Buyout Breakdown Meets Auction Action: Revisiting "Comic Book Summer 2021"
In the months of June and July, 13 buyout offers for fractionally-owned comic books were tabled. Shareholders rejected just one such offer, accepting the other twelve and sending a vast and impressive assortment of blue-chip comic books into the hands of collectors and investors with larger wallets.
Amazing Fantasy #15? Been amazing knowing ya. Fantastic Four #1? Have a fantastic time making someone else money. Journey Into Mystery #83? Journeyed to another home. X-Men #1? Two fractional exes. Incredible Hul- you know what, you get the idea.
But how did this happen? How did fractional shareholders relinquish their claim to so many key issues, many of which were tactfully sourced in some of the highest grades available, for returns since IPO that averaged just over 42%. Don’t get me wrong. 42% doesn’t totally suck, but for blue chip assets with well-illustrated track records of appreciation – the types of long-term assets that you’d think would be foundational to this fractional investing wave – it felt a bit short-sighted to throw in the towel. Importantly, the high-graded and therefore scarce nature of many of the comic books makes them difficult to replace.
This spring, it was made easier to lose sight of the longer-term track records of many assets, comics in particular, when, often for little reason at all, prices fell 30-40% or more in a day’s trading. Consider this: for seven of the twelve bought out comics, the return over last traded was larger than the return since IPO, which of course means that the assets were trading below their IPO price when they were bought out. Those precipitous spring drops rendered many fractional investors eager to realize any increase in value that they could amidst a deluge of red that, to some, felt interminable.
So, despite the strength in comic book results at auction, prospective buyers faced a perfect combination of circumstances as they perused fractional shop windows: comics trading below what many would consider fair market value and an ownership base largely chomping at the bit to see positive returns of any sort.
Blood in the water. Sharks at the ready.
This is a story that will play out over the long term. If this fractional alternative asset trend grows and gains the broader acceptance that many of us believe it will, it’s entirely possible that the Comic Book Summer of 2021 will become a case study in investor behavior. The real question is whether those case studies will highlight suboptimal, irrational behavior.
Just weeks removed from many of the buyouts, it’s time to begin that long referendum. Of course, I’d emphasize that the argument for or against those buyouts will not be decisively won or lost in just weeks’ time. However, we can begin to dissect in the short-term whether those decisions to sell were impulsive, trigger-finger reactions better suited to patience, research, and driving a harder bargain. The first auction results are rolling in – from ComicLink and Heritage now, and soon from Goldin as well (check out Bradley Calleja’s preview next week to see what’s on deck). Let’s see how those buyouts are looking in the early going and also how the results bode for the surviving fractional comic books, some of which have been driven to new heights by a suddenly exuberant fractional investing community.
Seller's remorse on the buyouts? Danger ahead for some survivors? Off we go.
The Bought-Out (with a few Survivors)
Amazing Fantasy #15
Heritage (CGC 9.6): $3,600,000
Rally (CGC 8.0) Bought out June 2021: $229,888.26
Let’s kick it off with what is now the most expensive comic book ever sold. There are just four copies of Amazing Fantasy #15, the first appearance of Spiderman, in CGC 9.6 condition, with none graded higher. The last time a 9.6 sold was in March 2011 in a private transaction for $1.1 million. This result represents a 227% return, or 12% annualized.
Of course, this sale is five grades above the bought-out Rally copy, with 36 copies graded higher than the 8.0, which has a population of 23. Given the extreme scarcity of the 9.6, it’s difficult to impute a multiple over an 8.0, but a multiple range of 7-9x would still yield a value for the 8.0 well in excess of the sale value.
Heritage (CGC 8.5): $150,000
Rally (CGC 9.4) bought out June 2021: $302,557.33
Otis (CGC 9.2) bought out July 2021: $225,000
The Heritage sale of an 8.5 for $150,000 is a 92% improvement on their April 2021 8.5 sale for $78,000. Speaking conservatively, it would be reasonable to expect a 2-3x multiple for a 9.2 over the 8.5 and a 4-5x multiple for a 9.4, both of which would place current values of the bought-out copies approximately comfortably higher than their respective sales prices.
