Any thoughts on Rally Rd? 1 1

[Kryptic1]

On 3/9/2022 at 3:17 AM, tth2 said:

Thanks for the insights, very interesting.  
 

How does the buyout decision making process work.  Is it simple majority vote, one share one vote?  Does Rally or some other administrator or management entity have super voting rights?

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.

[ThothAmon]

On 3/9/2022 at 3:07 AM, lou_fine said:

Not sure why you would be so concerned with the fractional ownership companies and hedge funds when the same potential for shenanigans exist with the comic book auction houses or possibly even in the old days with dealer to dealer transactions?  

Definitely real concerns also. One big difference is the amount of money that has flooded into the hobby since Black Rock et al joined the party. I wanted to refresh my understanding of the business model so I’ve started to go through some of the companies filings and literature. Didn’t get very far into their disclaimer before  I read the attached screenshots.  
https://rallyrd.com/disclaimer/

[Kryptic1]

On 3/9/2022 at 8:22 AM, EastEnd1 said:

Well, decided to take the plunge and just subscribed to a whopping 20 shares in the Larson Batman #1!  I will be a 1/1000th percent owner... very exciting!  Cost me $175 net of the CGC gift coupon of $25!  Decided to buy 20 shares in the Erling Haaland rookie card while I was at it.  Have to say, the site was very user friendly and the process was very easy and seemed very professionally managed.  We'll see.  In light of all the recent Wall Street interest in NFTs and "alternative assets", I'm very curious as to where this form of investment goes.   

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.

[70s80sTimeMachine]

On 3/9/2022 at 2:56 PM, Kryptic1 said:

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.

Interesting. So there is a path to get in and out depending on your position size of course as others alluded to as well; this is not as bad as getting into a nontraded REIT or dark OTC asset or private investment etc. where it's basically a sunken cost and you are depending on distributions.

One of the few copies of Batman #1 graded above #BATMAN sold for $2.2M in January 2021......

I pulled the above off the Rally site; I believe this is in reference to the 9.4. Are they trying to pump people up or something? There is a world of difference from a 9.4 vs. and 8.0; actually two entirely different planets as far as BATs 1 goes.

It appears Rally is offering the Larson 8.0 ((which just sold September 2021 for $1.47M)) @ a $1.8M market cap. My two questions are, is Rally the one that made that purchase in September or did they just acquire this BATs now and you would be getting in closer to their cost basis @ that $1.8M valuation?

Based on your experience, any guess as to when this starts trading? 

 

[70s80sTimeMachine]

On 3/9/2022 at 8:22 AM, EastEnd1 said:

Well, decided to take the plunge and just subscribed to a whopping 20 shares in the Larson Batman #1!  I will be a 1/1000th percent owner... very exciting!  Cost me $175 net of the CGC gift coupon of $25!  Decided to buy 20 shares in the Erling Haaland rookie card while I was at it.  Have to say, the site was very user friendly and the process was very easy and seemed very professionally managed.  We'll see.  In light of all the recent Wall Street interest in NFTs and "alternative assets", I'm very curious as to where this form of investment goes.   

 No guts no glory.

Please continue to update the thread on your experiences; in particular when it starts trading. Thanks!

[EastEnd1]

On 3/9/2022 at 3:29 PM, 70s80sTimeMachine said:

 No guts no glory.

Please continue to update the thread on your experiences; in particular when it starts trading. Thanks!

Ha... that's exactly what I thought when I pushed the button!  Except I'm not exactly Braveheart committing a miserly $175!  I am actually intrigued by this concept and am hoping to use this as a learning experience.  I can see a lot of potential possibilities, some of them pretty revolutionary... imagine being able to sell just a partial interest in YOUR OWN key books at top dollar... though I'm not sure if Rally is the one that will ultimately exploit them successfully.  Will be interesting to watch things develop... and yes, will let you know how it goes!

[Kryptic1]

On 3/9/2022 at 3:25 PM, 70s80sTimeMachine said:

Interesting. So there is a path to get in and out depending on your position size of course as others alluded to as well; this is not as bad as getting into a nontraded REIT or dark OTC asset or private investment etc. where it's basically a sunken cost and you are depending on distributions.

