Welcome to the inaugural edition of Bull Case Bear Case by Altan Insights! In this series, we’ll arm fractional investors with the necessary context to make informed choices on select offerings launching in the week ahead.
The intent is not to provide recommendations, but rather to present investors with a look at both sides of the coin. If an investor is bullish on an offering, what are the key points they might reference to support that thesis? If an investor is inclined to pass, what would be their reasons for concern?
We’ll aim to make a robust, but concise case on both sides, highlighting opportunities and risks both in the near and longer term. In the interest of avoiding redundancy (and a tedious read), we won’t highlight all-applicable, overarching market risks and tailwinds for every asset. For example, you won’t find this in every asset’s analysis: “collectible assets are speculative in nature as investments, and absent underlying cash flows, valuations are prone to severe fluctuation and potential drawdowns at the whims of supply and demand.” A highly sound point that absolutely bears heeding, but perhaps not one that needs reading multiple times in short order.
Feel free to use this tool as you see fit. It can be a starting point for further research, or it can be used to challenge or reinforce existing assumptions and preconceived notions. Our goal is to be as balanced as possible so that you, the investor, can efficiently and effectively prepare for upcoming offerings and ultimately decide where you shake out.
A selection of offerings will be available for free each week, with analysis on additional offerings available to our Altan Insights Pro Plan members. We have a feeling you won’t want to miss those! We expect to see more IPOs than ever before in 2022, and anything you can do to get sharper and to save time preparing will be a distinct advantage over the field. Don’t forget, you receive seven days of free access when you upgrade to Pro; check out the Pro analysis here.
Now, without further ado, welcome the Altan Insights team onto both of your shoulders, because we have bull cases and bear cases to share.
Brady NFL Debut Ticket (PSA 7)
IPO: 1/12 @ 2:30pm ET
Market Cap: $107,750
True scarcity. Despite being a relatively modern debutant, because of Brady’s lack of relevance upon entering the NFL, populations of his debut ticket are actually quite low. Between full tickets and stubs, signed and not, there are just 26 examples that have passed through PSA. Contrast that to 15 slabbed stubs for Mickey Mantle’s debut nearly 50 years earlier, 10 for Wayne Gretzky’s debut 21 years earlier, and 30 for Michael Jordan’s debut sixteen years earlier. A slightly more anticipated debut, that of LeBron James three years later, has 76 full tickets and stubs in the PSA population.
Ticket market appreciation. The collectible ticket market experienced an incredibly prosperous 2021, with eight of the top ten sales of all time taking place over the course of the year. Some would argue that the space is still due further inflows from collector and investor wallets relative to the card space, given the low populations and true scarcity at hand. Between PSA 10 and BGS 10 copies of Brady’s 2000 SP Authentic rookie cards, there is a population of 111 cards. Those cards routinely command six figures (more recently nearer to $150k in the case of PSA 10s), putting them at a premium to the debut ticket despite a population 4x the size and despite the existence of other, more desirable Brady rookie cards. If you are a believer in the overall ticket value proposition relative to cards, the valuation here is more easily digested.
Path to current valuation. When a signed Brady ticket (graded PSA 6) sold for $73k in October, it achieved a multiple of approximately 10x to a PSA 8 signed example from September of 2020. Collectable’s ticket sold in August of 2020 for $11k. This is highly imperfect, particularly in a rapidly developing ticket market where multiples mean little, but if you were to apply the same multiple of appreciation, you can see a path to the IPO value in the short term and begin to focus on the longer term outlook, which a bullish investor views favorably for tickets. Bullish investors will also point to the $144k sale at Heritage in November of a signed ticket to the game in which he threw his first touchdown pass. Of course, that game is a lower population, the ticket is signed, and it is a PSA 10, but should the debut carry more value?
More desireable tickets in existence. There is a not insignificant population of Brady signed and inscribed tickets from this game. There are, in fact, more PSA/DNA authenticated full tickets from the game than there are unsigned full tickets (8 vs. 6). While this is the second highest graded full ticket, it may rank further down the stack in terms of desirability of tickets from the game. Gretzky, Jordan, and Mantle unsigned debuts have achieved six figure sales. However, there exist only two PSA-graded signed Gretzky debut stubs (both with qualifiers), and there are no signed stubs from either the Jordan or Mantle debuts.
Premium to signed record. The high sale for a Brady debut ticket is for a signed debut ticket, graded a PSA 6 with auto graded PSA/DNA 10, for $73,200 in October of 2021. While that result was approximately 10x the sale of a PSA 8 signed example in September of 2020, and applying a similar multiple to the sale of Collectable’s ticket in August of 2020 for $11k would get you to the IPO value, investors may still be likely to balk at the premium to the current high watermark for a signed ticket to the game. Additionally, as covered above, the use of multiples is far less reliable in the rapidly developing ticket market than it is in the more established sports card market.
New, potentially volatile asset class. While tickets have seen massive appreciation in value over the last year, the asset class remains relatively inefficient, with price discovery still occurring among different assets and grades as collectors and speculators alike grab at assets. This environment introduces the chance of high volatility both for the category itself and for assets within.
I, Robot (1st Edition)
IPO: 1/11 @ 12:00pm ET
Market Cap: $8,000
Increasingly relevant subject matter. Asimov, I, Robot, and Asimov’s entire Robot seriesare credited as standard-setting in science fiction, influencing countless future works of literature, film, music, and television. The most lasting inspiration comes from the book’s Three Laws of Robotics. In an era where the human relationship with and exploration of artificial intelligence advances daily, the book may become increasingly relevant, particularly given its groundbreaking ruminations on the ethics of those matters.