Incredible Hulk #1
Heritage (CGC 7.0): $72,000
Rally (CGC 8.0) bought out July 2021: $110,520
When Hulk #1 was bought out in July, it was already a highly questionable decision versus comps. An 8.0 – which only has a population of 13 with just 31 higher – sold in June with ComicConnect for $150,000. So before the buyout offer was even tabled, there was a recent comp $40k higher than the implied net result for shareholders. But the level at which the Rally copy was trading, $72,500, was barely above the results for a 7.0 at the time ($69,000 –Heritage in June), inviting that relatively soft offer. As a result, this eyebrow-raising sale was among the toughest decisions to stomach – please read our Altan auction content! (if you’re reading this, you already do, and you probably voted no)
The 7.0 has marched forward yet again, besting that June result and perhaps demonstrating that the market has increased moderately in strength since those summer offers.
Incredible Hulk #181
Heritage (CGC 9.8): $84,000
ComicLink (CGC 9.8): $86,000
Rally (CGC 9.8) bought out July 2021: $54,300
Otis (CGC 9.8): $100,000
Rally’s copy was bought out in the later stages of July at $54,300, but by one of the very slimmest margins we’ve seen – just 54% approval. By the time of the 11th comic book offer, clearly shareholder skepticism had begun to grow: why were these books so firmly in the crosshairs and in demand – what are we missing? The book was sold nonetheless, and for the time being, it appears significant money has been left on the table.
Interestingly, the copy on Otis was down 10% over the last month and sat at $72,000.....until yesterday when it popped nearly 40%, going from trailing recent comps by a healthy margin to comfortably exceeding them in short order. The Heritage sale is an 71% improvement over their $49,200 sale from a year ago.
Teenage Mutant Ninja Turtles
Heritage (CGC 9.6): $66,000
Rally (CGC 9.8) bought out June 2021: $91,994.26
Otis (CGC 9.8) bought out July 2021: $180,000
Fractional shareholders didn’t even need to wait a month to see that resisting the first offer and holding out for better can pay off. Rally’s 9.8 was sold in June for just under $92k, a decision that garnered a whopping 86% share-weighted approval. Mere weeks later, Otis shareholders of a book in the same grade were able to realize a result for essentially double what Rally shareholders chose to take. Oof.
The Heritage sale of a 9.6 is perhaps evidence of stalling short-term growth in this title, as $66,000 is also the price it last sold for in April. The growth over the last year and a half, however, has been staggering, as the March 2020 sale price for a 9.6 was $18,000. 9.8 graded copies have a population roughly half the size of 9.6 copies, and we’ve seen them sell for roughly 2.5x 9.6 levels. As such, the Otis sale, which was a 189% return over IPO, is looking relatively strong for the moment, and few gripes can be had there.
Heritage (CGC 9.2): $72,000
Rally (CGC 9.6) bought out July 2021: $309,850
Otis (CGC 9.4): $145,500
The $72,000 sale of a 9.2 at Heritage represents a nice step forward for the issue, which last sold with Heritage in April for $63,000. The 9.4 copy on Otis is up almost 24% in the last month, and the multiple between a 9.2 and 9.4 would generally be larger than the roughly 2x at hand here. A 9.6 typically garners 6-7x a 9.2, meaning that even at the low end of that multiple range, we have another case of buyout money likely left on the table.
ComicLink (CGC 9.6): $151,000
Heritage (CGC 8.5): $19,800 (August)
Heritage (CGC 8.5): $26,400
Rally (CGC 9.0) bought out July 2021: $19,885
Otis (CGC 9.6): $125,195
The only comic book offer rejected by shareholders to date was for Daredevil #1 on Rally in early June, as a return of 1.3% over the last traded price was turned aside by a narrow margin (56% voted to decline). The rejection only bought that Daredevil copy a brief reprieve, as by late July, an offer that only brought in 8.1% over the last traded level was deemed sufficient by 62% of shares.
Fortunately for fractional, another copy of Daredevil #1 in a higher grade remains investable on Otis. That book is up 145% since IPO, and it was down nearing 20% over the last month until the 9th, when it traded up sharply. Despite that sharp rise, the value remains below a late August comp from ComicLink, where a 9.6 sold for $151,000. This wasn’t just any 9.6 though. That particular copy bears the distinction of a CVA Exceptional sticker.
