Will this limited release report box office?

One of the frustrations that starbond traders have is when they are expecting a starbond to have a profitable adjust, only to have it not report box office to ERC.  (If you're not familiar with this issue, it is explained in this column).  Obviously it would be useful to know whether a movie is likely to report box office before you invest in the starbond. However, doing this research for every limited release is time consuming, tedious and easily forgotten.  After many years of doing nothing about it, I finally got fed up with being on the wrong side of starbond movements and decided to look systematically at the studios that do and do not report box office, and develop a reference to hold that information.

The new spreadsheet is called Will It Report?.  It has data on films that had a limited release starting in January 2015, the studio behind the release and whether box office was reported to ERC.  The studio behind the release is the same as that listed on the relevant moviestock page, except in cases where the moviestock page does not list a studio, and this information has been gained from another source. These studios are marked with an asterisk.

Will It Report? also analyses the data through a simple formula and suggests how reliable a particular studio is at reporting box office.  Because these predictions have not been tested and are probably not going to be 100% accurate, I've stolen pithy results from the Magic 8-Ball as the answers.

Like other HSXsanity tools such as the predictions database and the midnight box office database, I plan to continue updating Will It Report? for future releases.  Also like other HSXsanity spreadsheets I'll do my best to make it as accurate as I can, but errors happen, real life gets in the way and so on.

Not having looked at this issue in detail before, there were a couple of results that challenged my assumptions on which studios reported and which did not:

• Lionsgate - or rather, its subsidiaries and partners - are inconsistent about whether they report box office.  Movies released under the Pantelion label, which is aimed at Latino audiences and backed by Lionsgate - such as ALMAL, LVRBT and VATAP, which all had releases in 300 or more theatres - consistently report box office.  Other Lionsgate-related brands, such as  Grindstone Entertainment (a subsidiary) and Saban Films (a partner) have not reported box office.
• Weinstein reported box office for nine of its eleven limited releases. The two movies that did not report - EVRLY and MNST2 - were both released under the Radius-TWC brand, which specialises in VOD.
• Independent wings of major studios such as Focus Features, Fox Searchlight and Sony Pictures Classics reliably report box office, but major studios that want to bury movies (for example, Paramount and ARE51), or that decide to release a movie through their VOD brand (Sony/Stage 6 and PDSTN) are not.
• IFC Films is surprisingly spotty about reporting box office. My vague impression was that they reliably reported box office, but they reported on only 8 out of 17 films - generally the most successful ones.  MTCH was the only film to report with a theatre count in the single digits, and SALVT (box office of $42K) was the only film not to report with a total box office of over $20K.

There's clearly more work to be done in parsing out which movies are likely to report and which are not - though I'm not planning to get down in the weeds in this column.  But hopefully Will It Report? is a useful reference that you can use to flag possible starbond adjust issues when you're looking at other starbond tools such as kaigee.com,  the HSXDude's Post-Adjust Bond Show or even doing your own math.

Why are so many dumb traders holding this security the wrong way?

On HSX, there are usually a few very obviously profitable short-term investments, like movies that open much higher (or lower) than expected, arb moviestocks, and starbond adjusts. And lots of moviestocks and starbonds make profitable investments over the long-term, because you can reasonably expect their price to steadily increase or decline.

But when you look at the number of shares held on the moviestock trade, sometimes you will see that the overwhelming majority of traders are holding the investment the "wrong" way - either against the short-term adjust, or against the prevailing long-term trend.  What's going on here? Have you got it wrong, or are all these traders complete idiots?

Neither. It is actually because many HSX portfolios are not actively traded.

HSX has been around for over fifteen years now, and over that time there have been a lot of traders who have stopped playing the game and allowed their portfolios to go dormant.  Even though their portfolios are no longer traded, their positions still show up on the "shares held long/short" section, giving the illusion of popularity.  This is especially notable for moviestocks that have been active on HSX for a long time, and were once hot stocks to own, but now are stalled projects. AUST4, FLASH and HALO.

And then there are casual traders who are not so dedicated to HSX that they check their portfolio every day, every week or even every month.  There's a big uptick in HSX activity over the summer and the holiday season, when the combination of movies that people want to see and the allure of buckets of easy H$ entices more casual players back to the game. There's also a down-tick in spring and fall, when the movies are generally less interesting and making H$ is harder, giving people less reason to play. When these traders are taking a break for the game, they either take the long-term perspective and invest in moviestocks they believe will go up in value over the coming months (or years), or leave their portfolio as it is without worrying about it.

