You’d be excused for thinking we’re a little obsessed with the Capital Asset Pricing Model.  But Alpha is a concept that can be applied to all sorts of regression situations, from the talent displayed by inner city high school principals in turning out scholarship winners, and in the ability of an NFL coach to exceed pre-season expectations.

Now we have another example of such “non-traditional alpha”.  Hedge funds (technically private equity funds) have been dabbling in film financing for some time (witness Perry Capital, GLG Partners, Dune Capital, ABRY Partners, Stark Investments, Melrose Partners, Credit Suisse and Merrill Lynch).  Tom Cruise recently brought this concept to the mass media after he got himself unceremoniously canned from Paramount and reincarnated United Artists with the apparent help of various hedge funds.

And just last week, Morgan Stanley announced plans to sell a bond backed by one studio’s individual movie projects.  Bloomberg cites a source who says it will ”pay investors a return from box-office receipts, merchandising, pay-TV contracts and other revenue” from films made or distributed by that studio over the next two years.

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