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 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.

March 12, 2010: Green Zone, She's Out of My League, Remember Me, Our Family Wedding

A solid crop of movies this weekend, but it doesn't look like any of them are going to break out.

First up is Green Zone (GREZN), Matt Damon starring in a movie about searching for weapons of mass destruction in Iraq. It's directed by Paul Greengrass, who did the second and third Bourne movies. That's a successful pairing, Damon and this director; those movies opened with $52 and $69 million, respectively. Expectations are lower for this one, with the stock in the low 60's. Strike price is H$25, a reasonable bet. The call (GREZCA) is above H$3, a good sign. That would put the stock at H$75. The put (GREZPU), however, is also above H$3, and has had a steadier march up. The CX derivative on HSX is at H$60, dropping substantially of late. Reviews are decidedly mixed, at 50% on rottentomatoes.com. My gut tells me that the floor for this movie is $20 million, and that there is more potential on the upside to be surprised than on the downside. Definitely one to watch tomorrow morning.

Stock: Long

Call: Long

Put: Short

CX on HSX: Long

Cantor: Long

Filling in the "disposable raunchy teen comedy" slot is "She's Out of My League," (SHOML), about an average-looking guy who scores with a seriously hot girl. It's a good premise for this kind of movie. Stock is in the high H$30's, just off the high. Strike price is H$15, with the call (SHOMCA) at H$3. That's a stock price of H$48. Put (SHOMPU) is at H$2.52, so mixed signals there. Just watched the redband trailer, which is funny. Signals are looking good. It's at 41% on rottentomatoes.com, which is not surprising, and probably not all that relevant. I have a feeling the target audience will like this. No votes on IMDb, kind of a bummer.

Stock: Long

Call: Long

Put: Short

CX on HSX: Long

Cantor: Long

Robert Pattinson, who broke big with the Twilight series, shows up in another movie, "Remember Me," (REMBR) a movie with an utterly forgettable title. The plot also sounds fairly forgettable, like a coming of age story with some good casting. Besides Pattinson, Chris Cooper and Pierce Brosnan play distant fathers, and Emile de Ravin is the love interest. I have zero interest in this. Sounds like an arthouse movie that got lucky. The stock is at H$34, down from a high of H$39. The call (REMBCA) is below the IPO price, not surprising, and not a good sign. The put (REMBPU), meanwhile, is above H$3. So far, every signal is pointing to a flop. The CX derivative on HSX is also down, to about H$35. That's another one. On Cantor it is, inexplicably, at $43. Reviews are not good, at 38% on RT. My impression is that it might attract a good female crowd, but men are going to stay away in droves. The average rating on IMDb is 5.4. Wow, that's not good.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Last, and probably least, is "Our Family Wedding," (FAMWD) about a wedding between an interracial couple. The twist is that he's black, but she's not white, she's Hispanic (although Hispanics can be of any race). It's a very standard premise, and sounds highly predictable. The cast is decent, but no superstars. Stock is H$23, and it's nosediving. Movies with black or Hispanic casts are occasionally underestimated on HSX, and that might be the case here, but I don't think it's going to beat the market by much, if anything. Strike price is H$10, which suddenly looks optimistic. Call (FAMWCA) is barely above a buck, which is a terrible sign. The put (FAMWPU) is, as can be expected, doing well, coming close to H$3. CX derivative on HSX is at H$29, also nosediving. It's at 4% on RT, which is about the strongest signal possible for "bomb." Sounds like it could be offensive to people of all races.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Update Sunday night: Not a bad weekend for me. I missed Green Zone and She's Out of My League, but nailed Remember Me and Our Family Wedding. I noticed that Green Zone was dropping on Friday night, so I sold my the shares on Cantor that I had bought in the low 70's (whew!). I bought 3 shares at $62, as a hedge. So I lost a tad bit there, but not much. Now I regret not shorting it at $91! Turns out that the Iraq war problem affects major stars, as well. My problem with the marketing is that I couldn't tell quite what the movie was about. Is he looking for weapons of mass destruction? We know there weren't any. So I wasn't quite sure what this movie was about. I overestimated the audience for SHOML. A movie like that really has to rock to break out of its niche. I also forgot that the other studios will probably be dumping bad movies the weekend after a major blockbuster like ALCNW. More lessons learned.