Index Update: June and Second Quarter Recap
Altan Insights 100 as of 6/30/21: 811.70
June Performance: -5.9%
Q2 Performance: -13.4%
YTD Performance: -18.8%
June wasn't particularly kind to fractional markets. In fact, neither was the second quarter. Come to think of it, 2021 hasn't been all that friendly on the whole.
June couldn't have had a more inauspicious start. On the first of the month, the complete set of 1st edition Pokémon on Rally traded down almost 69%. That set was the 5th largest asset trading on fractional markets coming into the month and, consequently, the fifth largest constituent of the Altan Insights 100. $412k in market cap lost in one fell swoop. Of course, the last day of June wasn't much nicer. To bookend a forgettable month, the single largest constituent of the index, the PSA 10 Topps Mickey Mantle on Collectable, dropped over 10% on the 30th. Another $230k in market cap wiped off the top. Those two events on their own are difficult to recover from, and while there were some highlights to offset the lowlights, 81 of the 100 constituents were flat or down in June. 30 were down outright, and just 19 were up. For those that were up, the average return was 12%, while those that were down had an average return of -18%. Clearly, results skewed in the wrong direction.
On a percent return basis, the First Edition Pokémon set was far and away the worst performer in the index this month, down 69%. Next was the PSA 9 O-Pee-Chee Gretzky, down 39% in June after flirting with a $225k buyout offer back in April. Somewhat surprisingly, the softening comes despite the record sale of a PSA 10 at the tail end of May. The third worst performer was Collectable's Tom Brady SP Authentic Rookie card, down 38%, followed by the tournament-used putter from Tiger Woods, down 35%. The fifth worst performer was the complete 1986 Fleer Basketball sealed box on Rally, down 31% in the midst of the much discussed weakening of the Jordan Fleer market.
On to more positive news. The top performer in the index on a percent return basis this month was the BMW Z8 on Rally, up 32%. That's right, in a total upset and a Cinderella story for the ages, a car leads the way. Following closely behind with a 30.9% return was Gone and Beyond by Kaws on Otis. Rally's now bought out Amazing Fantasy #15 delivered a 30.6% return before its removal from the index. After the rejection of a $210,000 buyout offer, the NES Super Mario on Otis climbed 22% on the month, while the Johnny Unitas game-worn jersey on Collectable returned 19% in June.
As the Altan Insights 100 is a market cap-weighted index, it's additionally important to discuss the biggest movers in dollar terms, since those carry significant influence on index movement. Despite the 69% loss for the Pokémon set, it was not, in fact, the biggest loser in dollar terms. That (dis)honor goes to the PSA 10 Topps Mantle, which declined $505,000 in June, as compared to the Pokémon set's $412,750. The 1986 Fleer set haunted again, this time via the complete set on Otis, which lost $92,000. Wilt's game-worn high school uniform dropped $88,480, while the Gretzky OPC lost $87,100.
You'll notice the positive dollar performers are much smaller in magnitude. Banksy's Police Car on Otis led the way, picking up $58k in market value on a 12% monthly gain. The BMW Z8's 32% gain was good for $54k in market value pickup, while Amazing Fantasy 15 followed closely behind at $53.8k. KAWS delivered $50.3k in additional value, while just a 5% increase in the value of Honus equates to a $50.5k pickup in market cap.
If we zoom out a bit further to look at assets that were in the index since the start of the second quarter, we see some of the same culprits, with key differences. Pokémon's 69% drop still leads the way, but those who have been following the basketball market closely won't be floored to see the LeBron Topps Chrome Rookie Refractor on Otis down 59% on the quarter. Buzz Aldrin's Apollo 11 control stick was down 58% on the quarter, because why wouldn't an incredible, historical asset with no real comps of note drop by more than half without a negative catalyst? Notably, that asset traded yesterday, and was up 92%, reversing the plunge of a few months prior. Riding the Pokemon roller coaster downhill was the Kangaskhan Trophy card, losing 45%. Finally, the Michael Jordan Fleer Rookie on Collectable lost 43% in the second quarter, as auction troubles for the asset have been well documented by...pretty much everybody.
