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Stark Reminder Of Movie Investment Risk

Investors in a Wisconsin hedge fund shouldn’t be blamed if they find a distasteful filmy residue in their collective mouths at the thought of losing $50 million.

Investors in a Wisconsin hedge fund shouldn’t be blamed if they find a distasteful filmy residue in their collective mouths at the thought of losing $50 million. The fund, Stark Investment of St. Francis, is behind a private equity fund called Virtual Studios, which, according to The Los Angeles Times, entered into an agreement to invest $528 million in six film projects by Warner Brothers. One of the flicks in that deal was Poseidon, a remake of the 1972 campy disaster classic, but this time around, the movie itself looks like a shipwreck in the making. The pic reeled in an underwhelming $22.1 million in its opening weekend, and as movie industry watchers painfully know, if a movie doesn’t cut it in week one, it’s not long for this celluloid world. Virtual, the Times reports, sank $125 million – half of the total production and marketing budget – into Poseidon. At the rate the film is going, it may not make more than $75 million – which means HF investors behind Virtual may have to swallow about $50 million. A Stark spokesman told the Times it was unfair to judge the total Hollywood investment strategy based on the results of one domestic revenue report. Still, as some market observers say, firms ought to think twice before deciding they ought to be in pictures.

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