Kryptic1

1 hour to get through the first 27 lots. At this pace we’ve got another 7 hours left in this round.

I was going to say the same. The X-Men 106 cover going for less than half of the 107 cover last auction surprised me.

I’ll take this

The TMNT 1 IPO price was $65k. I don’t remember seeing what the purchase price was, but it was probably around $60k. They were adding tiny markups early on as they were growing the user base. They were definitely losing money back then and I wouldn’t be surprised if they still are. They raised more venture capital money last year and it seems like they’re still prioritizing growth over profitability.

I was very surprised they went into NFTs too, and for the same reason. Everything they brought to market before that was an established collectible that has shown the ability to maintain value over time. I don’t think we’re all going to be looking back a decade from now wishing we had paid $500k for a link to a picture of a monkey that looks like it was drawn by an untalented toddler. There has clearly been a lot of demand for them from Rally users, but even when you give people what they want some of them will still blame you when it goes badly.

They paid $67k and marked it up to $80k. A lot of the declines after IPO can be explained by people in the secondary market being unwilling to pay the markup and valuing things at the real FMV. But it doesn’t explain why people keep rushing to buy the next IPO. They sold out another IPO for an NFT today in minutes even though the two NFTs that started trading this week are down over 50%. Are these the same people, or do they keep bringing in enough new users to replace the old ones who got burned?

Those 10 items are across all categories that they own. Only the last two on that list are comics: Detective 58 CGC 8.0 (unch) and Silver Surfer 4 CGC 9.8 (-25%). The 4 items that are down over 50% include: 2 NFTs - a bored ape and a set of curio cards, a Michael Jordan autographed basketball card, and a Donkey Kong 3 Nintendo game.

Most of the items they have are rare enough that there aren’t many comps. They make a judgment call on what they think they can sell and at what price. It isn’t much different from a dealer deciding what they’re willing to pay for a book and what they can sell it for, except the dealer is selling to one person and Rally is selling to a bunch of people.

Not very. They send out an e-mail afterwards with the % voting for and against. Recently there was a buyout of a TOS 39 in 9.4. The offer was only 2% over the last traded price, so I thought there was no chance it would be approved. The vote was 70/30 in favor of the buyout. I asked for more details on what % voted for, against, or didn’t vote at all. Rally doesn’t vote their own shares and I’m sure some people just don’t bother so your vote is weighted even more heavily than your actual % ownership. They told me 66% of the shares were voted. I owned 6.3% of it so my vote against the buyout counted for nearly 10% of the total and it still passed easily. The worst part of it that buyouts are double-taxed. They pay taxes on the gain at the “corporate” level and then we have to pay again on our gains after the distribution. I’m sure most people don’t think about the tax implications and Rally does nothing to educate them.

Each asset is registered as a security with the SEC and you can look up the details on sec.gov. Rally also provides a link to the filing through their app. They show the breakdown of the price so you can see what they paid for it, how much is going to expenses, and Rally’s profit.

Rally used to have the trading windows - at first it was 2 days a week and 8-10 assets on each of those days. Then it was every weekday but only 3 assets per day. They would collect buy and sell orders throughout the day, and at the end of the day a clearing price would be set for each asset based on those orders and all transactions would happen at that same price. As they added more assets to the site the time between trading windows for each one stretched out to a couple months. Late last year they went to daily trading. Now buy and sell orders are matched throughout the day rather than all at the end of the day. The price you see at the end of the day is just the price of the last trade. They have been adding 10-20 assets to daily trading each week. Just about everything trades daily now, except for the recent IPOs.

Rally owns a % of every asset, usually 10% or less. The shares we buy don’t legally have any voting rights. Rally has control over buyout decisions, but they poll the shareholders and have always gone along with the majority decision even when that decision is really stupid.

Yes, the $2.2M sale was for a 9.4. They are often vague with the details on valuation. I think the customers they’re targeting are people who want to own a piece of a rare collectible as a novelty and won’t focus too much on whether they’re getting a good deal. Rally bought 80% of the Larson 8.0 for $1.34M from the person who won the auction in September. The previous owner retained the other 20% so they will own 20% of the shares if Rally can fill the IPO. They sometimes buy directly from auctions, so I don’t know why they didn’t do that here. They often make terrible buying decisions which explains a lot of the poor performance after IPO. It’s usually about 3-4 months after IPO that assets will start trading. I think there are regulatory reasons for there being such a long wait but I’m not clear on that.

Be careful with the IPOs. You will get much better results if you wait until they get into daily trading. For example, 10 assets started trading this week for the 1st time since their IPOs. Here are the % price changes from IPO price for all of them: Unchanged, -57%, -59%, +24%, -38%, -55%, -61%, -9%, unch, -25% And yet, there was another IPO today that sold out in 2 minutes.

Yes, it’s a share-weighted vote. Rally sends out an e-mail when a qualified offer is received and they give everyone 48 hours to submit their vote. During that time, if anyone wants to outbid the offer they can submit a higher one. We get notified of the results of the vote about a day later. Rally’s advisory board has the right to overrule the shareholder vote but has never done so.

