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Before buying more, that is the question you need to be able to answer.

Campioni
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No. of Recommendations: 2
I am not sure if it has changed much, but a few months ago, I know that MVL was covered by only a few research firms. With such limited research and information out there, individual investors are stuck waiting on press releases and quarterly reports to try and determine the stocks value. This leaves the door open for a lot of rumor mongoring, misinformation, and playing on the possible concerns out there, which helps shorters. Look at the information that one has access to for MVL. One major thing is how the loss of tax protection is going to affect the company. This is a huge question that people are waiting to see how it affects the bottom line. Next, you have the relatively poor performance of Punsiher at the box office. Next, you have an astronomical figure of over $200 million spent for the production and marketing of Spiderman 2. (Even though this does not fall squarely on the shoulder of MVL, that money needs to be recouped before any profits can be seen) Finally, you have insider sell offs of stock. (I have my own theory on this which I will present below) This can lead to a bunch of uncertainty over the strength of the company. Shorters can then short the stock, spread more of this "uncertainty" in the hopes of lowering the price. IMO, until there is more coverage of MVL, the shorters will continue to try and manipulate it.

As to the insider sell off, my thoery is this. I believe that the shareholders voted down the proposal to increase the number of common shares available to the public. In an attempt to simulate that, we have insiders giving up some of their position so that more stock is available. I don't have the numbers of the insiders sales, but I would be curious to see if the total comes out to something close to the proposed increase. (Caveat, I am not sure the status of the insiders positions and whether they were common shares or not, so this theory may not hold any water, just my thoughts.)
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No. of Recommendations: 8
Shorters can then short the stock, spread more of this "uncertainty" in the hopes of lowering the price. IMO, until there is more coverage of MVL, the shorters will continue to try and manipulate it.

I am curious; do you equate actions to the opposite affect as being attempts to manipulate the stock upward? By buying shares of Marvel and posting positive views of it here, are you trying to manipulate the price upward?

I'm inclined to believe that most of the buyers here think that the current share price is less than what the company is actually worth. Fair enough.

That said, is it so far fetched to think that people who have shorted the stock simply think that the stock price is actually *higher* than what they believe the company to be worth? A difference in opinion does not make a conspiracy.

Camp's question is a good one. You have a substantial amount of people willing to take the opposite side of the bet. It could be that they are making short term bets which really aren't relevant to you given your projected holding period. It's also possible that they have a solid thesis upon which they have invested their dollars.

Dismissing shorting as manipulation is far fetched and counter productive, IMHO.

As to the insider sell off, my thoery is this. I believe that the shareholders voted down the proposal to increase the number of common shares available to the public. In an attempt to simulate that, we have insiders giving up some of their position so that more stock is available.

Are you implying that there is a legitimate shortage of Marvel shares, and that those shares were absolutely necessary to provide liquidity, and that the owners of those shares sold them not out of self interest - but to guarantee that there would be shares available should I choose to go looking for them?

I could be wrong, but I'm guessing that I would have been able to buy shares of Marvel at the going price on any day which the market was open over the last 12 months.

-Ortman
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No. of Recommendations: 4
A difference in opinion does not make a conspiracy.

That's right. It makes a market.

Bunker
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I have also noticed the increasing short interest.

Here are some reasons why I would not short this stock.

1. Marvel is a prime target for acquisition- can you imagine shorting 6000 shares and waking up one day and the share price is $10 above your short price- Marvel now has zero in debt, 150 million cash, a lot more intellectual property in the pipeline- all this makes it a fine target for acquisition.

2. The company fundamentals are getting better and better: no debt, cash, 4-5 movie releases a year with virtually no capital risk, increased licensing opportunities and better margins. Did I mention very little capital risk- not to mention a low overhead when compared to what they make (great margins)

3. The Sony settlement could have been huge- none of us know the facts yet- but my hunch is that Marvel would not have settled without getting something good from it- better than spiderman 1.

4.Fantastic Four, X-Men3, Hulk-2, Spiderman 2-6, Punnisher should make over 60 million after international and re-release is done and than there are DVD's, Man-Thing, Blade 3, Iron-Fist,Electra, and on and on and on. Even if some of these movies are flops- Marvel makes their money from licensing primarily, and has zero in capital outlay.