Wait, another acronym?! What’s CVA?! Is that like CGC?!
Too. Many. Acronyms.
CVA is an organization established to essentially fill gaps left by the comic book grading companies in terms of eye appeal within a numerical grade. Just as not all PSA 10 sports cards are created equal and appear equal in terms of eye appeal, comic books of the same grade can differ in their quality as well. CVA will award a silver CVA sticker to those copies possessing “outstanding eye appeal and superior structure within the numerical grade assigned by CGC.” Gold stickers can also be awarded, though supposed to be far rarer, for exceptionally extraordinary examples.
As we know, PWCC often sells cards that they deem to be of superior eye appeal for higher prices than a card of the same grade not so deemed – take their record July sale of a Fleer Jordan Rookie as an example. So, to a degree, fractional investors should be wary that the Otis copy may not necessarily present an apples-to-apples comparison to the ComicLink sale….you know what, I guess it is apples to apples, but maybe not Braeburn to Braeburn? Maybe more like comparing Fuji or Honeycrisp to Braeburn? Still, sticker or not, the value of theOtis copy is over 15% below that sale.
As for the buyout decision on Rally, recent sales of copies in a lower 8.5 grade suggest the exit may have been premature. We’ve seen 9.0 copies garner a multiple in the neighborhood of 1.25x an 8.5 in the past, and 9.6 copies are typically 4-5x a 9.0.
Heritage (CGC 2.0): $222,000
Rally (CGC 1.5): $85,000
The last time Batman #1 traded on Rally was in early June, just as the comic book buyout offers began to trickle in, but before there was a discernable pattern. As a result, it’s not surprising that the book traded down 5.56% in that window, though it does still sit above its June 2020 offering market cap of $71,000. Of course, key issues like Batman #1 have been the subject of overwhelming demand this year, and the Heritage result for a 2.0, which more than doubles the last November 2018 sale, is further evidence.
There typically isn’t a massive gap in values between 1.5 and 2.0 graded issues. There are just 128 universal graded copies of this issue, with eleven 1.5s and nine 2.0s. It has not previously been uncommon to see a 1.5 command 75-90% of the value of a 2.0.
Tales of Suspense #39
Heritage (CGC 9.2): $144,000
ComicLink (CGC 9.0): $145,000
Rally (CGC 9.4): $111,000
Two strong results in rapid succession for copies of Tales of Suspense #39, the first appearance of Iron Man, in grades lower than Rally’s 9.4. Starting with the ComicLink result from late August – that was another CVA Exceptional example. Still, even with the presence of the CVA sticker on the ComicLink 9.0, it’s a bit jarring to see it outsell the 9.2 at Heritage.
Nonetheless, both sales bode well for the Rally copy, which despite being higher graded than both, is trading for $33-34k less. In the past, we’ve seen a 9.4 sell for 1.75-2x the value of a 9.2, though as recently as July 2020, a 9.4 has sold for 2.1x a 9.0. In either case, the current market value of the Rally copy is well below comps, and fractional investors will have to be patient for their next opportunity to act, as the comic last traded in early August.
Action Comics #23
Heritage (CGC 5.0): $24,000
Rally (CGC 5.5): $28,000
Rally’s 5.5 copy was launched at a $28,000 market cap in late May of this year and has yet to begin trading. In the weeks immediately following the launch, the perceived strength of that offering would be bolstered both by the flurry of buyout activity and the sale of a 4.0 at Heritage for $21,600 on June 18th. Relative to that sale of a lower grade, this 5.0 sale for $24,000 feels like a sputtering market; it’s worth noting though that the populations across the board for this issue are quite low (nine 4.0s, six 4.5s, seven 5.0s, four 5.5s), so copies proximate in grade do not typically trade for dramatically different values, particularly in the lower-to-mid tiers.
The Amazing Spider-Man #1
Heritage (CGC 7.0): $38,400
Heritage (CGC 6.0): $26,400
Rally (CGC 6.5): $33,750
Nothing to see here. The Rally copy, graded a 6.5, sits neatly between the 6.0 and 7.0 sales at Heritage this week. The book hasn’t traded since early May, when it slid a mere 1%. It will be interesting to see if comic book exuberance pushes it beyond that 7.0 sale when it comes to the trading block again.