One of the few copies of Batman #1 graded above #BATMAN sold for $2.2M in January 2021......

I pulled the above off the Rally site; I believe this is in reference to the 9.4. Are they trying to pump people up or something? There is a world of difference from a 9.4 vs. and 8.0; actually two entirely different planets as far as BATs 1 goes.

It appears Rally is offering the Larson 8.0 ((which just sold September 2021 for $1.47M)) @ a $1.8M market cap. My two questions are, is Rally the one that made that purchase in September or did they just acquire this BATs now and you would be getting in closer to their cost basis @ that $1.8M valuation?

Based on your experience, any guess as to when this starts trading? 

 

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.

[batman_fan]

On 3/9/2022 at 1:25 PM, 70s80sTimeMachine said:

Interesting. So there is a path to get in and out depending on your position size of course as others alluded to as well; this is not as bad as getting into a nontraded REIT or dark OTC asset or private investment etc. where it's basically a sunken cost and you are depending on distributions.

One of the few copies of Batman #1 graded above #BATMAN sold for $2.2M in January 2021......

I pulled the above off the Rally site; I believe this is in reference to the 9.4. Are they trying to pump people up or something? There is a world of difference from a 9.4 vs. and 8.0; actually two entirely different planets as far as BATs 1 goes.

It appears Rally is offering the Larson 8.0 ((which just sold September 2021 for $1.47M)) @ a $1.8M market cap. My two questions are, is Rally the one that made that purchase in September or did they just acquire this BATs now and you would be getting in closer to their cost basis @ that $1.8M valuation?

Based on your experience, any guess as to when this starts trading? 

 

My question on the Batman 1 offering, they are selling 180,000 shares at $10/share.  Is that the total # of shares and then Rally holds 90,001 shares so they have the controlling # shares or do they sell all to the public and hold zero shares but still maintain control over the asset? 

[70s80sTimeMachine]

On 3/9/2022 at 5:51 PM, batman_fan said:

My question on the Batman 1 offering, they are selling 180,000 shares at $10/share.  Is that the total # of shares and then Rally holds 90,001 shares so they have the controlling # shares or do they sell all to the public and hold zero shares but still maintain control over the asset? 

Good question and additionally, quick napkin math; a $1.8M valuation is already a approximate 29% premium vs. cost basis. I realize the slab was purchased 6 months ago but does that seem reasonable? I suppose we will find out what the market thinks when the shares start trading. But if they are able to fill this offering what happens to that premium capture? Just gets allocated to new acquisitions? 

**Actually I just realized that might be the valuation the buyer from September established in order to sell the stake off.

Edited March 10, 2022 by 70s80sTimeMachine

[KCOComics]

When they make a decision to sell an asset, like the Batman 1, who do they sell it to? Do they have buyers lined up? Do they send the asset to auctions and hope for their desired outcome? 

Or do they keep the asset, cash out buyers and resell the shares at a higher valuation down the road? 

Sorry if this was discussed.

[Kryptic1]

On 3/9/2022 at 5:51 PM, batman_fan said:

My question on the Batman 1 offering, they are selling 180,000 shares at $10/share.  Is that the total # of shares and then Rally holds 90,001 shares so they have the controlling # shares or do they sell all to the public and hold zero shares but still maintain control over the asset? 

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.

[lou_fine]

On 3/9/2022 at 11:56 AM, Kryptic1 said:

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.

Looks like you are a fountain of knowledge here with respect to the Rally fractional shares and exactly how they work.  

Can you confirmed that the trading window for all of these books can actually be done on a daily basis,and if so, how do they determine the value of a particular book at the end of each day?  Although I haven't been following these Rally fractional share books since they were first talked about on these boards back in 2020, I thought the trading windows on these books were only opened at certain specific time periods and actually not tradeable on a regular daily basis.  

Hence, a rather illiquid asset, but if they've now changed the business model to facilitate daily trading of these books, then it becomes a much more liquid asset, depending upon how they determine the daily price point for each book.  

[lou_fine]

On 3/9/2022 at 1:33 PM, Kryptic1 said:

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.

