Beating the rush
I once watched a Bloomberg video which addressed “beating the crowd”. Essentially, it expounded on picking up on big news before it reached the market. Of note, the investor who was featured in the interview stated that he had taken about US$4,000 and flipped it to US$20,000 within a year and change.
The investor did this by simply paying attention to things that he saw in his everyday life and compounding his investment. He did not want to divulge all the components of his strategy, but he gave a few examples of what helped him to achieve this feat. His first example addressed The Hunger Games, a bestseller science fiction novel written in 2008. The investor realised how popular the book was and banked on it being turned into a hit movie. He paid close attention to the book and as he found out that Lions Gate Entertainment Corp was getting the rights to the film, he invested in the Company. His bet paid off when Hunger Games thrashed the box office.
After watching this, it got me thinking of my own examples and what news I could spot before it hit the market. Past examples I came up with included the Harry Potter, Lord of the Rings and Twilight books being made into movies. These titles were hits both in the bookstore and later on were hits in the cinema. Just for the record, the Harry Potter movies brought in over US$7 billion for Warner Brothers studio, a unit of media and entertainment company Time Warner Inc that trades on the New York Stock Exchange under the ticker TWX.
Next, I shifted my focus to the local market. Being a socialite, I noticed that Pulse Investment Ltd was trying their hand at hosting weekly events. The company started with their MVP Fridays event and later added the Pepperseed and Soca in the City events which were all well received. Initially, Pulse’s MVP Fridays offered free entry and would generate revenue from bar sales. Now the company has capitalised on the event’s popularity and started to charge a $1,000 cover charge, while still selling liquor to partygoers.
Desnoes and Geddes have also stepped onto the social scene with its “Big Vibes” event every Friday at the Red Stripe factory on Spanish Town Road. The company sells its products to patrons for only $80! And with the large crowd that has been flocking the event, this can only mean big sales for the company. An event like this provides an additional outlet for the company to push sales without necessarily incurring higher distribution and selling costs.
It was just a few weeks ago, that Supreme Ventures Ltd updated the odds for its JustBet game by adding more betting options. This offered more ways for gamblers to win from their bets. However, gambling presents the chance for a win or loss, giving Supreme Ventures the ability to generate more Revenue as customers purchase more tickets.
With movies like Twilight, Iron Man, Fast and the Furious and Transformers, Palace Amusement stands to benefit significantly as these movies have a hefty following in Jamaica. In Palace’s most recent financial release, the Company logged a significant increase in half year net profit to $13.83 million from $2.81 million. This was driven by a 6.4 per cent appreciation in revenue to $432.44 million from $406.1 million.
During this period the company featured the latest installment in the Twilight Saga; Breaking Dawn — Part 2, The Dark Knight Rises and James Bond’s Skyfall. Savvy investors should stay abreast to popular movie titles and when they come out as they usually mean more revenue for the cinema and for the studios which made them. Look at Disney Co’s Iron Man 3, it opened with US$174.1 million in sales, the second biggest movie debut ever. Disney’s stock price has appreciated by 12 per cent since the premier of Iron Man 3 on April 18.
During its fourth quarter, which is the quarter that the company is currently in, Palace will be screening big name movies such as Fast and Furious 6, The Hangover Part III, Man of Steel and Monsters University in 3D. These movies coupled with the summer and the Company’s two-for-one Mondays and Tuesdays ought to be big drivers for the company’s bottom line during this period. Of note, Palace’s stock price is up 58 per cent year-to-date, and up 92 per cent from the corresponding year ago period.
If investors notice these cues, they can invest now and benefit from the results of the company’s new endeavors. Trading on the news can be a way to take advantage of short term moves in the market and can create useful trades. This is especially the case on international markets. With this in mind, I urge investors to look out for their own hints and make the most of them.
Emile Wallace-Waddell is the Research Administrator at Stocks & Securities Limited and can be contacted via ewallace-waddell@sslinvest.com