5. I like to make money.

Other than suspecion about some of the tops at marvel getting greedy-which is a concern, but that concern is outweighed- in my brain- by the strong fundamentals and this is the same management that pulled Marvel out of bankruptcy to where it is now-I see no good reason to short this company. I challenge, no, I double dare anyone on this board to come up with 3 good reasons to short Marvel at this time. And, beyond that if you can come up with three reasons that you think are good- are you willing to put your money on the line and short Marvel right now?



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First, of course I would like to drive the stock up. I would venture to guess that the vast majority of the people on this board hold a position in Marvel. I would also bet that the vast majority would like to see the stock move up. That being said, I don't think that there is an argument that shorters want to move the stock down. The question that was posed was if anyone had any explanation as to why the stock would be shorted so much. If you have any insights as to negative aspects of the company that might be driving the price down, please share. I offered points of uncertainty that could leave questions as to the performance of MVL. If there are other potential negatives to the stock that you know of please share. If you are implying that the shorters have information that the rest of us don't, then I believe that would fall under the realm of insider trading. The only way people are supposed to affect the stock market is through speculation. I speculate that the stock is undervalued based off of the numbers and performance of the company. Shorters are speculating that the stock is overpriced based on the possible negatives that are out there. As another poster put it, this creates a market. My suggestion was that because MVL is not widely covered, there is less information out there and therefore, more room for speculation. Am I dismissing the shorting process, no. I am just giving a reason as to why I believe why MVL is being shorted. I agree, the question is a good one. I offered my opinion as a possible reason why. If you have other ideas as to why the stock would be shorted, please share so others here can have mor information to consider.

As to the sell-offs, I am not saying there is a shortage of stock. What I am saying is that there was a resolution presented by the board and executives for an increase in the common shares, resolution #3. Obviously, they wanted more shares out there for the trading. I believe that that resolution was voted down by the stock holders. One way to make more shares available would be for those who hold large positions, such as the executives, to give up some of theirs.
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"Obviously, they wanted more shares out there for the trading."

I believe there are a number of reasons that a company would want an increase in shares that have nothing to do with the desire for more trading.

1) The company may want to compensate employees (mostly executives) with stock options or stock and so more shares would be needed.

2) A company may plan a secondary offering of stock to raise cash (since Marvel has so much cash this scenario is unlikely).

3) A company may be looking at an acquisition and part of the payment to buy another company would come in the form of stock. For instance, there was some discussion here a while ago about Marvel being interested in buying Lions Gate.
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The short interest has been gradually growing for the last year at least, so I don't think recent insiders sales are a primary reason for high short interest.

My feeling has to do with the perception among investors, especially institutional investors, that IP companies should be markedly discounted due to their lack of "tangible" assests.

Further, there seems to be a perceptions that MVL is wholly dependent on a single franchise, Spiderman. Thus, shorts could be thinking...."all their eggs in a single basket, what if basket fails?".

Another rationale could be that revenues are not sustainable due to perceived "cyclical" nature of critical movie releases. Also, Marvel is in a very unfavorable sector of the market.

Yet another reason could be the lack of analysts covering the stock. The big money is often moved by the big brokerages. Shorts may have thought they could manipulate the stock of a company the size of MVL, especially with a history of bankrupcy. They might diseminate rumors that MVL's books are cooked, or that MVL will not make earnings. See Roberts/Barrons fiasco.

Fortunately for us Longs, MVL has very good answers for all of the above. That's why I'm staying with MVL. Management has developed a licensing/franchise model that prints money. They have low overhead, no debt, a good reputation, many valuable properties going forward which will help expand the underlying base of the Company. Also, they are working hard to develop the foriegn market, another source of tremendous potential.

Further, they are diversifying their demographic appeal to include more children (with animated attractions and acquisitions, etc). Because of their success thus far, Marvel has a greater input in film decisions affecting the quality, directors, and cast of future projects. They will insist on quality. I see good things ahead for this company.

Pruf

PS. Do your own due diligence. I've been wrong before about Marvel's short term prospects (for instance back in Dec. when I suggested we might hit the high 30s presplit). I tend to think the market will raise the stock price when good news is announced, and MVL has had plenty of good news. Much of that is, apparently, priced in.

