Modern Marvel
This post is going to be about many things which I enjoy and the convergence of them all. Those things are trading in the stock market, social media, and ...
My infatuation with Marvel began early in my childhood. I loved reading Marvel comics. In particular, I was a big fan of the X-Men, but I also read Spiderman, Fantastic Four, Silver Surfer, and some others. Like many other kids, I enjoyed the fantasy land which the comics would let me discover. I had the toys (and maybe still do?). I watched the X-Men cartoon show religiously on Saturday mornings. The X-Men arcade game was always a favorite with my cousins and me whenever we went to Chuck E Cheese or Pistol Pete's Pizza, especially since it was a six player game. I remember wasting all my quarters playing that game alongside Terence, Shawn, Angelo, and Gilbert. Damn you, Sidney, for coming along so late ... we needed a sixth! I even began to collect Marvel trading cards. Whenever I want over to Shawn and Gilbert's house, you could find me in front of their TV playing X-Men: Mutant Apocalypse on their SNES. Yeah, I loved X-Men and Marvel.
However, sometime in the late 90s, I all but forget about all that. Then again, I think for most of that period, the company went dormant too.
That all changed in 2000 though. Even though they released Blade in 1998, it was in 2000 with the release of X-Men when they truly started making moves in the movie industry. That movie got my love for Marvel going again. Fortunately, they didn't stop there and released many more blockbusters, including the sequels to X-Men, Spiderman and its sequel, and the two Fantastic Four movies. Now don't get me wrong, not all of the movies that Marvel has released have been good, but I believe most of them have been.
Let's pause for a second and switch topics. Around mid 2005, I was making money and no longer saving aggressively for a condo downpayment. I had to do something with the little money I was saving. I decided to enter the stock market. Since this whole investment thing was new to me, I asked my brother for some advice. He recommended I invest in companies and industries, which I knew, and he offered a few suggestions. I believe Marvel (MVL) was one of those. I knew nothing about the company's financials or fundamentals, but I bought some shares anyway. Not really knowing what I was doing, I sold them about a year later at a slight loss.
I began reading a lot of books on investing and was learning a ton. Unfortunately, during that learning period, I lost a buncha money, like with my initial shares of MVL. I was now picking stocks with more understanding and actual reasons to justify my selections. Marvel came up in a stock screen I use often. I did a lot of research and bought shares of MVL again in February 2008 around $25. Currently just under 40% of Marvel's outstanding shares are owned by people at the company (that is not normal for a public company). That fact makes me feel comfortable that the executives at the company have motives (at least somewhat) in line with my interests as a stockholder since they are stockholders too.
This was also around the time that Marvel announced they would start producing their own films. All of the movies mentioned above were not produced by Marvel, but instead the company licensed the characters to companies like 20th Century Fox and Sony Pictures. While these movies posed little financial risk to Marvel, they did not receive the majority of the profits for them either. Producing their own movies would allow them to keep most of the profits from blockbuster movies for themselves, but then again, they would have to foot the bill for the failed ones too. In addition to the risks/rewards associated with producing films themselves, Marvel would have to put up a lot of money upfront while the movies were being made.
This is when, in my opinion, Marvel made a brilliant move financially. They secured a $525 million loan to finance the production of their first ten movies. Here's the good part: they used, as collateral for that loan, the theatrical rights to the characters used in those ten films. Basically, what that means is if a film flops and they can't repay the loan, they lose the theatrical rights that character. Let me say that again, if the movie fails, the only thing Marvel loses is the rights to make more movies of that character ... whose film already failed. Sounds like a win-win to me. The second Hulk movie showed that it's difficult to take a character from a failed movie and do it all over again. That's only the downside (if you can call if that): if the film does well, they reap all the profits.
Marvel first independently produced movie Iron Man was a huge success. Their second independently produced film Hulk was released in June, and though it didn't do nearly as well as Iron Man, it was still considered a relative success. Investors whole-heartedly agreed with the success of the two films. A few month after its release, the stock price was around $35. I couldn't complain about a good 40% gain in around 6 months and sold most of my shares of MVL.
Despite the fact that they are not releasing another movie themselves until 2010, there's a lot to be excited about. More importantly, I feel they are doing building the excitement. A new movie based on Wolverine is coming out soon. This is not produced directly by Marvel, but it's enough to fill the void for now because in 2010 the real stuff gets going. In 2010, they will be releasing a sequel to Iron Man and a Thor movie. 2011 will give us a Captain America film and an Avengers film. If you know anything about Marvel, you know that Iron Man, Hulk, Thor, and Captain America are all part of the superhero super group Avengers. See where this is going? Building upon the success of Iron Man and Hulk, and the hoped-for success of Thor and Captain America, Avengers will be monumental. They're already doing a spectacular job tying the movies together.
- After the credits of Iron Man, Nick Fury tries to recruit Iron Man. Nick Fury commands S.H.I.E.L.D. which often allies with the Avengers.
- Also in Iron Man, there is a scene in which you can briefly see Captain America's famed shield on Tony Stark's work bench.
- In Hulk, they passingly mention the super soldier serum. The super soldier serum is what gave Captain America his powers.
- Also, in the director's cut of Hulk, there is a glimpse of Captain America frozen in the ice in the Arctic.
These new movies and antipation of movies to come has renewed my infatuation with Marvel. Back to MVL ... the recent economic conditions has sunken the stock price back to around $25. At that price, I scooped up some more shares. My thinking is if it was able to reach $35 on just Iron Man and Hulk, I think in these times, it could do that again with Iron Man 2 and Thor (hopefully more). I know I will probably have wait till mid 2010 to see those numbers again, but I think the patience will pay off.
On a different note, as many of you know, I am getting more and more into Twitter these days (you can follow me here). I may be a little biased, but I honestly believe that Marvel is one of the best brands making use of twitter. They are both informative and engaging. If you shoot them a tweet, they will usually reply. They also keep you up to date with what's going on with Marvel from new comics to new trailers to interviews with writers. All that aside, the main reason I think they are doing well is being they have succeeded in convincing me to purchase their product. I like following Zappos tweets, but I haven't bought any shoes from them yet nor do I have any plans to.
At some point this weekend, I am going to sign up for Marvel's Digital Subscription. The subscription will basically give me access to thousands of past issues of Marvel comics. The first appearances of Hulk and Iron Man, the first X-Men comic ever, the death of Captain America, or Spiderman meeting Obama will all be at my disposable. At $5 a month, you can't complain either. Plus I justify the cost to myself by saying it's helping my investment in MVL.
I have a new problem though. In line with my last post, Marvel, with their digital subscriptions, has created a long tail of comics. Where do I begin? Well, I'm going to begin with X-Men ... but where to go from there?
- the death of Captain America?
- the New Avengers?
- the Civil War?
- Iron Man's Demon in a Bottle?
- something else entirely?
Unfortuately for all of you (and me), we have to wait a few months before any new Marvel movies come out, but until then, you can read the issue of Spiderman when he meets Barack Obama here as a free preview (for now, at least) of their digital subscription (I recommend Smart Panels). When you're done with, here's something else to keep you going.
Disclaimer: None of the above should be interpreted as a recommendation for action in the stock market.
Disclosure: The author is long Marvel (MVL).
