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September 14, 2008
Weekend Box Office Finally Up - Start of A Trend?
I spent all weekend hitting refresh on my browser monitoring the news on Lehman, AIG, and Merrill Lynch. Apparently a bunch of Americans decided to do something else: go to the movies.
The weekend box office rose 35% from a year ago, breaking a seven weekend losing streak. The last up weekend was the opening one for The Dark Knight, back in mid-July. Given the massive numbers produced by Batman, over $517 million so far in North America, the long losing streak is a reminder that most recently released films did not find big audiences and that the second half of the record breaking summer of 2007 was unusually strong.
Last weekend was the best ever for the same September weekend by about 20% as four films grossed at least $10 million. All of the films were adult-oriented but their demographics differed enough to give each a chance to find an audience.
The big weekend could be the start of good run for movie theatres....
Last year saw a 12 week run of negative comps that began the last week in September and extended through mid-December. With this week's top four likely to have some staying power in a slow part of the year and a decent releases slate between now and mid-December, it is time to take another look at Regal Entertainment (RGC), the leading domestic theatre chain.
Quarter to date the box office is down just 2% giving RGC a decent chance to meet consensus revenue estimates that call for a flat quarter. Easy comps and an extra week means growth should return in 4Q. RGC shares are trading near their 52 week low thanks to Hollywood's seven weekend losing streak which might make it a good time to step in for a trade. While you wait, the current yield is 8%. I'll be brushing off and updating my RGC model this week.
Posted by Steve Birenberg at September 14, 2008 04:59 PM in Box Office
MAJOR EVENTS ARE UNFOLDING IN THE U.S. AND WORLD MARKETS.LEHMAN AND MERRILL LYNCH ARE GONE.
AIG IS ON THE PRECIPICE.THE OVERALL MARKET APPEARS TO BE IN TH WORST SHAPE SINCE THE 1920's.
THE MARKET SEEMS TO MAKE NO SENSE . WITH THE US LOSING TEMPORARILY 20% OF ITS REFINING CAPABILITIES ,OIL IS DOWN $6.IT APPEARS AS IF HEDGE FUNDS ARE LIQUIDATING THE STOCKS OF GOOD COMPANIES WITH NO SUBPRIME EXPOSURE TO MEET MARGIN REQUIREMENTS.
ARE THERE ANY LOGICAL WAYS TO APPROACH THESE MARKETS IN GENERAL AND THE MEDIA STOCKS IN PARTICULAR? FROM THE AMATEUR INVESTOR'S POINT OF VIEW ,TODAY AND THIS ENTIRE YEAR IS A LONG NIGHTMARE.IS THERE ANY LONG TERM PERSPECTIVE IN HOW TO BEST DEAL WITH THESE UNFOLDING EVENTS?
There really is nothing to do but sit back and wait for things to settle down. There is no need to try to catch the exact bottom. The market will now probably bottom lower that previously expected. But I still think upside remain looking out a year or two. If you miss the first 500 points of the Dow rally you will still get 1000 or more when a real uptrend emerges. I'd wait for that.
Finally, MER being gone is a positive. Merrill is not really gone. It is in the hands of a company that has access to capital. The reporting on MER is poor as that outcome is a real positive. LEH and AIG are real issues and whoever comes next.
Fundamentals don't matter at the moment so don;t try to figure out when they will. Just wait for the market to tell you. That will be when action in individual stocks and sectors matches up with fundamentals. The problem is that fundamentals get worse for everybody when global GDP decelerates this fast.
Posted by: Steve at September 15, 2008 07:59 AM