March 31, 2010

There is one movie opening today, The Last Song (LSONG). Miley Cyrus stars as a moody teen girl with issues about practicing the piano, relations with her father, and relations with a cute guy. All of this takes place around a house on the beach. It's based on a novel by Nicholas Sparks.

I'm sure it's quite moving for people in the target demographic, which does not include me. I like Miley Cyrus, she seems nice and somewhat wholesome and responsible. She definitely works hard. This looks like a good role for her, moving slightly out of her comfort zone, from constantly upbeat and perky teenager to talented but moody teenager. Stock is up H$3 and change today, a good sign. Strike price is H$15, which makes perfect sense. Call (LSONCA) is also up H$3 and change. Put (LSONPU), meanwhile, is on a downward trajectory, just barely above the IPO. Critics are pretty savage, with only a 6% approval rating on rottentomatoes.com, but that's to be expected. Since it's opening on a Wednesday, the adjust formula is slightly different - Fri-Sun x 2.7, + previous box office. So the price includes Wednesday and Thursday. It's opening on lots and lots of screens. The CX derivative is at H$49, although that's down from the very high price of H$56.

The last Nicholas Sparks movie, Dear John, did quite well. We know exactly what we are going to get with this movie. Hey, teenager girls need their sugarcoated lessons in life as much as anyone.
Stock: Long
Call: Long
Put: Short
CX: Long

Original Idea Fund Launches Today!

Big excitement in the world of Talented Earthquake Productions today - I am starting a mutual fund on the Hollywood Stock Exchange, and the IPO is today! The Original Idea Fund will invest in movies that are based on an original idea. No sequels, prequels, remakes, or sequels to remakes. Nothing based on a book, play, comic book, musical, news story, or theme park ride. No biopics. No documentaries. Just original ideas.

So no Pirates of the Caribbean, no Ocean's Eleven, no Twilight or Harry Potter. But I will be investing in movies made by people like Kathryn Bigelow, Woody Allen, and Quentin Tarantino. I might be investing in the next Avatar or The Hangover. I will also be investing in StarBonds of actors and actresses who star in these movies, although initially I am planning to limit those to one or two StarBonds per movie.

The Fund will IPO at H$20, as all mutual funds do on HSX, and will delist, or cash out, when it reaches H$100. Looking forward, there is a question that I haven't answered yet. Many mutual funds cash out, and then have another IPO. So there have been six iterations of the New York, New York fund, for example. But, given the nature of this fund, I don't think I could do a sequel!

Cross-posted at Talented Earthquake Productions.

March 26, 2010: How to Train Your Hot Tub Time Machine

We only have two movies opening wide this weekend, both comedies, and both potential blockbusters. As of Thursday night, however, they are moving strongly in opposite directions.

How To Train Your Dragon (HTRYD) is the latest animated effort from DreamWorks. Other than the original Shrek, I haven't been in love with DreamWorks animated movies. They're generally decent, but not great. This looks funny and charming, but I can sense a cliche or two in the trailer. Stock climbed very steadily for a while, then dropped, but is up dramatically today, to H$127. Strike price is H$50, just about dead-on, with the call (HTYDCA) up to H$4 and change. The put (HTYDPU) is barely above the IPO. Cantor isn't practicing anymore, but the CX derivative is showing healthy signs, at H$137. Good signs there. It's going out on 4,000 screens, and I am sure many of them are 3D. Critics are wildly enthusiastic, with a 95% approval rating on rottentomatoes.com. Not much doubt about how to play this one.
Stock: Long
Call: Long
Put: Short
CX: Long

The other movie this weekend is a little more uncertain. Hot Tub Time Machine (HOTUB) has one of the best titles ever, but there are some questions. It stars John Cusack, one of my favorite actors, and Rob Corddry, an excellent comic. But the other two guys are largely unknown, and it's being released by MGM, a dying studio. The stock has been climbing steadily, but dropped H$8 today, not a good sign. Strike price is H$30, which is very optimistic, and the call (HOTUCA) is below IPO, at about a buck and a half. The put (HOTUPU) is above H$4, not surprisingly. It's going out on 2,700 screens, a good wide release. Critics are mostly positive, with a barely-fresh 63% rating on RT. The CX derivative is at roughly the same place as the stock, and has had roughly the same trajectory, although it's not bombing today. I have a feeling there's a lot of profit taking happening in the stock, not terribly surprising. This is a movie that could very easily bomb, because it's such a classic high-concept movie. John Cusack in a movie about traveling back to 1986 is brilliant. There is a large built-in audience for this movie, and it includes me.
Stock: Long
Call: Short
Put: Long
CX: Long

