Index Update: Recapping a Herculean Comeback in July
Altan Insights 100 as of 7/31/21: 910.19
Week Ending 7/30: -0.1%
July and QTD Performance: +12.2%
YTD Performance: -9.0%
What a month for fractional markets! As you may recall, the end of June was a trying moment, with year-to-date performance approaching -19% after the second quarter saw the index fall over 13%. Well, as it turns out, June 30th ended up being the bottom, at least for the time being. Fractional markets rallied sharply off of that bottom in July, gaining nearly 100 points, owing largely to a buyout-led charge upward for comic books and a resurgence in sports cards. Those two positive trends bled into other asset classes as well, and we saw vastly less large, downside trading activity during the month, a welcome contrast to largely indiscriminate selling in the spring. Of the 100 assets that began the month in the Altan Insights 100, 37 were up in July (versus just 19 in June). It's far more significant, however, that just 11 assets were down! In June, that figure was 30. Furthermore, 3 of the 5 assets added to the index as replacements for bought out assets were up during the month. On average, assets with positive July returns were up 28%, while assets with negative July returns were down just 9%. In June, those figures skewed quite negative (+12% and -18%). So, while buyouts and Mickey Mantle certainly made waves, this was a month of wholesale improvement.
The best performer on a percentage basis in July was Teenage Mutant Ninja Turtles #1 on Otis, up 122%. Interestingly, TMNT didn't begin or end the month in the index, instead entering as a replacement for X-Men #1, which was bought out on day 1, before getting bought out itself July 21st. The second best performer was also a comic buyout, with Avengers #1 on Rally returning 102%. The only non-comic buyout cracking the top 5 was the Apollo 11 Control Stick, which had a massive day to kick off the month on July 1st, rising 92%. It had previously lost 58% on April 22nd. Rounding out the top five were Journey into Mystery #83 on Rally, bought out at an 84% gain, and X-Men #1 on Otis, bought out July 1st at a 60% gain. On the downside, the worst performer of the month was the Sidney Crosby Rookie Card Basket on Collectable, down 31%. The basket has fallen sharply since IPO, but seems to be finding support in recent weeks. The Panini Flawless Emerald Patrick Mahomes Rookie Patch Autograph was down 17% in July, despite the record sale of a Mahomes card later in the month. Other poor performers included the Mike Trout Orange Refractor Rookie on Rally (-13%), the 1969 Topps Basketball Complete Set (-10%), and Muhammad Ali's WBC Title Belt (-8%).
Given that buyouts dominated the top 5 on a percentage basis, we also wanted to provide the top results exclusive of buyout activity. In this case, the Apollo 11 Control Stick leads the way, followed by the Jordan Fleer Rookie on Collectable, which was up 54% as a new record auction price was set at PWCC during the month and the card began to more broadly reverse its downward trajectory. The third best performer was the Tiger Woods Tournament Used Putter, up 50% - it was one of the worst performers in June, losing 35%. Rounding out the top five were Super Mario Bros on Otis, up 50%, following the incredible results of the Heritage video game auction, and the 1952 Topps Mantle on Collectable, up 49% and gaining significant ground after the Memory Lane auction mid month.
As the index is market cap weighted, it's additionally important to dissect the top 5 best and worst performers by change in market cap in dollar terms. The fractional space lost the largest asset in the index this month, as the 1953 Mantle on Collectable was bought out, which ultimately added $715,000 in value during the month despite a more tame percentage gain. The 1952 Mantle followed, adding nearly $340k. The Wilt Chamberlain Game-Worn Jersey added $164k, while Avengers #1 on Rally added $156k, and the Lamborghini Diablo added $150,000, gaining 35% during its trading window. The bottom 5 performers look quite similar to their standing on a percentage basis, though the National Treasures Patrick Mahomes RPA joins its Flawless counterpart in dollar terms. The Crosby basket's loss of nearly $52k on the month was the largest detractor, further illustrating the strength of the month. For context, there were 16 assets in the index that added more than that in market cap in July.
Having completed our month-end reconstitution of the index, there are notable changes to the composition to share. Ten assets that were included in June have been removed in July, seven of which were due to a market cap that ranks outside of the top 100. The other three are Mythic Markets assets, which have been removed due to prolonged inactivity, with the timeline for ultimate liquidation currently uncertain. None of the aforementioned seven performed their way out of the index, they were simply displaced by the inclusion of higher market cap assets - the Flawless Mahomes did perform negatively, but its market cap at the beginning of the month wouldn't have kept it in had it remained flat. Six assets did perform their way into the index this month though. Two Hermès Birkins make the cut in July, the Himalaya and the brown Sellier Faubourg, having traded sharply higher after very strong auction comps at Christies. The SP Authentic Tom Brady rookie on Otis (+25% in July) rejoins the index after a month on the outside looking in, as does the National Treasures Giannis RPA on Collectable (+33%), following his NBA Finals triumph. Love is What You Need by Tracey Emin on Otis also rejoins, and the Roberto Clemente Basket on Collectable recovered from a tough start to trading to make the grade this month, after trading up nearly 66%.
The top ten constituents look slightly different this month. Most notably, of course, the bought-out 1953 Mantle cedes its top spot to the new-to-trading Wilt Chamberlain Rookie Uniform. The 1952 Mantle jumps from fourth to second, bumping both the Honus and Gretzky cards down one place apiece. Super Mario Bros and Police Car by Banksy remain at 5 and 6, while the Kobe Bryant Farewell Game Signed Hardwood makes its debut at 7, knocking the 1954 Game-Worn Wilt Jersey down one place. The Lamborghini Diablo rejoins the top ten after falling out last month, buoyed by a 35% return. Finally, the 1986 Fleer Basketball Set on Otis retains its spot in tenth place. Departing the top ten were the Porsche Speedster, which now sits at 12, and the Shattered Backboard Jordan 1, now 11th.
The sector composition has shifted considerably this month. The departure of the 1953 Mantle and the addition of the Wilt Rookie uniform contribute to a large shift from sports cards to sports memorabilia. Sports Cards are down from 47% to 42% of the index, while sports memorabilia rises from 12% to 19%. Comic books, which accounted for 4% of the index at the turn of last month, are now just 1%, as the buyout of several high market cap assets during July leaves the asset class with vastly less high-end representation. Cars lost 2% of their allocation this month, while the addition of the two Birkins contributes to a 1% uptick in luxury fashion/jewelry.
July provided both a large and welcome reversal of fortune for fractional markets. It bears noting that many of the assets that led the way were those that suffered severely challenged performance in recent months, as a retracing to valuations more in line with comps undid a significant amount of YTD damage. Nonetheless, the index remains down 9% YTD, and so we will be watching closely to see whether this month is the start of a sustained move upwards or simply a brief reversal of hasty selling. The comic book buyout activity that helped to buoy the index this month will not be a large contributor in August, given the lower allocation to the space, so trading results are likely to play an even larger role. Still, if recent trading windows and results are any indication, it's clear that the profuse bleeding of the second quarter has been curtailed.
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