On the plus side, it was an outstanding quarter for Super Mario investors. The quarter began with Heritage Auctions selling a WATA 9.6 A+ Super Mario Bros for $660,000, shattering the previous world record for a video game. Rally's superior 9.8 copy finished the quarter at $690,000, gaining a whopping 218%. That asset received a $484,500 net buyout offer in late April, which was promptly swatted away by 72.5% of shareholders. The 9.4 copy on Otis also had an epic quarter, gaining 82%. That asset was the subject of a $210,000 gross offer in late May, which was rejected by approximately 65% of shareholders. We'll have the opportunity to see if the momentum is sustained in video games as Heritage hosts a standalone video game auction next week. The Z8's 32% return was the third highest on the quarter, with Amazing Fantasy and KAWS trailing close behind.
On a dollar basis, the PSA 10 Topps Mantle surrendered $1,330,000 on the quarter. Ouch. Pokemon's $412,750 was the second worst drop. followed by the Fleer Jordan, the Apollo 11 control stick, and Muhammad Ali's title belt, which lost close to $133k on a -35% return.
Rally's Mario led the way on dollar gains, increasing by $473k, while Honus delivered $100.5k in appreciation. Otis's Mario gained $83k, followed by Banksy's Police Car at $69k, and the Z8 at $54k.
As is customary, we are reconstituting the index to include the top 100 assets by market cap as of the end of June. The turnover in constituents results from two factors: higher market cap assets that have begun trading and assets that have performed their way into or out of the index. There are 16 new entrants to the index, meaning 16 assets from the May reconstitution are no longer included. Of the 16 additions, two did actually perform their way in, meaning they were eligible for inclusion at the end of last month but weren't large enough, and subsequently performed well enough to be large enough for inclusion this month. The first of which is the Renault Alpine A110 on Rally. The asset was actually the index replacement for the bought-out Ford GT, but it increased close to 40% before that event occurred. Still, those gains were strong enough to launch it into the index on its own merit. The second was the Avengers #1 comic book on Otis, which gained close to 24% on the month during a red-hot June in the category. Of the 16 assets leaving the index, 3 truly performed their way out. An asset that wouldn't have been included even if it remained flat on the month hasn't really performed its way out of the index, but there are some that dropped precipitously which have. Two of those are the Tom Brady SP Authentic rookie cards on both Otis and Collectable, dropping 20% and 38% respectively. The latter was ranked 53rd at the end of May. Tough month for the GOAT. Take note: Rally is slated to drop a BGS 10 of that card in the near future. The 2003 LeBron James Topps Chrome Refractor on Otis also dropped out, losing 28% during the month to fall from 85 to 127 in terms of rank.
Some small shakeups hit the top 10 constituents. The top two remain the same, but the PSA 10 Topps Wayne Gretzky rookie on Rally debuts at the #3 spot following the record sale of the OPC 10. The 1952 Mantle remains at #4, while Rally's Super Mario falls from 3 to 5. Police Car by Banksy rises from 8th to 6th, while Wilt's game-worn jersey falls from 6th to 7th. The Porsche 356 Speedster is up 1 spot to 8th, and the Shattered Backboard Air Jordan 1 makes its top ten debut at 9. having finished last month at 11. Finally, the Fleer Set on Otis drops from 7th to 10th. Dropping out of the top 10 is the Pokémon 1st Edition Set and the Lamborghini Diablo SE30 JOTA. The Pokémon set took an epic tumble from 5th to 43rd.
Finally, the sector composition has shifted since the May reconstitution, with sports cards now accounting for 47% of the index, versus 40% on 5/31. That rather significant uptick reflects the flurry of issuance that we've seen both at the tail end of last year and the early stages of this year across marketplaces. 11 of the 16 assets joining the index this month are sports cards, in contrast to just 4 of the 16 assets departing. The increase comes at the expense of cars, down 3%, historical memorabilia, down 1%, comics down 1%, following the buyout of some larger cap items, and trading cards (Pokémon) down 2%, as has been painfully detailed here.
One quick note on composition: three assets from Mythic Markets remain in the index for the month ahead. Mythic is in the process of unwinding/liquidating its holdings, and there will not be trading going forward. In that regard, they are "delisted". Should there be no activity on that front in July, the assets will be removed from the index at the turn of August.
Clearly, the spring played host to a fair bit of selling, some indiscriminate, some not. The question will be whether that selling clears the table and resets the stage for movement to the upside over the summer. Stay tuned. We'll be back with our regular weekly index update on Tuesday following the holiday.
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