So obviously these portfolios are missing out on H$ opportunities by not holding their investments the right way. But the people running them aren't morons. They just have other priorities outside of HSX.

Why isn't this moviestock priced higher when I like it so much?

Moviestock prices are driven by market forces - basically, the collective trader demand to own (or hold short) shares in the moviestock. You as an individual may think that a movie sounds great or, if you've seen it, is great (or awful), and on that basis decide it's a good investment. But that doesn't mean the market as a collection of traders necessarily agrees.

There are many possible reasons why the market may not share your enthusiasm for owning a particular moviestock.  For example:

• the movie might not ever get made
• the movie might not have any stars attached
• the movie might not have a release date, or it has a bad one
• the movie might not have a distributor, or it has a bad one
• the movie might have a horrible trailer
• the movie might not be tracking well with the general audience
• the movie might not be earning enough at the box office to justify its price
• the movie might actually be terrible.

If it's not any of these reasons, there's probably some other good reason why the price is lower than you think it should be.

Obviously the same thing applies in reverse with movies you think are awful. Plenty of awful movies prove to be very popular with the general audience. And while you may think that a particular movie looks awful, the movie could be aimed at another section of the movie-going audience entirely, and that target audience thinks that the film looks great. Whether or not you want to see a movie is generally a poor indicator of that movie;s financial success.

Really, the most important lesson to learn is not to play HSX based on emotion. Personal attachment to a particular moviestock or starbond rarely makes a good investment strategy.

What is front-loading?

Front-loading is when a movie's audience turns out in droves to see the film on its opening weekend - or even its opening day - but does not sustain a high level of interest.

By definition, movies that are front loaded will have a low internal multiplier, with more people seeing the movie at midnight shows and on Friday than over the rest of the weekend.  They will also have a low delist multiplier, as audiences lose interest in the movie after its opening weekend, making them profitable post-adjust shorts.

The types of movie that tend to be front-loaded include:

• sequels, prequels and other franchise movies
• movies that have a GFB fan-base
• movies aimed at teenage audiences
• horror movies
• Tyler Perry movies

Movies aimed at adult audiences and children tend not to be front-loaded.

Obviously these are indicators about what to expect, not rules.  There are plenty of sequels and franchise movies that sustain fan interest beyond the opening Friday night and delists above adjust price - say, when a movie has very positive word of mouth, or it breaks out from its target audience to attract other demographics. 

To get an idea of whether a particular movie is front-loaded, you can look at a range of factors, such as:

• comparing the movie's opening Friday and Saturday box office figures.  If a movie has a lower Saturday than Friday - once midnights are factored out - it is likely to be front-loaded
• comparing the movie's Monday box office to its opening weekend box office.  The average Monday gross is about 10-11% of the weekend figure. 
• comparing the movie's second weekend box office gross with that of its opening weekend.  The average second weekend of box office is about 40-45% lower than opening weekend.  You can also compare the movie's second Friday with its first Friday - the average drop is about 35%

These numbers are all guidelines, and not hard rules, and you should take other factors into account such as the movie's genre and target audience.  For example, some movies - particularly movies aimed at children - are far more popular to see on weekends than during the week, and can suffer very steep drops on Monday without being front-loaded.

You can also look at other non-box office factors, such as:

• the film's Cinemascore rating, which indicates how well the movie was received by its target audience. Anything B+ or under is not good.  There is more information on Cinemascore in this column
• the film's ratings on rottentomatoes.com, including the Tomatometer which gives a summary of how well the movie was received by critics, and the Flixster audience rating.  These ratings are also available through Flixster  
• how similar movies have performed on opening weekend and the next three weeks of release

What is "Nikki math"?

Whoever reports the weekend box office numbers first will be the one who gets their article read.  So when it comes down to either doing it fast, or doing it right, doing it fast wins every time.

Both Variety and the Hollywood Reporter often make early box office reports on Friday evening, but the undisputed ruler of early box office numbers is Deadline Hollywood.

Deadline is frequently first, but also frequently wrong when it comes to extrapolating the Friday numbers to weekend figures.  This wrongness is referred to as Nikki math, named for Deadline's founder and editor-in-chief Nikki Finke, although the math is probably done by the studios she is talking with based on the early information they have.