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No. of Recommendations: 7
I double dare anyone on this board to come up with 3 good reasons to short Marvel at this time.

How about a double dog dare?

I can come up with three reasons, you have to decide if they're "good" or not.

1) The rising short interest. In the past year MVL's short interest has been increasing. Over the same time frame PIXR and DIS short interest has declined. Does somebody know something?

2) Management. Lawsuits, excessive stock options, and self-serving interests suggest a lack of business integrity. Back in 1997 Marvel Entertainment Group terminated its relationship with then president and CEO of Marvel Studios Avi Arad. In a nutshell, Avi had negotiated deals representing Marvel Studios with his toy company Toy Biz. Toy Biz paid no toy related royalties to Marvel! Former president Joseph Calamari stated "these contracts make no business sense" and "Avi could not continue to serve two masters."

3) Toy Biz Worldwide. In MVL's 10-K it states "An affiliate of TBW performs certain administrative oversight duties in connection with the Company's (MVL) toy manufacturing operations in China, for which the company pays a commission." Whenever Toy Biz Worldwide is mentioned MVL makes it very clear they have no interest in THAT company. Well how about the affiliate? There just happens to be another company in China called Toy Biz International. The principal of that company just happens to be Jeff Hsieh, CEO of Toy Biz Worldwide. Why so many companies named Toy Biz etc? I would not be the least bit surprised if some of the money paid by Toy Biz Worldwide to Marvel found its way back to Toy Biz International.

I don't have enough of a financial/accounting background to dissect all the info in MVL's business filings. The things I've found out while looking into MVL have changed my view of the company.

are you willing to put your money on the line and short Marvel right now?

I don't have enough confidence in what I know to short MVL. Obviously others do, to the tune of 14 million shares.


JMO,
Campioni

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(1) The rising short interest. In the past year MVL's short interest has been increasing. Over the same time frame PIXR and DIS short interest has declined. Does somebody know something?

While that may be a reason NOT to buy long (like you suggested at the beginning of this thread) I certainly don't think it is a good reason to sell short. All that does is keep the stock price artificially lower than it should be and make things more dangerous for the (ever growing) group of shorts as a whole. IF I was going to short a stock I'd look for one with less short interest, kind of like value short investing I guess. (But I don't have the constitution to short stocks.)

No fault with your other two reasons though. But I think the biggest risk with the company (and what the shorts are counting on) is that the superhero fad will wear off. In fact, I can almost guarantee it within the next couple of years as the movie market gets saturated. Sagging toy sales will follow. I would be VERY skeptical of Marvel's movie schedule beyond 2006.

So while I'm long on the stock (financials are great and I think it is the perfect business model) I can't say I'm "super-long". Hopefully Marvel will position themselves to ride out the lull.

By the way, as a MVL investor and a Marvel fan I certainly hope I'm wrong about the fad wearing thin.

- Tom
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Personally, I think that shorting Marvel with the fundamentals the way they are is very dangerous. Shorts are not always right, so I don't get nervous just because someone speculates that the stock may fall. Marvel has had quite a runnup after all, so I can see where some shorts might think it has ended. I also don't think that with all these shorts the stock price has not been tremendously affected.
I personally prefer to buy a good stock that is heavily shorted. My guess is as good as the next guys and if I'm right then someone is going to have to cover their butts. If I'm wrong, so be it. I don't buy without first accepting the risk. Never invest what you can't afford to lose.
I think Marvel still has much room for growth. I totally disagree that the
"superhero fad" will wear off in the next couple of years.
I don't think it's a fad at all. Fans have gone to see superhero movies since the Buck Rogers days and it's not slowing down at all. I think it's just getting started good. I into Marvel for the long haul. I ain't sceered of no stinkin' shorts! Fool on!

Cruelmoon
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I can't agree with your position that the super-hero fad will fade. Twenty years ago, people were enthralled with Superman. 10 years ago, everyone went to see the Batman movies. There is something about a super-hero that we, as a nation, love. It boils down to the fact that everyone loves action. With a super-hero, you have super action.

