23 January 2007

Super Bowl XLI Picks

Phil Davis asserts that Super Bowl advertisers get a 1% boost in their share prices during the week following the Super Bowl:

Congrats to the Bears and Colts for making it to the Superbowl -- now let's make some money on it!

No, not betting (Colts by 10), but one thing I always notice is that companies that advertise in the Superbowl tend to get about a 1% move in the week following the game. While I wouldn't just invest willy-nilly, we do have some prime prospects to consider:

  • Apple Computer Inc. (AAPL)!
Little is known, but they are on the list. Carl Howe agrees with our own Reinharden that there's big news coming involving the Fab Four! Carl also reminds us that Apple may have a real blockbuster in store -- we all remember their 1984 ad 23 years later, even though they only played it once ever! I've got my money on an iTV spot as the roll-out is scheduled for February and it barely got a mention at MacWorld.
  • Anheuser-Busch Companies Inc. (BUD) -- ten 30-second spots! Too rich for my blood at $51, but I'll be warming back up to BRK.A on a breakout (they own a lot of BUD).
  • Garmin Ltd. (GRMN) (got 'em) -- if this doesn't do it, we need to pack it in, just one spot though...
  • Honda Motor Co. (HMC) -- 3 spots, the Asian market's on fire and they are retesting $40.
  • Pepsico Inc. (PEP) -- 3 spots in the first quarter -- they must have something to say. Also possibly in breakout mode after being hammered down to $65 ahead of expiration.
  • Toyota Motor Corp. (TM) will promote Tundra trucks -- good if oil is $45, bad if oil is $55 again.
  • Yum! Brands Inc. (YUM) -- Taco Bell -- good luck there! I'm dying to see what they try to do to repair their image; my kid still cringes when we drive past!

    I find this potential short-term money making opportunity too intriguing to pass up.

    But wait. I need more evidence than a fudgy statement using a soft convictionless expression "tend to get about", referring to the 1% move.

    I reviewed this collection of advertisements and advertisers from Super Bowl XL, played on February 5, 2006.

    The stock tickers of the companies that traded publicly at that time last year were (in the order of the AdLand piece):


    I did a wee bit of data mining on Yahoo! Finance's historical price quotes page. I recorded the closing price of each ticker on February 3, 2006, the Friday preceding the Bowl. I then wrote the highest price each stock traded during the following week, between February 6 and February 10, 2006.

    What eternal statistical truths did I unearth from this tiny data sample?

    These stocks averaged a peak change of +2.45% from the Friday, February 3 close. However, no pattern emerged as to when each ticker hit its highest price. Although every stock traded higher during the following week, only 13 out of 18 stocks ended up priced higher as of market close on Friday, February 10.

    Here are the peak percentage gains for each ticker:

    BAY +2.64%, TM +3.46%, GM +3.11%, S +2.14%, F +2.06%, NFS +0.37%, DMND +0.33%, HMC +1.46%, MOT +3.68%, DIS +2.03%, FDX +2.58%, PG +0.37%, PEP +1.41%, UN +1.52%, T +3.10%, YUM +3.21%, VIA +2.45%.

    Who had the most spots last year? BUD, YUM and PEP. Only YUM exceeded the average 2.45% gain for the group, so having the most spots doesn't necessarily predict success.

    If I'm remembering correctly, FDX and UN had the most critically-acclaimed ads, if I can go so far as to use such a description. FDX beat the average; UN didn't.

    That 2.45% average gain is lacking context with the larger market. So, of course, I looked up the February 3 closing numbers for the Dow Jones Industrial Average, NASDAQ Composite, and S&P 500 indices, and compared them to the highest points these indices rose to during the subsequent week.

    Each index attained its highest levels on 2/9/06. The DJIA rose 1.94%, the NASDAQ rose 0.13% on 2/9/06, and the S&P rose 0.83%. Clearly, the Super Bowl advertisers outperformed the markets by a significant margin over such a limited period. If anyone out in the Blog ether reading this would care to compile advertisers in Super Bowls XXXIX and prior, and perform the same stock price comparison, please take the ball and run with it.

    Switching sports for cliche purposes, who's on deck this year?

    The list of rumored advertisers during the Super Bowl XLI broadcast is eerily familiar:


    The newbies here are GRMN, AAPL, and MSFT.

    I'm not going to analyse any of these picks--the Phil Davis excerpt above is good enough for starters.

    How would I play this strategy? I'm going to look up each of these stocks on Groundhog Day and price out the at-the-money and just-in-the-money February call options. I will favor stocks with low time value premia, as the decay of time value over the course of the following week could very well negate an average gain of 2.45%. And as my limited data set showed me, there is no need to rush like Westbrook on Monday morning and load up on calls.
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