Lots of people have cashed in on the success of the Twilight movies, like actress , author , even eBay billionaire Jeff Skoll. The finale of the teen vampire movies, "The Twilight Saga: Breaking Dawn-Part 2," has been a financial monster, taking in $700 million worldwide in three weeks.
But perhaps the biggest financial winner is not well known. Mark Rachesky, a investor who likes to stay under the radar, has made a paper fortune this year off of Twilight and another hit movie, The Hunger , thanks to his own investment saga that saw him take on his mentor, the billionaire investor .
Rachesky is the president and primary owner of MHR Fund , a investment firm that manages his own money as well as outside client money. He got his MD from Stanford, but long ago traded it in for Wall Street, where he worked for Icahn before heading out on his own. Securities Exchange Commission filings show that Rachesky's firm manages $5.1 billion and its most important investment is Lions Gate Entertainment, the Vancouver-based studio behind the last Twilight movie.
With a 35% stake in Lions Gate, Rachesky's firm is the biggest shareholder of the movie and television studio. Fueled by the Twilight finale and The Hunger Games, Lions Gate stock has increased by 92% in 2012, meaning Rachesky's firm now owns $820 million of Lions Gate shares. He paid much less for those shares, which represent his investment firm's biggest single position, according to an SEC filing. As of September 30, the Lions Gate investment represented nearly one-third of MHR Fund's publicly-traded stock portfolio.
Rachesky first started investing in Lions Gate years ago, SEC filings show, but he became a big Lions Gate shareholder in 2009, snapping up shares for as little as $4. The stock recently traded hands for $16. Rachesky declined to comment.
In 2010, Rachesky decided to side with Jon Feltheimer, chief of Lions Gate, to beat back a hostile tender offer for the company launched by Icahn, who at one point offered $7.50 a share. To undermine Icahn, who had a strong in billionaire Mark Cuban, the company sold debt to Rachesky's firm, which promptly converted it into equity and diluted Icahn's stake in Lions Gate. The fight for control of Lions Gate, which included a, went on till August 2011, , leaving Rachesky as the company's biggest shareholder.
Now chairman of Lions Gate, Rachesky helped approve the company's acquisition of Summit Entertainment and the Twilight series. Rachesky was co-chairman of Lions Gate when the deal was negotiated and his investment firm's Lions Gate shares were worth some $440 million prior to the January 2012 announcement of the deal, when the stock traded for $8.60.
"We are big believers in the increasing value of content and this transaction strengthens Lionsgate's asset base while providing significant financial benefits, including highly visible cash flow and revenue," Rachesky said in a statement when the deal that brought Twilight to Lions Gate was announced.
The idea was to leverage the Twilight franchise to create a young-adult powerhouse. So far that vision has worked and Lions Gate has become the leader of the rich young-adult and teenager segment, building steady revenue streams coming from sources like home video and merchandise. The studio got a big boost this year from its home entertainment category that benefitted from strong Hunger Games sales. The result: Lions Gate's stock has handily outperformed most of the market, including all other media stocks that have movie-studio components, like Walt Disney, News Corp., and Time Warner.
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