Standout condition. Rally’s book is in near-fine condition, and while first edition copies do surface with reasonable frequency at auction, it’s quite rare to find copies with a dust jacket as visually appealing as this example, which has retained its color well. More typically, dust jackets see rubbing and sunning, particularly to the spine, that diminish the rich red color seen here. There is some minor bumping to the corners, pushing to the spine, and chipping to the jacket, but overall visual appeal is superior to most copies, though it does trail the very fine copy sold at Christie’s for $10,000 in September, even if only narrowly. The condition of the dust jacket is superior to the copy sold at Gorridges for a USD equivalent of $5,092 in October.
Incredible fractional book performance. Books with an IPO market cap under $20k have a staggering average IPO since inception of 120% as of 1/6/21. Of the eleven such books to IPO on Rally, eight have achieved triple digit (!) returns to date. This is the second lowest IPO value for a book to date and just the second less than $10k.
Population of more desirable copies. While this copy stands out for its strong condition, high-end collectors may be more drawn to signed or inscribed copies, or better yet presentation copies, albeit in lesser condition. There types of first edition copies have sold at auction with some regularity, and they are the ones that have typically captured values approaching five digits. The $6,250 sale at Swann in 2018, for example, did include the author's signature.
Priced-in growth? The asset was purchased for $5,000 at Heritage in October, and some might therefore infer that the $10k sale at Christie’s in September was somewhat flukey, particularly in light of the broader strength in results at that auction. The market may more realistically lie in the mid four digit range, given the typically slow appreciation of the book market and the majority of sales in the 2010s clustering in the low-to-mid four digits.
Relatively high sourcing fee. Though the sourcing fee is $1,820, a nominally smaller number to be sure, at 22.75% of the offering value, that’s a relatively high fee compared to other offerings. We would put a greater emphasis on sourcing fee versus pure markup, as sourcing fee is the largely discretionary component. Line items like brokerage fees, transport costs, and offering expenses are less influenced by the marketplaces and more representative of the costs of bringing an item to market, and the cash on balance sheet belongs to the shareholders and is necessary for potential, ongoing future expenses. Investors should not necessarily expect that sourcing fees be zero either - the marketplaces are businesses providing a service (the democratization of assets most could not otherwise participate in and the ongoing marketing and facilitation of ownership thereof). Investors should, however, be aware when a sourcing fee is nominally high or high as a percentage of the offering, and they can take this into consideration in making an investment decision, particularly in the context of whether that fee stretches the topline valuation beyond attractive or palatable entry levels.
Strong catalyst potential. Is there any piece of cardboard that has a bigger potential catalyst in January than an Aaron Rodgers rookie card? The star quarterback is the front runner for league MVP, sitting at -500 odds across most sportsbooks, and the Green Bay Packers will head into the postseason as the number one seed in the NFC. In their latest ranking, NFL.com named Aaron Rodgers the 10th best quarterback in league history. On that list, Rodgers was positioned behind names like Peyton Manning, Joe Montana, Roger Staubach, and John Elway - all players with more than one Super Bowl victory. While it is difficult to estimate how high a second title could lift Rodgers, both in the rankings and on the card market, there is little question the additional accolades and rings would further cement his legacy as a top-5 passer.
Print and grade scarcity. This card combines scarcity with gem mint quality, two features that are pursued by collectors and investors alike. From a print run of 99, there have been 70 examples graded by Beckett and 12 that have earned a 9.5. This particular card carries a 9.4 subgrade average but none of the BGS 9.5’s have a subgrade average above 9.5, which means any gem mint example comp is relevant, and there is not necessarily a tier within the population of 9.5’s.
Recovering market. Similar to other modern football cards, prices for Aaron Rodgers rookies have experienced an impressive trajectory over the last two years, with base cards increasing in price by 85-100% year over year, while more finite copies, such as this card, have seen their prices improve by 150% or more. After prices pulled back during the summer, sales displayed signs of recovery through the fall that has continued into the winter. Sales data for this /99 example is limited, but mint and gem mint Bowman/Topps Rodgers base cards are currently selling for 30-45% premiums against comparable sales that occurred in August.
Rodgers a laggard. The Aaron Rodgers rookie card market has lagged behind other stars, and there has never been a seven figure sale of any Rodgers card or memorabilia. While his base cards have 5X’d in value since January 2020, they have failed to realize the 8-10X growth found with players like Tom Brady and Patrick Mahomes. After peaking in the spring, prices fell significantly, in line with the rest of the blue chip modern card market, but have failed to recover at the rate of other active quarterbacks. The $56,000 market cap is also the most expensive level this card has reached to date. The $49,999 price paid by Rally to acquire #05RODGERS in August is the highest public sale for this RPA.
No assurances of postseason success. With big expectations comes the potential for big disappointment. Since winning the Super Bowl in 2010, the Packers have failed to return to the big game, despite making the NFC Championship game in four seasons. Can Green Bay traverse a deep NFC and knock off the best from the AFC? In a league and at a position where legacies are directly tied to reaching the pinnacle of the sport, Rodgers will need to guide the Pack to a game that has eluded him for over a decade. If he can't do it this season, the possibility of retirement or an uncertain new football situation puts the reinforcement of the longer term bull case in question.
Questionable cultural appeal. From his estranged family relationship to the recent immunized vs vaccinated debate, controversy has followed Rodgers on and off the field throughout his career. Whether or not that has impacted card and memorabilia values is up for debate, but it surely hasn't helped. While likeability is not necessarily a factor in determining an appraised value or estimating a future value, Rodgers has not helped his cause within select demographics of the sports world, including those within the media.
1989 Upper Deck Ken Griffey Jr (SGC 10 Gold Label)
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