I will admit, that I think every franchise will run its course. As with the Superman and Batman movies, they just ran out of steam. If Marvel plays its cards right, and quits while on top with a certain franchise, they are set to continue to receive royalties from toys, costumes. . .Then, well down the road, you can revive a franchise by releasing a new movie. (such as the talk about Superman and Batman) The plus for MVL is that they have positioned themselves with so many other sources of revenue, that they can end a franchise, introduce another and keep that cycle going for quite a long time. Although they might not be as successful as the Spiderman franchise, they will keep the cash rolling in.
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Double dog dare. Seems that we have some serious challenges going on here!

In response to Campioni's 3 reasons:

"1) The rising short interest. In the past year MVL's short interest has been increasing. Over the same time frame PIXR and DIS short interest has declined. Does somebody know something?"

--->I'm not sure what this has to do with Marvel's short situation. Pixar would probably have less short interest now, because it is not coming off a 52 week high or consilidating after the mega-hit (Nemo).
Marvel has had high short interest over the last several years because it has been breaking 52 week highs. When shorts pick a stock to do DD on they use a number of different reasons. A stock hitting 52 week highs often fall back--thus shorts get on board. Stocks that have earnings problems--thus shorts get on board. Stocks that have legal problems--shorts get on board. These are just a few red flags that get a shorts attention.

--->The only reason that I have been able to acknowledge being valid is the 52 week high situation. Despite Marvel's litigation with Sony there was no down side. Sony's countersuit was bogus. It was a tit-fot-tat reflex. Stan Lee's suit is nothing. Just an attempt to get a pay raise. As a matter of fact that is what some folks thought Marvel's suit with Sony was. An attempt to open negotiations and get more money. If that was the case, Marvel had nothing to lose. Regarding the 52 week high option, that might be a good reason to short if there were not more growth opportunities coming. The problem is that Marvel has a legion of money making projects and ideas in the pipeline. To me it is like playing Russian Roulette with a fully loaded gun. The reason that the short interest has continued to rise is that more shorters continue to pour money into Marvel. The short situation has reached massive proportions. Despite having undoubtedly funneling millions of dollars, along with media misrepresentation and lies concerning Marvel, Marvel is sitting where it was 8 months ago. Granted Marvel is down from its January all-time high about 20%. The latest short numbers (from Yahoo finance) are for June 7. They show 14.79 million shares short. This is up from 14.58 in May. The short interest is an astounding 18.7%. Nearly 1/5th of the float is shorted? Wow! What reasons can support that? Only the fact that some VERY big investors have lost a lot of money over the past year or two and are trying to scare or frustrate the Marvel investor. When these large investors "share" their wisdom, other investors (translated: lemmings) follow their lead.

"2) Management. Lawsuits, excessive stock options, and self-serving interests suggest a lack of business integrity. Back in 1997 Marvel Entertainment Group terminated its relationship with then president and CEO of Marvel Studios Avi Arad. In a nutshell, Avi had negotiated deals representing Marvel Studios with his toy company Toy Biz. Toy Biz paid no toy related royalties to Marvel! Former president Joseph Calamari stated "these contracts make no business sense" and "Avi could not continue to serve two masters."

--->Wow. Campioni, you and I have had some spirited discussions here. I have not always agreed with you, but you have earned my respect. This statement, reason #2, is really wild. I have to ask myself if you are purposefully mis-stating facts or are you simply misinformed. The Managment problems, lawsuits (other than what I mentioned in point 1) and stock options go back to before Marvel's bankrupcy. You are correct that Marvel had VERY serious problems, but those days reflect managment under Ronald Perelman. As a matter of fact Avi Arad was fired by Pereleman when he would no go along with Perleman's shady dealings. If you want to understand the deal that Toy Biz (who Arad worked for before the bankrupcy) and Marvel made read the book Comic Wars. The deal for BOTH companies was good and BOTH companies made good money. It was Perleman who forced Marvel (and potentially Toy Biz) into bankrupcy through mismanagment and crooked bookkeeping. I REALLY hope that you read Comic Wars (by Dan Raviv, coming out in paperback on July 2, printed by Marvel press). If you want to understand where Marvel was, is and is headed this book is an essential read.

