has been climbing quite steadily, and is currently at H$54, or a $20 million opening weekend. The original made about $55 million, so we are looking for this one to outgross the first. Given Perry's record of success at establishing himself as a reliable brand, that's entirely possible. The strike price was set somewhat optimistically at H$25, which would imply a stock price of H$67. Not impossible, but not likely. The call (WDI2CA), not at all surprisingly, is down to a buck and change. The put (WDI2PU), equally unsurprisingly, is soaring, above H$3. It's going out on 2,100 screens, a good release, but not great. There is only one review on rottentomatoes.com, which suggests that it was not screened for critics, which is somewhat disconcerting. The CX derivative is almost exactly the same price as the stock, which is a tad unusual. The one review on RT, from Armond White of the New York Press, makes the very good point that this formula is starting to feel stale. I wouldn't know, not being all that familiar with Mr. Perry's work. My guess is that there is still some gas in the tank, but I will be watching this one closely tomorrow morning.

Stock: Long

Call: Short

Put: Short

CX: Long

At the other end of the demographic scale, although not that far away on the art-vs.-entertainment scale, is Clash of the Titans, a remake of the 1981 movie. I haven't seen the original, and it's not "on the list," i.e. the list of movies that I think I should see, but haven't. My impression is that it's famous more for the special effects than the plot, of which I know very little. The stock has been climbing quite steadily, just like Mr. Perry's movie, and currently is floating just under H$190. That's a $70 million opening weekend, somewhat below the strike price of H$75. The buzz is quite substantial, as evidenced by the call (CLASCA), which is about H$5. That would mean an $80 million weekend, or an adjust to $216, or up by H$26. The put (CLASPU), meanwhile, is up today, while the call is down. I am sensing a slight realignment, with the call dropping and the put moving up. The CX derivative is down almost H$3 today, just about level with the stock. It's going out on 3,700 screens, a good wide release, as is expected. Many of those screens will be showing it in 3D, although it's not clear how many, since there has been much discussion of late about the shortage of 3D screens, with more demand for 3D screens that supply at this point. It wasn't shot in 3D, a minor problem, but one that didn't slow down the Alice in Wonderland juggernaut. I'm not really clear on what the plot is, other than it being a clash of titans. The trailer does not give away much of the plot, but is nicely edited and fast paced. I'm sure it will be quite entertaining, but not enlightening in any way. Critics are fairly savage, with only a 35% approval rating on RT. Normally that wouldn't matter much with a movie like this, but my gut tells me that a fair number of people are bored with too much CGI, which is what this feels like. One of the most important critics, Harry Knowles of Ain't It Cool News, rips it apart. I don't always agree with him, but the man knows his movies, and he just shreds this screenplay. If you've lost the head geek, you're in trouble.

Stock: Short

Call: Short

Put: Long

CX: Short

Update Friday morning: WDIG2 is up almost H$4, so that is looking good. I am maintaining all positions there, although I am least certain about the call - this may very well bring in more than $25 million this weekend. CLASH, on the other hand, is not looking any better than it did yesterday. Earlier this morning it was down almost H$14. I don't think I have ever seen a drop that dramatic on an opening day. It's still down almost H$7. Definitely maintaining the short there.

Update Sunday afternoon: Well, it was a great weekened here at TEQP-HSX. I nailed just about every prediction. CLASH did come in at the l0w end of expectations, and way below the strike price, at $61 million (with $2.5 million previously, presumably Thursday night). It dropped from H$186 to H$168. Tyler Perry, once again, confounded critics and delivered the goods. The one mistake that I made was the one prediction I was most uncomfortable with, which was the call on WDIG2. It opened at $30 million, nicely above the strike price, and adjusted up from H$59 to H$81. Nicely done, Mr. Perry. I've learned this lesson once, and apparently I will have to learn it again: don't underestimate Tyler Perry. Miley Cyrus did marginally better than expected, clearing $16 million from Friday to Sunday, and $9 million on Wednesday and Thursday. LSONG adjusted up to H$53, from H$48. I am staying short on CLASH to delist, and long on the other two, assuming that word of mouth is decent.