10/3/12 Picks

David Thewlis - DTHEW

David Thewlis's next film is Red 2, an action-film sequel currently trading at $57.59, thus making him an unlikely target for a short order.  When one considers that the next film to fall out of TAG range is Harry Potter and the Deathly Hallows, Part 1, shorting DTHEW becomes a no brainer.

DTHEW is currently trading at $117.10 over a TAG of $116,871,427.  Even if Red 2 somehow made more than $250 million, more than 2.5 times what the original Red made, DTHEW would still fall to $116.87, meaning a gain of $0.23 per share on a short, just a fraction of one percent and not worth the commission fee.  But if Red 2 falls short of $250 million, which it will almost certainly do, shorting DTHEW becomes much more attractive.  For example, if Red 2 repeated the $90,356,857 gross of its predecessor, DTHEW would fall $31.93 per share (27.3%).  Even if Red 2 doubles its predecessor's gross, DTHEW would still fall approximately $13.86 per share (11.8%).

DTHEW is made even more attractive when one considers that the next film to fall out of TAG range after Harry Potter and the Deathly Hallows, Part 1 is Harry Potter and the Deathly Hallows, Part 2.  It's not yet known which will be the next film starring David Thewlis, but since Deathy Hallows 2 made over the maximum TAG adjust of $250 million, DTHEW is guaranteed not to gain in price, no matter how successful the next film.  And since it is unlikely that any film will gross at least $250 million, DTHEW should fall even further.

If you have stock in DTHEW, sell it.  Then short as many shares as you can afford.