Nikki math offers both opportunities and risks to traders.  In the immediate term, players will trade according to Deadline's estimate - even if they believe the estimate is wrong.  This is because they also know how other players will trade it, and there is often more money to be made from playing the players than from being right.

But eventually, the math will get questioned by someone on the boards, Variety or THR, or even Deadline itself as new information comes in and the site changes its numbers without warning.  Trading by Nikki math is just like any other form of day-trading - if you're not playing close attention to the boards and to moviestock prices, you can get burned very easily.

So if you're not too busy on a Friday night, Nikki math can provide you with some decent trading opportunities, but at the same time you can't take Nikki math for granted.

Is it worth investing in weekend openers at the last minute?

The short answer is yes, often it is.  And these can be the safest, most profitable investments around.

You'll often see traders saying that they think the weekend openers are priced about right, and that they'll be sticking their money elsewhere over the weekend.  Even though it takes the fun out of the weekend, this can be sound trading practice - if the weekend works out like you predict it will.

However, it's worth looking at how frequently the box office exceeds (or disappoints) the expectations of not just traders, but everyone involved in the movie industry.

In 2012 alone, you had the first $200+ million opening weekend ever, a movie where children are forced to fight to the death open above $150 million, a movie about a talking teddy bear open above $60 million.  and even the Bond movie open 30 per cent higher than any other Bond movie.  And that's not even considering the movie-going public's bizarre fascination with Channing Tatum.

Here's the full list of 2012 wide releases to date, comparing their price at reset on Friday morning with their eventual adjust price.  If you were invested the right way on all of these, you would have had gains of over $180 million on these investments.  For those who like charts, here's how it looks broken down by weekend.

The three weekends that stand out immediately are the weekend before President's Day weekend (with The Vow and Safe House both opening above $40 million, and two other openers each earning a further $20 million), the weekend The Avengers opened, and the weekend both Ted and Magic Mike opened.  And that's not counting other 2012 surprises like The Lorax and The Hunger Games.

$180 million in gains isn't unusually high either - in 2011 the total gains from weekend openers were $162 million, and in 2010, they were $173 million.  Because I like making charts, here's the one for 2011 openers:

The stand-out weekends are for the final Harry Potter movie, Paranormal Activity 3 (combined with a couple of poor performers) and the lower-than-expected opening of the last Sherlock Holmes and Chipmunk sequels.

And for 2010:

That huge weekend in March is for the Tim Burton version of Alice in Wonderland, with other $7 million-plus gainers being the President's Day weekend, the weekend Shrek 4 and MacGruber tanked, the weekend The Karate Kid and the A-Team remakes opened, the July 4 weekend and the weekend Jackass 3-D and Red over-performed.

While the amount of money to be gained on a yearly basis is relatively consistent, there's no clear pattern for when movies open much higher (or lower) than anticipated by the market.  2012 saw several movies over-perform early in the year, but there was less money to be made from the adjusts after July.  On the other hand, 2011 had eight of its top money-making weekends fall in the last half of the year. As you would expect, the timing of money-making opportunities from the openers isn't predictable - it comes down to how each individual movie performs relative to expectations.

So while you might think on Thursday that there's not much money to be made on the openers, this can frequently change when early box office numbers come in on Friday evenings.  So keep an eye out then, and play accordingly.

Where do I find basic information about HSX?

At the bottom left on every page on HSX, you can find links to the Help section, including Help Topics, FAQs and the Glossary.

The Help Topics section contains basic information about HSX - how the game works, how to set up an account, what moviestocks and starbonds are, and how to make buy, sell, short and cover securities.  This is essential reading for new traders, and the What Can Be Traded and Ways To Trade sections are especially important.

Obviously, the FAQ section contains answers to frequently asked questions that new traders have once they have become more familiar with the game.  In particular, it describes how moviestock and starbond adjusts work, as well as some of the more arcane rules about starbonds.  If there is a question about HSX that you are not sure of, check this section first.

The Glossary is a list of HSX terms and their definitions, so if you need more information about a  particular concept, look here.  In particular, you will want to check out the following definitions:

• Adjust Price, which lists the different multipliers used to calculate moviestock adjusts
• Cash-Out Price, which explains how cash-outs work and how long moviestocks remain on HSX after release
• Trailing Average Gross, which sets out how a starbond's TAG is calculated.

