Investing in movies has always been viewed as a highly speculative venture resulting in far more bombs than blockbusters. That’s why Maximilian Kogler, co-founder of Da Vinci Media Ventures, said he uses a 'Moneyball for movies' approach in order to profit off independent films. Independent movies from $2 million to $40 million in budget tend to make decent profits, according to Kogler. He said the average return for movies in this range since 1996 is about 11.5%, or what he refers to as beta. 'We apply a venture capital portfolio theory to it, which means we diversify into about 20 movies a year – or beta - and then we eliminate the ones that we think will not make money,' said Kogler. 'We don’t try and pick winners, we get to beta and then we eliminate a disproportionate amount of losers because it’s easier to do.' Kogler said he uses technology to trim off those losers. Da Vinci employs a natural language processing technology to support its script-based algorithms, which are one part of a broader suite of due diligence tools the company uses for its film investments.
TheStreet’s Fundamentals of Investing Course will teach you the keys to making the right decisions in any market.
TheStreet’s Personal Finance Essentials Course will teach you money management basics and investing strategies to help you avoid major financial pitfalls.
TheStreet Courses offers dedicated classes designed to improve your investing skills, stock market knowledge and money management capabilities.
More from Video
Replay: Jim Cramer Tackles Trump's Tweets, the Fed and Facebook's 'Libra'
Jim Cramer breaks down the Fed drift ahead of Wednesday's announcement, Facebook's Libra whitepaper, and shares three stocks that he's keeping a close eye on.
How Hershey's Insulates Itself From Trade Tensions
85% of Hershey's products are sourced in the U.S.