Update Friday morning: HTRYD is up H$6 and change this morning, so staying long on that one. HOTUB, on the other hand, is moving in the opposite direction rather dramatically, down almost as much as the dragons are up. Looks like it might bomb. Reversing positions there, although I am also maintaining a long position of 25,000, to hedge it. Completely reversing position on the CX derivative, since it's a shade higher.

Update Monday morning: HOTUB did, in fact, bomb, so reversing position was a good move there. I overestimated the appeal of a boy and his dragon, and should remember that DreamWorks just doesn't have the magical touch of Pixar.

March 19, 2010: The Bounty Hunter, Diary of a Wimpy Kid, and Repo Men

Three moderately interesting movies this week, about a bounty hunter with a special target, a wimpy kid, and some men repossessing unique property.

First up is The Bounty Hunter (BOUNT), Gerard playing the title character, who has to hunt down his ex-wife, played by Jennifer Aniston. That's an interesting premise. The trailer is funny, and it has a certain appeal. Stock is in the mid-50's, down from a high of H$65. Strike price is H$20, with the call (BOUNCA) at H$3 and a half. The put (BOUNPU) is below the IPO price, about a buck and a half, so those signals are in sync. The reviews, however, are utterly savage, with an 8% - and that's a weak 8% - approval on RT. I'm not sure what's up with Cantor this weekend, it looks like the practice site is no longer working. Which is a bummer, because I was having a very good time on it. C'est la vie. I'm not a fan of either Butler or Aniston, and neither of them impresses me in the trailer.

Stock: Short

Call: Short

Put: Long

Diary of a Wimpy Kid is based on the very popular books of the same name. I've never read them, but apparently kids eat them up. The stock (WIMPY) is at H$49, down H$3 this morning (Friday), never a good sign. Strike price is H$20, which seems reasonable, but the call (WIMPCA) is just above a buck, while the put (WIMPPU) is above H$3. Reviews are mixed, at 56% on RT. It's going out on 3,000 screens, a regular wide release. This is highly targeted, but narrowly targeted. Some kids movies are also appealing to adults - this doesn't sound like one of them.

Stock: Short

Call: Short

Put: Long

Repo Men is a futuristic thriller about men who repossess body parts, the way repo men today repossess cars. That's a disturbing idea. I was intrigued at first, but recently I learned that it was shot at least 2 years ago, so it's been sitting on the shelf. Never, ever a good sign. Stock (REPOS) is at H$31, down almost H$3 today, and down from a high of H$46. Strike price is H$15, but the call (REPOCA) is at all of 70 cents, while the put (REPOPU) is at almost H$4. It's at only 22% on RT. It's going out on 2,500 screens. Not a good sign in the bunch.

Stock: Short

Call: Short

Put: Long

Update Sunday night: This was one of those weeks when the market got a couple of things almost exactly right, so there wasn't a lot of excitement. WIMPY and BOUNT both came in at $21 million, WIMPY ahead by a few hundred thousand. Jennifer Aniston, her hair, and Gerard Butler and his chest adjusted down less than 50 cents. That's technically a win for me on the stock, but it's meaningless. It just means I don't have to worry about shorting it tonight in anticipation of the drop tomorrow morning. WIMPY adjusted up about H$8, slightly better, but not by much. It's got an A- rating on Yahoo! Movies, which is not bad. That score always has to be taken with a large grain of salt, but it's not a bad sign. So I'm going to go long to delist. REPOS was, in fact, a total bomb, only clearing $6 million. And to think I was once optimistic about that one. Good thing I caught it in time.

My record this week is 6 for 9, all three calls, the stock for BOUNT and REPOS, and the put for REPOS. Not a bad week for me, but also not a great week for movies. I have no plans to see any of these, and I think they will be forgotten in a year.

Note about The Ghostwriter. Roman Polanski's latest opened wide this weekend, which I didn't realize, and I forgot to include that in my post. Sorry, Mr. Polanski! I'll be sure to pay better attention next time. For the record, it had a good weekend, but only adjusted up 20 cents.

