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'The Great Gatsby' Portfolio: Building a West Egg Nest Egg


Invest wisely in these names and, with a little luck, your screen will be as green as the ethereal emerald light at the end of Daisy's dock.

Fast-forward to the present day and its cocktail dresses are again a ubiquitous presence on the silver screen. Some 40 custom-made offerings appear on set, many made by their Miu Miu division. Yet much like LVMH, and as distinct from Giorgio Armani, Prada's clothes tend to sell less well than their other accessories and footwear, which command considerably higher margins. Despite being a multinational empire, this remains very much a family affair run by the husband and wife team of Miuccia and Patrizio. (The latter a quirky character famous for only hiring people of certain astrological signs.)

The fashion firm is based in Italy's catwalk capital of Milan, but sensibly opted to list in Hong Kong, which offers both higher multiples and easy access to its growth engine of Asia. Any company that counts both the Devil and, at least until recently, the Pope, among its customers would appear to have all constituencies covered. Indeed shares surged 6.76% on Monday alone, and are up about 40% over the past 12 months amid good global growth and stringent cost controls. In April Prada announced an almost 45% increase in net profit, along with plans to nearly double its dividend.

A relative lack of liquidity for Prada's pink sheets stock may be an issue for US investors, along with the ongoing impact of austerity in its home market of Italy. (Although, as one of its extravagant outposts just replaced a humble McDonald's (NYSE:MCD) in Milan's main shopping center, it appears any concerns about the continent's spending power are overblown.)

On week-ends his Rolls-Royce became an omnibus, bearing parties to and from the city between nine in the morning and long past midnight.
-- The Great Gatsby
, Chapter 3.

While some say the yellow car in question, an integral part of the Gatsby plot, was actually a Duesenberg, it is Rolls-Royce (OTCMKTS:RYCEY) that merits both a mention in the book and on-screen airtime alongside Robert Redford. The iconic English automobile is now actually part of Germany's Bayerische Motoren Werke Aktiengesellschaft (OTCMKTS:BAMXY) - BMW to you and me. However, given that Nick Carraway and Jay Gatsby both fought bloody battles against the Kaiser's army, it is doubtful they would want to own a car from the Fatherland. Far better, then, to stick with the Mother Country's stock. Britain's Rolls-Royce was privatized by the recently departed Margaret Thatcher, who entered the world as did Fitzgerald's masterpiece in 1925. The present day entity, whose famous logo of interlocking "Rs" survives intact, is an aircraft engine giant second only to General Electric (NYSE:GE) in its industry. Shares, up about 40% in the past year, are trading at fresh 52-week peaks as we speak. The stock sports an impressive -- and growing -- dividend yield, and just won a $1.6 billion aerospace order. Last week's abrupt departure of recently installed key executive Mark King is a concern, however.

After seeing how the other half lives with that high-priced quintet upstairs, jump in the rumble seat as we explore five slightly more frugal Gatsby offerings downstairs that you needn't be in the top 1% to enjoy.

Whisper it softly, but by common consent the handful of hitherto Gatsby films haven't been anything to write home about. This may be due to the work's inherently literary origins. Assuming a $194,000 first-edition is out of reach, Amazon (NASDAQ:AMZN) and Barnes & Noble (NYSE:BKS) each offer far more affordable ways to play Gatsby-mania as the book rockets up their respective bestseller lists, even while splashy new cover tie-ins rankle traditionalists. Category-killer Amazon recently reported a 21% increase in active users, to 209 million, with gross margins gaining 260 basis points. A bill passed in the Senate on Monday allowing states to tax online sales, may, however, hint at potential trouble ahead for the largest Internet retailer on Earth. As for Barnes & Noble, its heavily shorted shares had been badly underperforming the S&P 500 amid intense iPad (NASDAQ:AAPL) and Kindle competition. However, in the sort of fantastical script even a fine fiction writer like Fitzgerald couldn't have conjured up, shares suddenly soared to fresh peaks today on news that Microsoft (NASDAQ:MSFT) may buy its Nook business for $1 billion.

Time Warner (NYSE:TWX) is a diversified entertainment empire whose Burbank-based Warner Brothers studio has bankrolled Luhrmann's $120 million flick. It has high hopes for Gatsby, which also opens the Cannes Film Festival next week, although several Hollywood insiders have characterized as ominous the delayed release date. (The movie was originally scheduled to open last December.) The company recently announced plans to spin off its magazine unit into a separate entity. These titles include People, whose inaugural issue 39 years ago ironically enough tipped its straw hat to Gatsby on the front cover. (And incidentally, anyone who thinks crass commercialism is a recent development in the movie industry should think again. The process is as old as Time, or at least 1974.) Shares have surged some 70% in the past year, boosted by robust capital return and an ongoing buyback program. Cable network operating profit, which includes CNN and HBO, also rose a solid 11% in its most recent quarter. That said, revenue came in a little light, and higher TV programming costs could cause customers to embrace an assortment of less costly digital offerings.

This Gatsby is especially noteworthy for having been shot in 3-D. While the current Barron's points to a post-Avatar malaise in the medium, it also cites an industry analyst as saying, "If people respond well to [Gatsby], you could have a surge in period pieces and dramas in 3-D." Many will chose to watch this visual feast in the surround sound glory of IMAX technology, even at premium prices that can cost up to $20.50 per ticket in New York. Industry giant IMAX Corporation (NYSE:IMAX) operates 738 projection screens worldwide, and also supplies those ubiquitous 3-D glasses. The Canadian company has been a solid performer over the past year, and while its fourth quarter results missed Street estimates, a stellar opening weekend for Iron Man 3 and impressive upcoming slate including Man of Steel hint at improvement.

Lastly, one can't bid Gatsby goodbye without mentioning the music. Indeed even Vogue, the final word in fashion, trumpets the "Jay-Z soundtrack" on its current cover, while remaining strangely silent on the clothes. Purists who far prefer flappers to rappers are already recoiling in horror at an ode to the Jazz Age that features high decibel blaring by such thoroughly modern millies as Beyoncé and Fergie, to say nothing of Q-Tip and Andre 3000. But it is what it is, and alcohol outfit Beam, Inc. (NYSE:BEAM) - whose liquid assets were part of the prohibition pantheon during Gatsby's speakeasy era - can boast a hip hop connection to boot. After all, it owns Courvoisier cognac, which Busta Rymes and P. Diddy once employed as an emblem of the sort of ostentatious wealth that Jay-G(atsby) was intimately acquainted with way before Jay-Z ever arrived on the scene. (The music video even features vintage clothes and an old-school automobile.)

Beam, whose other brands include Maker's Mark Bourbon and Skinnygirl drinks, is certainly in good spirits at the moment, riding a recent analyst upgrade to rise to a fresh one-year best last week. First-quarter earnings exceeded estimates, and its conservative capital structure and debt-reduction efforts have won additional investor plaudits. Red flags to be aware of include foreign currency fluctuations, with almost half of all revenue derived from outside the US.

Some of the saltier Courvoisier lyrics should be listened to with delicate ears firmly plugged, and - spoiler alert! - the fate that ultimately befell both our protagonist and the twenties that roared with him ought only to be seen through similarly covered eyes. But boy, while it raged, what a hotsy-totsy party it was. Since F. Scott Fitzgerald himself once famously opined that "there are no second acts in American lives," Gatsby's age of exuberance and angst in equal measure couldn't possibly occur again. Could it?

See also: Early Reviews for 'The Great Gatsby' Suggest 'Iron Man 3' Will Have Another Stellar Weekend
No positions in stocks mentioned.
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