The Amazing Spider-Man #10
Heritage (CGC 9.8): $17,400
Rally (CGC 9.8): $50,820
Gulp. No typos above.
The Amazing Spider-Man #10 on Rally was offered in September of 2020 at an initial market cap of $21,000. Price activity was relatively stagnant until this week, when it popped 202.5% as a seemingly eager fractional bunch sought exposure to not only one of few remaining comic books, but also to a comic book of a hero with a movie set to release this year.
Though there are only nine 9.8s in existence, these simply don’t sell for very much, and they certainly don’t sell for $50k. This Heritage result was a marginal improvement on the last Heritage sale of a 9.8 in May of 2017 for $16,730. Perhaps this issue is overlooked, but not likely to the tune of 3x the current price in the short term.
The Amazing Spider-Man #129
Heritage (CGC 9.8): $43,200
Otis (CGC 9.8): $40,601.60
Rally (CGC 9.8): $40,000
Both the Otis and Rally offerings sit neatly below this most recent comp. The Rally offering has not yet launched, and the Otis copy is up 56% over the last month, which makes it all the more impressive that it still sits below market. This sale of #129, which features the first appearance of the Punisher, is an improvement on both a June and May sale of $40,800 and $33,600 respectively, indicating that there is steadily increasing interest in this title.
Fantastic Four #5
Heritage (CGC 8.5): $52,800
Rally (CGC 9.2): $65,500
It almost warrants a good chuckle that Fantastic Four #5 (Doctor Doom) dropped 18% in its early July trading window on Rally. By that point, seven comic book buyout offers had been registered, but a few still thought it sound to hurry in a panic for the exits. That was the asset’s first trading window, after a March 2021 IPO. Mind you, at the time of the trading window, the most recent comp for a 9.2 was $72,000 in January, before the market more broadly heated up.
This 8.5 sale is a slight decline on the previous sale of an 8.5 for $54,000 in April, which was also information available to traders in July. It would not be unreasonable to see a 9.2, with just 16 copies graded higher, fetch in the neighborhood of 2x an 8.5 (44 copies graded higher).
Special Marvel Edition #15: Master of Kung Fu
Heritage (CGC 9.8): $18,000 (September 6th)
Heritage (CGC 9.8): $13,800 (September 9th)
Otis (CGC 9.8): $61,875
Gulp again. Double Big Gulp.
Seems excitement around another Marvel movie in tandem with the Comic Book Summer of 2021 have propelled the first appearance of Shang-Chi to vertigo-inducing heights on Otis. The previous high sale on Heritage was $14,400 in April of this year, which the September 9th sale underperformed. While the box office performance has been strong and the movie rocked, this is a pretty major disconnect. A burgeoning movie franchise may make for a compelling investment thesis, but the Otis copy is now up a staggering 275% from its early August IPO, and at a market level 4x recent comps, future appreciation may already be priced in. With a population of 103, the frequency with which these come to auction (twice in the same week) may make it tougher to sustain a sharp rise higher.
Tomb of Dracula #10
Heritage (CGC 9.8): $48,000
Otis (CGC 9.8): $53,280
This is a massive result for the first appearance of Blade - the previous high sale at Heritage was $28,000 in June of last year. Before this auction, shareholders perhaps looked overly optimistic - the book is up 37% on Otis over the last month and sits well above Otis’s own estimated asset value of $28.8k,which was based on a June eBay sale. However, this sale, though perhaps somewhat of an outlier, is making the shareholder base look more prescient than thought, even if the market value still sits above the Heritage sale.
Fantastic Four #52
Heritage (CGC 9.6): $43,200
Otis (CGC 9.6): $52,000
The $43,200 sale this week at Heritage represents a fairly sizable step backwards from their most recent $50,400 sale in April. The copy on Otis is trading tight to that April comp, having risen 13% in the past month. The 9.6 has a population of 15, and just 5 are graded higher. That puts the Otis copy in good stead, and investors will be watching carefully to see if this sale was a blip in an otherwise upwards trajectory for the first appearance of the Black Panther.
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