Anyone can make an offer through their app, but they never disclose the buyer. It caused a bit of a stir last year when 4 of the comics bought out over the summer showed up in the Goldin September auction. Ken Goldin is a member of Rally’s advisory board, and I think they should be disclosing it if the offer is coming from someone affiliated with the company.

They sold the TMNT 1 after the spike for a pre-spike price. They sold for $100k then less than a month later Otis (another fractional ownership company) sold theirs for just under $200k. I wouldn’t say these companies are a significant driver in the market. There’s maybe a few dozen comics spread across all of the companies. Rally is trying to make a big splash with this Batman 1, and I think they’re going to have a lot of trouble filling the IPO and that could affect how aggressive they are in the future.

I wrote the post quoted below in September about my experience with Rally. Not much has changed since then. I’m starting to see more grumbling about the high IPO prices. They are now heavily advertising the Batman #1 that they are bringing to market at 25% over the price it just sold for at auction in September. Most of the recent IPOs have tanked when they started trading daily. Rally has also shown a knack for buying things at the worst possible time. They have a lot of Pokémon cards and video games bought at the top of the market that are down over 50%. The liquidity seems to be getting worse as they add more assets. If you’re buying a few shares as a novelty you should have no problem getting out, but if you own even 2% of something you won’t be able to get out quickly without a fire sale. There are a lot of assets outside of the comic category trading below market value, so there’s still money to be made if you avoid the IPOs and are in it for the long haul.

I’ll take the New Mutants lot.

I didn't consider the books to be part of my collection since I owned such a small percentage of them. It was strictly an investment for me - I saw people selling dollar bills for $0.60 and I bought as many as they would sell me.

I was mad about the first buyout, then after a while I realized that I can't expect the same group of people who made the irrational decision to sell me shares far under FMV to then make the rational decision to reject a buyout that's under FMV. If they made good decisions, I never would have been able to buy so I wouldn't have made any money at all. I'm just disappointed that the company that was founded on the idea of giving people the opportunity to buy into assets that are inaccessible due to rarity or price is now offering comics you could buy off eBay any day of the week.

I'm fine with the limits as they are. Letting a few people buy up large %s of an asset wouldn't fit with the spirit of what Rally is trying to do.

You're limited to 10% of the total shares at IPO and for high demand items the limit is much lower. Usually about 5% of the total shares change hands during the trading windows, so it would be difficult to accumulate enough shares to have control. I never got over 6% of any individual comic and I would have been willing to buy a lot more of several of them. Even if you got to 51% of an item, Rally still has to approve a sale so you couldn't force a sale to yourself for $1.

Here's my experience with Rally. I first learned about them through the thread in the General forum, and I really liked the idea of fractional investing, but I thought Rally's approach added too many expenses that would ultimately have to come out of investor returns. I didn't plan to invest, but I watched as most of the comics were dropping in their secondary trading windows, and figured that the discount that I was getting to market value would offset those costs. I deposited my money and started to buy up any comics that had fallen well under FMV. I was watching the same comics climb higher and higher at auction, but on Rally they kept dropping. In the Rally threads on Twitter, people were declaring "comics are dead!" because all they knew about the market was what they saw on Rally. I kept buying, assuming that people would eventually catch on and bid the books back up to FMV. Then the buyout offers started to come in. When I joined Rally, I wasn't too concerned about the lack of control over the timing of the sale. I assumed most shareholders would make rational decisions and since Rally makes the final decision on buyouts they could overrule the shareholders if necessary. I couldn't have been more wrong. The first offer was for Amazing Fantasy 15 in CGC 8.0 at $240k. Days earlier, a copy in the same grade had sold on the Comiclink Exchange for $300k. I reached out to Rally and asked why they would even consider such a low offer. They responded that they would present all "qualified" offers to shareholders. I also offered to buy up all shares from those who wanted to accept the offer so that anyone who wanted to stay in long-term could do so, but I got no response. The offer was approved by over 80% of shareholders. Rally had bought the book for $189k and it was worth $300k at the time of the sale. That market had risen by 59%, but if you had invested at the IPO price, the combination of accepting a lowball offer and all of the expenses added by Rally had whittled your return down to 15% pretax. So far, six of the nine books that I invested in have been bought out, all well below market prices. Since I was buying during the trading windows below the IPO price my returns have been very good, but at the expense of the opportunity for future gains. Most of the books worth investing in are gone, and they have been replaced by high population bronze age keys bought at the top of the market, like Giant Size X-Men #1 in CGC 9.8 for $64k or Amazing Spiderman 129 in CGC 9.8 for $40k. The market value for the new books are down 30-40% from where Rally bought them, but Rally investors, convinced that "comics are hot!!!!" by all of the buyouts, are buying everything in sight. I've been withdrawing my money since there isn't much left worth buying. I don't regret using Rally, and I'm not concerned that it's all a scam. My withdrawals have been processed quickly, and I just don't think they've put in all of this work over the last few years to run a smash & grab job on customer deposits. Just understand if you buy in that your fellow shareholders and Rally know nothing about comics, and you are at their mercy when decisions are made.

Take