Can I have two HSX accounts?

Well, ummm... I suppose so, but it's not really recommended.

The reason multiple accounts are discouraged is their potential for misuse.  Trading moviestocks affects their price.  One way to magnify that is to have multiple portfolios making the same trades at the same time.  More trades in the same direction means bigger price swings, which the trader knows about.

Obviously, this price manipulation is illegal, and traders who are caught with multiple trading accounts will face stiff, immediate and non-appellable penalties from HSX - such as having your multiple accounts closed down and losing 25 per cent of your main port's value.

Intent doesn't really matter, so "I didn't mean to, it was an innocent mistake" is irrelevant - as several traders on HSX have learned to their regret.  Also, traders are frequently outed by other traders, either on the HSX boards or in the Neighborhood Watch column on the HSX Dude, which is pretty embarrassing.

If you must maintain more than one port - say, one for long-term investments and another for YTD - make sure it is clear that they are used for different purposes by not trading the same securities on the same day.  There is an exception to this - after moviestocks and starbonds are adjusted, they will remain frozen at their new price until reset at midnight PST.  Trading in these newly-adjusted securities will not affect price, so trades by multiple ports are allowed.

What are the best strategies for growing my very small port?

Playing with a small portfolio, you should be investing in the securities that are going to have the greatest change in value over the short term - that is, the next 24 hours or so.  Do not diversify your portfolio, but specialise by investing on just a few moviestocks.  And become familiar with the concept of droi, so you can identify which investments will be most profitable for you.

During the week, the biggest daily changes are usually related to news.  Keep an eye on the Movies board for news that traders are likely to react to, and invest accordingly.  If it is good news, buy, and if it is bad news, short.  Liquidate the investment at the end of the day, and re-invest the proceeds.  Don't be sentimental about keeping your investments, or hold onto one that has been losing you money in the hope that it will turn around.  Sell out and move on.  Also, if you are in a favourable time zone or have insomnia you can also take up reset trading.

On Mondays, you should check to see if there are any starbonds scheduled to adjust that are worth putting money into, keeping in mind that you will have to wait a day to see any gains.  kaigee.com is the best site currently available with this information.  Make sure to place your investments before they are halted after 3 pm PST.  Then on Tuesday after 1 pm PST, cash out and re-invest.

On Friday evenings and Saturday mornings, you should compare the prices of the moviestocks opening over the weekend against their predicted opening weekends.  HSX traders frequently call the weekend wrong, and there are plenty of opportunities to make substantial gains when openers are under-priced or over-priced.  Don't be afraid to go all in, provided if it is worth it on a droi basis.  Invest your entire portfolio, take the weekend off, and then come back on Sunday afternoon to liquidate and re-invest.

On Fridays, you should also look at investing in calls and puts, which only require a nominal investment but can pay out at several times that.

Every day, you should take five minutes to play the Earn H$ games.  It may not seem like much, but Learn & Earn and Movie Mogul together will earn you at least $300K per month, even if you guess half the questions wrong.

Keep track of your portfolio.  Seriously, create a spreadsheet in Excel and then every day copy and paste your net worth from the LTD leaderboard. Use your Net Worth History to cover the past 90 days.  Actually tracking my port size and calculating how much H$ I made each day is easily the single most useful thing I ever did.

Set a daily target for how much you want to grow your port, and keep track of whether you meet that target.   What target you set depends entirely on how seriously you want to play, but for a new, casual player I would suggest aiming to grow your port by an average of $100K or 1 per cent a day, whichever is greater.  More serious traders should be aiming for at least double that.

You can also set a target based on how other traders are performing.  This is done by tracking similar sized ports through your Trader Watchlist, and comparing your performance against theirs.  Are you doing better than them? Or worse?  If you're doing worse, figure out what are they doing that you are not.

One way to find out what other traders are doing is to join a league.  There are several leagues where new traders swap tips and compete, like the Port Value leagues which make it easy for similar-sized ports to compete against each other, and Razorhawk's HSX School and the Trading House of Ill Repute, which are both aimed at helping newer players learn about HSX and sharing hints and tips among members.  Also, leagues have discussion boards that are only viewable to members, which is good if you're more comfortable seeking advice from a smaller group.