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.

March 5, 2010: Brooklyn's Finest and something from Tim Burton

Two movies are opening this weekend, Oscar weekend, one a generic cop movie with a solid cast, and the other another visual-effects spectacular from the usually delightfully twisted mind of Tim Burton.

First up, let's look at the cops, Brooklyn's Finest (BRKLN). I have this funny feeling that the title is sarcastic, but I'm not entirely sure. These Finest include Richard Gere, Don Cheadle, Wesley Snipes, and Ethan Hawke. And Ellen Barkin. Good actors all, but none have really opened a movie on their own in at least a few years. Opening on Oscar weekend, it's not being targeted at the arthouse crowd, that's for sure. Stock is at H$31, and has been dropping from a high of about H$40, although my guess is that it has bottomed out. Strike price is H$15, which is rather on the optimistic side, since the stock price predicts an opening weekend around $12 million. The call (BRKLCA) reflects that unfortunate strike price, as it is around H$1. The put (BRKLPU), absolutely unsurprisingly, is above H$3. The CX derivative on HSX is around H$32, after nosediving steeply. It's also at $32 on Cantor. It's going out on 1,900 screens, a decent release, but not great. Reviews are not terrible, but not good - it's at 31% on rottentomatoes.com. I think these prices are all about right, or maybe on the high side. I'm looking for right around $10 million.

Stock: Short

Call: Short

Put: Long

CX on HSX: Short

Cantor: Short

Then there's the big movie of the weekend and the month, Tim Burton's Alice in Wonderland (ALCNW). Lots of anticipation for this one. Price on HSX is just shy of H$200. Strike price is H$70, with the call (ALCNCA) above H$6. Haven't seen that in a while. The put, of course, is underwater, at H$1 and change. The CX derivative on HSX is at H$226, so much higher than the stock. On Cantor, it's even higher, at $235. So the predictions range from about $75 million to $87 million. It's going out on a very wide number of screens. But the critics' reviews range from merely decent to downright savage. It's at 57% on RT, but it's a very weak 57%. I have a couple of problems with it. First, there are a couple of famous faces (Johnny Depp, Helena Bonham Carter, Anne Hathaway), but they are hidden beneath lots of makeup and CGI. That takes away a certain part of their appeal, notably that they are very good looking. It's in 3D, which of course raises the box office potential, but it wasn't shot in 3D; those effects were added in post. Tim Burton definitely has a very active imagination, the kind that creates worlds suitable for 3D, but I'm not sure he has the technical chops that, say, James Cameron does. The story is apparently quite different from Lewis Carroll's original. In some sense, that doesn't matter, because most people are only vaguely familiar with the story in the first place. But the replacement story sounds very generic-Hollywood. It's supposed to be a kids' movie, but I'm not sure I see this appealing to many kids. I think it will have a huge opening weekend, but then drop quickly.

Stock: Long

Call: Long

Put: Short

CX on HSX: Short

Cantor: Short

Update Monday night: Boy do I feel stupid. Hopefully this will go down as one of the worst mistakes of my movie stock investing career, because I hope I never make another doozie like this one. Shorting a huge blockbuster - what was I thinking? And less than a month after I got burned the same way on Valentine's Day. This is certainly a humbling business. I should have asked the classic question: is there more potential on the upside, or the downside? There was virtually no potential on the downside - this movie was pretty much a lock to make at least $70 million. You had four great brands working here - Disney, Tim Burton, Johnny Depp, and Alice in Wonderland. Certainly was a learning experience. It adjusted from H$205 to H$314. Brooklyn's Finest also adjusted up, although that was not really as surprising.

The big question is - how will ALCNW do over the course of its run? Movies with openings like this tend to drop over time. I'm staying with my short, in the hopes of somehow salvaging some kind of money from this. Also, there are some seriously strong negative reactions on Yahoo!, so I have the feeling the word of mouth will not be that great.

Update from last week: I was wondering how 2COPS and CRAZI would hold out long term. My bet was that CRAZI would benefit from a higher PSA, because fewer movie theaters would pull it. Looks like I completely misread that - 2COPS didn't lose any theaters, and CRAZI only added 3, a miniscule change. Another lesson learned.