"3) Toy Biz Worldwide. In MVL's 10-K it states "An affiliate of TBW performs certain administrative oversight duties in connection with the Company's (MVL) toy manufacturing operations in China, for which the company pays a commission." Whenever Toy Biz Worldwide is mentioned MVL makes it very clear they have no interest in THAT company. Well how about the affiliate? There just happens to be another company in China called Toy Biz International. The principal of that company just happens to be Jeff Hsieh, CEO of Toy Biz Worldwide. Why so many companies named Toy Biz etc? I would not be the least bit surprised if some of the money paid by Toy Biz Worldwide to Marvel found its way back to Toy Biz International"

--->Wow. Once again read Comic Wars. Toy Biz Worldwide is a seperate, privately owned company. They are making great money and paying Marvel great money. To purport mismanagment, slight of hand or under the table deals is complete fantasy. You might be correct in your fantastic conspiracy theory. But there is nothing to substantiate the theory. All my DD has shown CURRENT Marvel managment top be honest and trustworthy. Until I have reasons to think otherwise, I'll stick with them.

I'm not trying to be obnoxious or pick a fight. If you can prove otherwise, please let me know--I've got much money riding on this.
Concerning the short question, let me know what might compell you to short Marvel (other than the fact that there are 15 million other shorts out there).

Take care and good hunting!!

Fool on!!! Go Marvel!!!!





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No. of Recommendations: 2
Netman,

The "double dog dare" line is from one of my favorite X-mas movies, A Christmas Story. It was a "double dog dare" that prompted Ralphies friend (Flick?) to stick his tongue on a frozen pole. Just an attempt at humor, apparently unsuccessful.

This statement, reason #2, is really wild. I have to ask myself if you are purposefully mis-stating facts or are you simply misinformed.

This was taken from bankrupt.com while doing a search on the Marvel/Sony settlement. As the owner of an Italian restaurant, my initial reaction is to believe someone with the last name Calamari :) I will take your advice and try to read "Comic Wars."

To purport mismanagment, slight of hand or under the table deals is complete fantasy. You might be correct in your fantastic conspiracy theory. But there is nothing to substantiate the theory. All my DD has shown CURRENT Marvel managment top be honest and trustworthy.

When my DD shows me otherwise I like to bring it to this boards attention. While doing a search on Toy Biz Worlwide I came upon a listing for Toy Biz International with the principal being Jeff Hsieh. It also seems odd to me that Jeff Hsieh's e-mail address in this listing ends with toybiz.com. Not Toy Biz Worldwide, or Toy Biz International, but part of the Marvel subsidary Toy Biz. I thought finding info on a company that provides Marvel with such a large percentage of it licensing revenue would be easy, it's not. As the manufacturer of Spider-Man merchandise shouldn't they at least have their own web-site? (last attempt at humor:))

I have not always agreed with you, but you have earned my respect.

Ditto


Campioni
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"When my DD shows me otherwise I like to bring it to this boards attention. While doing a search on Toy Biz Worlwide I came upon a listing for Toy Biz International with the principal being Jeff Hsieh. It also seems odd to me that Jeff Hsieh's e-mail address in this listing ends with toybiz.com. Not Toy Biz Worldwide, or Toy Biz International, but part of the Marvel subsidary Toy Biz. I thought finding info on a company that provides Marvel with such a large percentage of it licensing revenue would be easy, it's not. As the manufacturer of Spider-Man merchandise shouldn't they at least have their own web-site? (last attempt at humor:))"

--->I'm not sure where I have my info about Toybiz. Perhaps it was from Comic wars, I think it was from information given out by Marvel in a conference call a year or two ago. I do specifically remember that Toybiz is a privately owned company in China (cheap labor & low costs). Marvel did give permission for Toy Biz to take this name. Remember, before the bankrupcy, Marvel was a comic company (bought by Perelman with the hopes of making it a entertainment empire) and Toy Biz was a toy company owned By Ike Perlmutter. Marvel & Toy Biz were merged together because of agreements and Marvel's troubles. Ike's Toy Biz was the minnow that swallowed the whale (Marvel) when the bankrupcy court approved Ike's bailout deal. The resulting company took the Marvel name. The Toy Biz that sells Marvel's toys today is a completely distinct and different company. At least this is what I have read.

If you find out to the contrary please post.

I'll post some info that you might find interesting from Comic wars in a separate post.

Fool on!! Go Marvel!!!
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