Altan Insights 2020 Year in Review
In a year filled with uncertainty in the public markets, alternative asset investing took a huge step forward to gain critical momentum heading into 2021. With an increasing number of marketplaces working tirelessly to comply with SEC regulations, non-accredited investors now have more opportunities than ever to invest in exciting, appreciable, alternative assets.
Rally led the sector with over 120 IPOs this year and expanded their offerings into new alternative asset sectors, including luxury bags, Pokémon cards, video games, vintage technology, and wine. A 1999 Pokémon 1st Edition Shadowless Complete Set (PSA 10) which Rally held an IPO for on June 26 with a $125,000 Market Cap is now up 500% to $750,000, the highest return on investment of any asset to date across fractional marketplaces. Rally co-founder Rob Petrozzo pointed out that as of December 20, Pokémon is up 3X more in the last 6 months than other buzzworthy investments such as Bitcoin. The impressive return made headlines and garnered attention for the fractional space.
Otis introduced a secondary market and expanded into sports cards and video game IPO's while continuing to provide investors with a unique arrangement of culturally relevant offerings, ranging from contemporary art to rare sneakers. Speaking of art, Masterworks injected the traditionally private art sector with a revolutionary level of liquidity and opportunity. With over 30 offerings in total, non-accredited investors finally had the chance to build a diverse portfolio of carefully curated fine art investments.
Another alternative asset that was previously inaccessible is the lucrative, yet high-risk horse racing industry. MyRacehorse brought excitement and recognition to the fractional investing space with an impressive combination of offerings and winnings. Their IPO of Horse of the Year nominee Authentic garnered national attention after he broke away from the field to win the Kentucky Derby.
Collectable made a splash by entering the fractional investing stage in 2020. Founded by Ezra Levine with a focus on sports cards and memorabilia, they rolled out an impressive suite of offerings. On September 10th their first IPO was announced: One of the two 1953 PSA 10 Mickey Mantle cards in existence. The card sold-out 40,000 shares at a $1 million valuation. To date, the $1 million offering amount is the highest of any non-art piece offered in the fractional space. Collectable has provided investment opportunities in 24 unique pieces of sports memorabilia to the public, $5,316,719 in total value, 22 of which are expected to close before the end of the year.
Secondary Market Trading
The emergence of secondary market trading for fractional assets has provided liquidity and helped investors realize short-term appreciation. Rally established itself as the most active secondary marketplace, with over 100 assets trading in 2020. On October 6th, a record 9 assets traded during the same trading window, and with a fourth-quarter push of IPO's it would not be surprising to see a new record established in early 2021. We also expect to see a revamped and upgraded trading platform from Rally in 2021. In March, Masterworks introduced liquidity to the art market by allowing investors to buy and sell shares of their holdings on its marketplace. Otis opened trading on October 26th, allowing for daily clearing windows. Collectable is expected to launch its secondary market by the end of January 2021, as well as a web version of their app in Q1. Mythic Markets is also targeting Q1 for both secondary market trading and an app.
The absence of liquidity in the alternative space has always been an understandable criticism and barrier for public investors. With the creation of secondary trading, investors can realize gains on their holdings at more frequent intervals, not solely when the asset is exited.
Savvy investors saw some impressive exits in 2020. On October 21st, Masterworks announced the sale of Banky’s Mona Lisa (2000) for $1.5 million, locking in a 32% return after fees (the painting had a $1.04 million market cap when it IPO’d on the platform). Rally exited numerous holdings during the year, most notably the Michal Jordan Fleer #57 Rookie Card (PSA 10) which netted investors a 79% gain. Rally’s 2003 Saleen S7 was “spinning its tires'', failing to gain much traction on its initial offering. Thankfully, its investors were rescued with an external buyout, providing them with a 12% ROI. Collectable obtained a 35% gain for investors with its sale of the Panini Flawless Patrick Mahomes Emerald RPA (BGS 9.5) just weeks after its IPO. A similar offer was made for Collectable’s 2009 Steph Curry Signed Rookie Card Basket – on 12/17 a buyer offered to purchase the asset for a 34.8% premium. This offer was initially rejected but a counteroffer, which provided investors with a 70.9% return in 87 days, was accepted with 69% of shareholders voting to approve.
Looking Ahead to 2021
The search for yield within the fractional space will continue into 2021, along with the possible addition of an offering that provides consistent yield in the form of dividend income. Look for the art sector to potentially lead the way in developing a fund structure designed to provide this highly desirable combination of appreciation and yield. We’re also looking forward to several new marketplaces launching in 2021. Altan Insights predicts we’ll see continued expansion into new sectors including spirits, whiskey barrels, wine futures, rock n’ roll/hip-hop/Hollywood memorabilia, stamps, diamonds, event ticket stubs, coins and graded action figures. We now know we’ll also see dinosaur fossils enter investor portfolios - a triceratops skull will IPO on Rally.
In our founding year, we rose to meet the community’s hunger for in-depth analysis and data across marketplaces, as the fractional alternative space reached new heights. Featuring the industry’s most comprehensive asset table and other valuable tools, Altan Insights is the leading source of research, data and analytics for the fractional alternative asset investing space. With additional partnerships and other exciting updates on the horizon, investors can expect more of the high quality research they’ve come to rely on, combined with new and improved tools to make even smarter investment decisions. We truly appreciate your continued support and look forward to an exciting and prosperous new year.