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Originally Posted by Dpeck100
Your bullet points are all reasonable concerns. I think the 90 day lock up period is actually a good thing. One of the problems in the stock market when an IPO or a secondary offering is announced is you get a lot of hot money that wants to get in for a minute and out with some cash. It makes a stable secondary market much more difficult when the buyers are not natural buyers who plan to invest and instead are just flippers. I also think it will give some time for the dust to settle and see what other offerings they bring out and how much demand there are for those. Let me be clear I have no information about the doings of this company. My belief is purely market based and I see this morphing into a concept and if I had to guess they started with a big one like this to try and get this thing really moving. I would assume after looking at their website and the talent pool they have working for them that there will be a media blitz and attempts to go on television and push this idea.
The fact that the owner retains 60% ownership means he still has a lot of skin in the game. It also means the available supply of seats at the table are smaller and so in theory could drive the price up more easily with less demand to get in after the 90 day lock up period. One person raised a good point earlier about the expected bid ask spread. In the stock market a very liquid stock might trade a penny apart and if you use a Fidelity or a broker dealer like that you can actually get executed generally speaking at the mid point so half a penny. We are not talking about a listed stock here so there has to be some expectation of a wider spread. In the stock market you also have market markers working for themselves who carry inventory and so they are buying when others aren't with the intent to provide liquidity and to scalp money from small price changes. I am not sure if the broker dealer that is providing liquidity with this on behalf of the investment firm will attempt to do this. Sometimes there is what is known as a supporting bid where they try and keep the price from falling and I suppose it is possible here. The trading aspect of this is definitely something new and I think it will work itself out over time. If people buying in are using funds they need back in a 90 day window they really shouldn't be placing funds in a deal like this.
The primary issue in my view that matters is what happens to card prices of this magnitude. I keep hearing this is the top of the market and maybe for the time being it is. I think those are bold claims. Asset price predictions can be very humbling. Card prices I would argue are even harder to predict than stock prices because there are no real metrics to go on. When Apple hit $138 it had a trailing PE of 41 times earnings. A valuation level I never dreamed possible for the company. There was no shortage of analysts on TV raising price targets and these are well trained finance professionals trying to rationalize the move and suggest further gains ahead. With cards you can't really say well this is overvalued because of real metrics. It is guess work. In March when the market was falling there was more doom and gloom on this board than any I participate on. Some very ominous predictions. I just sold a card Friday night that has gone up over 1600% since then. They felt their predictions were based on logic. I at the time was one of the loan bulls but I can't say in any capacity I thought this card would rise to this degree. You can be right about the trend and wrong about the price.
In the case of the 1953 Mantle this is clearly one of the best looking baseball cards ever made. It is a true work of art. What is that worth? I don't know. The card in any condition has always been highly sought after and the set itself has a very low number that have graded a PSA 10. You have a combination of factors at play. Star power, attractive card, scarcity of condition, and a very popular set and so the recipe for long term demand is undeniable. The only real question is what should that be worth. If it is the top of the market how far down does it go? I would imagine in the example I gave above in 2009 when a Honus Wagner sold for over 400k there were hobby participants like those who visit this board that would have said that is insane. Unreal. I can't believe someone would pay that for a PSA 1. That has no where to go but down. Maybe the card consolidated for a few years and didn't really move much and then it started to climb again. I think a more realistic scenario is perhaps this is fully valued at the moment but under no circumstances do I see a major correction in top level cards. I for years have used the example of the 1952 Topps Mantle PSA 10. There are obviously only three. You can have all the money in the world and still can't get one. Imagine being a hedge fund manager and in your 63rd floor apartment in New York City and having a party with this prized card in a glass case and everyone at your party sees this baseball card and says OMG tell me about this. This is one of only three of the finest known examples of the most popular baseball card. What is it worth? At 2 million it is cool. At 10 ten million it is awesome. And so on. The higher the price the more interest there is. This is how things work. The insatiable appetite to have what others can't is not going away and so while low dollar cards where supply is plentiful may decline the wealth class will still be interested in a card like this and I believe even more so in the future.
The company is teaming up with a broker dealer and so for them to make a market in the card it has to be held as collateral. I have had limited text contact with Evan and the first question I asked him was do you have to turn the card over. He said yes. If anyone should be concerned about its where abouts its him with 60% ownership. This issue is the least of my concern.
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Thanks, appreciate your thoughtful response.