Wow, and a big thumbs up to you as I am not sure how you managed to get the scoop of this one here with all of these details.    

So, based upon these numbers here, it would appear that the buyer of the Larson copy of Bat 1 from Goldin is well on his way to making some pretty fast money here if Rally is able to sell out the shares on this offering.  The previous owner (i.e. Goldin purchaser) paid $1.47M for the Larson Bat 1 and then immediately sold off 80% of it for $1.34M which basically gives the book a theoretical 100% market value of $1.675M.  Not too bad at all, but even better, Rally now offers the book up for fractional shares sales with a total market cap of $1.8M with the previous owner retaining 20% of the shares.  This means the previous owner or the Goldin purchaser is now out of pocket by only $130,000 (i.e. $1.47M - $1.34M) , but retains a 20% stake in the Larson Bat 1 which is worth $360,000 (i.e. $1.8M X 20%) if Rally is successful with their share offering of this book here.    

And if Rally is able to resell the book for an even higher amount going forward after a successful IPO, the Goldin purchaser with his use of leverage will really be     in terms of his real rate of return on his actual out of pocket expenditure of only $130,000.  

[tth2]

On 3/10/2022 at 12:45 AM, ThothAmon said:

Definitely real concerns also. One big difference is the amount of money that has flooded into the hobby since Black Rock et al joined the party. I wanted to refresh my understanding of the business model so I’ve started to go through some of the companies filings and literature. Didn’t get very far into their disclaimer before  I read the attached screenshots.  
https://rallyrd.com/disclaimer/

Standard risk factors undoubtedly forced on them by their overly cautious lawyers.

As a guy who has written thousands of them during my career, if people actually paid attention to them, no one would ever buy a share, because they’d be too paralysed with fear!  It helps to have experience in reading them so one can distinguish between the standard boilerplate ones and the ones that actually stand out and really give you pause.

 

[tth2]

On 3/10/2022 at 10:03 AM, Kryptic1 said:

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.

How transparent is the voting record, though?

[lou_fine]

On 3/9/2022 at 11:49 PM, tth2 said:

Standard risk factors undoubtedly forced on them by their overly cautious lawyers.

Totally agree with you here as it looks like your typical fine print standard disclaimer that all investment companies put in to cover their arse.  

[Kryptic1]

On 3/9/2022 at 11:54 PM, lou_fine said:

Looks like you are a fountain of knowledge here with respect to the Rally fractional shares and exactly how they work.  

Can you confirmed that the trading window for all of these books can actually be done on a daily basis,and if so, how do they determine the value of a particular book at the end of each day?  Although I haven't been following these Rally fractional share books since they were first talked about on these boards back in 2020, I thought the trading windows on these books were only opened at certain specific time periods and actually not tradeable on a regular daily basis.  

Hence, a rather illiquid asset, but if they've now changed the business model to facilitate daily trading of these books, then it becomes a much more liquid asset, depending upon how they determine the daily price point for each book.  

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.

[Kryptic1]

On 3/10/2022 at 12:26 AM, lou_fine said:

Wow, and a big thumbs up to you as I am not sure how you managed to get the scoop of this one here with all of these details.    

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.

[ThothAmon]

On 3/10/2022 at 2:49 AM, tth2 said:

As a guy who has written thousands of them during my career

Different perspectives make a market. Mine comes from a background as a prosecutor, often of financial crimes. 

Edited March 10, 2022 by ThothAmon

[tth2]

On 3/10/2022 at 10:14 PM, ThothAmon said:

On 3/10/2022 at 3:49 PM, tth2 said:

As a guy who has written thousands of them during my career

Different perspectives make a market. Mine comes from a background as a prosecutor, often of financial crimes.

When less sophisticated issuers expressed their concern about all of the risk factors to me, or wanted me to tone them down, I would tell them that other than the lawyers, accountants and bankers working on the IPO, no one would ever read them and thus no one would get scared off by them.  The only time any other person would read them would be if something bad happened, in which case everyone would read them, and then the issuer (and the underwriter) would be damn glad that we threw in everything we could think of.   

Edited March 11, 2022 by tth2