Comic Fodder

Jonah Hex, DOA

Just when you thought the studios had finally perfected the art of the comic book movie, along comes something to make you groan. Lest readers mistake this for a movie review, it's not. I did not go see this movie, and wouldn't even Redbox or Netflix it. If it's on TV at some point, I might sit down for 15 minutes, but the fact is, alarm bells went off in my head as soon as I heard the first interview about it. Something about Josh Brolin talking about how "ridiculous" it was.


I may have gotten the exact wording wrong, but you know somebody has gone off the deep end when the lead actor is already brushing off his film as an exercise in complete absurdity. while Hex has never been the biggest seller, his story is not, by definition, absurd. So what happened on the way to the movie studio? I was a fan of the original character, but there have been some other treatments of Hex over the years, delving into some weird stuff. For whatever reason, the executives decided to gloss over the core of the character and concentrate on him having the ability to interview the deceased (I'm assuming so they can deliver exposition to help move the plot along). An acquaintance let me know that he actually liked the movie, although the editing was atrocious, and it made the transitions awkward.

I saw very little in the way of TV ads, and the few interviews were not full of sterling words. As much as I actively try to avoid any marketing materials (so I can enjoy seeing just the finished product, and avoid seeing the entire movie in the previews), I could tell the marketing push was somewhat underwhelming. So how did things go? As Toy Story 3 shattered records for the weekend, Karate Kid gloried in updating movie nostalgia, and A-Team worked at building enough of an audience for a sequel, Jonah Hex pulled in... 5.3 million dollars. That's gotta hurt.

There comes a point when someone needs to step up and make a reality check, and nobody did that with this movie. Everyone just went along with whatever script changes there were, until the mess was plopped onto the movie screens with joyful abandonment. By which I mean everyone associated with the project has already abandoned any trace that can be made back to them for this stinker. What does it mean when you've already lost your base? When a die-hard comic fan like me looks at the product with his nose curled up, were they actively trying to make me mimic Hex's scarred visage? I mean, I actively try to go see every comic-themed movie there is, but my first (and all subsequent) reactions were, "Dude, I'll go see a clunker, but I'm not even going to attempt to see that."

So I may be wrong, but I won't find out for years, when I catch a glimpse of it on TV. Meanwhile, this turned out to be a perfect example to see if investing in a comic book movie would have made me any money. Turns out, when I first purchased the IPO of Jonah Hex on the HSX market, it was at $30. It went as high as $103.46, which means the market thought Hex would have an opening weekend of about $38 million. As the movie crept closer to its release date, that became considerably lower. The adjust took it down to the bottom. Since the format change of the website, though, I have forgotten to monitor things for the past couple months, so I had never made a change to my initial purchase. The adjustment, down to $12.56 million, cost me $872,001.00, meaning my investment yielded -58.13%.


Enter the Cantor Exchange. Approval has been granted to invest in movies using real money, and HSX let us do some electronic paper trading to see how it would work. Since I had a bad feeling about the movie, I was surprised to find the derivative for it (cx) was so high. I shorted the sucker at $130, because I just saw no way possible for the flick to do $130 million in four weeks. The theory behind the derivatives is that instead of HSX freezing trading and then adjusting the price, it would be a genuine free market. There would never be a freeze on trading, and it was up to each participant to hold or sell their shares, and that alone would drive the price. There would be no artificial adjustment to align the derivative with the actual box office gross. So how did it do?

The stock on HSX, JOHEX, dropped $16.57 to $13.73, the estimated amount it will pull in for its first month at the box office. The derivative, JOHEX.CX, went from $65.97 this week to $24.95, and is still dropping. This might mean that some investors are still hoping that it will have legs of some sort and make a small comeback, while it may just be that, like me, they forgot to sell in the past 24 hours. The artificial adjustment of HSX should be very close to the real amount, which means the artificial market could lag a little bit to more closely reflect reality, but that might be due to this all being fake money so far, and some people just can't be bothered to limit their losses in a timely manner.

So how would this work as a way to hedge against losses, which one of the ways the Cantor Exchange was marketed? Well, my short of the CX has gone from $130 to $26.03 at my last report, meaning I have a profit of 1,039,700.00 (79.98%). Wow! Take away my $800k+ loss from the regular HSX, and my profit is $167,699. I won't bother closing out the derivative just yet, because it has farther to fall, and hence more profit to be gained.

For a hypothetical case, let's say my stock in the HSX shares was a real financial holding that was fully utilized in the production of the movie, and there was no way for me to extract it (that sounds sexier than me simply forgetting to play the game and get out of a losing position). But I have no conflict of interest (not an insider), and I want to hedge against my investment in case I was wrong.

So I short the derivative JOHEX.CX, and manage to recover all of my losses, plus a little profit. Here is a prime case of an investor properly hedging his bets to minimize a potentially costly investment. What if the movie had pulled in, say, $140 million in a month? Well, then I would have had my original profit which would have been almost $5.5 million, minus $100,000, the cost of the short. My cost to hedge was almost insignificant compared to the profit, but check how well the hedge paid off when the original investment turned out to be a disaster.

For real investors, legitimately involved in the movie business, this exchange may be the perfect vehicle to allow them to mitigate losses. Now if only I could somehow convince them not to butcher the source material when they go to make the movie in the first place...

Tpull is Travis Pullen. He started reading comics at 5 years old, and he can't seem to stop.