Yekshimash!
I went to the pictures last night to see Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan.
I don’t know whether you’ve seen it yet, but Sacha Baron Cohen is certainly a very clever chap. I practically walked out of the place with a six-pack I laughed so much! It was one of the only times I've been to see a comedy where the whole cinema laughed hysterically all the way through.
You may agree or disagree, but one thing is certain - this film is set to make an absolute fortune.
Borat gets the last laugh...
Consider this for a moment...
Borat cost less than $20m to make, and could generate more than $100m from the US box office. And that's not including international markets and DVD sales that could well double that figure.
No wonder City hedge funds are sniffing around!
Here's what I've found out keeping my ears to the ground...
Dune Capital Management, formerly controlled by the legendary George Soros, are due to refinance a deal to produce several films - 15 to be precise. They've been spurred on by the success of Borat and The Devil Wears Prada.
Borat’s success alone triggered a bidding war for the rights of the next film to be made.
Universal Studios won the battle and will pay upwards of $40m to make the film about one of Cohen’s other comic characters, Bruno, a camp Austrian fashion journalist.
But don’t imagine that all hedge fund investments in Hollywood have been successful though.
The latest flop was Poseidon, financed by a deal worth $530m through Warner Bros’ and Virtual Studios, a hedge fund backed vehicle.
This Greek God of the Sea certainly didn’t make any waves!
There is a lesson to be learnt here:
Don’t get carried away with the glamour of Hollywood and film rights... even the big hedge funds get it wrong sometimes. Keep your wits about you, and try to make careful investment decisions. Get it right, the rewards could be astronomical.
But what's all this got to do with the small cap market?
Well if you're interested in investing in film and television rights companies you will find them in abundance on AIM.
Sorting the diamonds from the cubic zirconias…
We’ve already agreed it would be nice to have some sort of exposure to this wealthy industry, so see how we can grab a piece of the action.
But how can we separate the diamonds from the cubic zirconias AND know which company is the right one to put our money into...
Easy: by recognising quality.
There are a couple of potential zingers that I’ve spotted but I only have time to tell you about my favourite. This one has had a fairly decent run of news and rallied nicely on the back of it.
Last November it was 2.5p... this November it reached 24.25p (on a steady ascent too). Where will it be in November 2007? Potentially the moon judging by the way things are going for them.
In late 2000, they reached highs of £3.62, which will do very nicely seen as they’re currently priced at a very reasonable 22p.
"So who are they", I hear you scream at the computer!
Hollywood is right on your doorstep...
Well, they’re a London-based film and television sales company. But here's the sparkler... they own and control a significant library of film, television rights and assets.
They have a few savvy people behind them making it happen. The CEO for example is very successful in the film industry. He co-founded October Films, one of the foremost independent film companies of the 1990’s, which has won two Oscars, 13 nominations and top prizes at the Cannes Film Festival during the last 15 years.
His was also Chief Financial Officer at Miramax and financial analyst at Tri-Star. The rest of the board have equally notable experience.
They've just swung into profit and trading has been strong since September. They have already released a number of films, with plenty more to follow. They are confident for the future, and so am I.
I always look for a sound management team, a good opportunity to nip in at a decent level, and the potential for the share price to fly to the moon!
Bye for now, or as Borat would say: Chekwye!
Melissa Carroll
for The Penny Sleuth
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