Welcome to Fractional, the only weekly newsletter delivering actionable insights on fractional investments.
This is a special one-off issue to celebrate Fractional blowing past 250 subscribers 🚀
I hope you like it.
What’s an arbitrage?
To oversimplify, an arbitrage opportunity lets you buy an asset for less than it’s demonstrably worth then later resell it for a guaranteed profit. If you can buy a pair of jeans at the thrift shop for $5 then sell them on eBay for $15, that’s arbitrage.
There are a number of these floating around fractional marketplaces at the moment, and I’m going to highlight a few for you now.
If you like this, there’s an opportunity at the end to sign up for more of the same.
I spotted this yesterday and tweeted it out.
Right now, you can go onto Otis and buy shares of a 9.6 grade Daredevil #1 at a valuation of $51,100.
An identical copy sold for $102,000 last week over at Heritage Auctions, establishing a fair market value (FMV) nearly double the Otis IPO price.
The copy available on Otis is trading at nearly 50% discount to fair market value. Once this asset starts trading, I expect it to converge with FMV pretty quickly.
Potential return on $1,000 invested: $996 | ROI 100%
1986 - 1987 Fleer complete set
This is another opportunity on the Otis platform.
Right now, you can buy shares of a complete set of PSA 10 Fleer 1986 - 1987 NBA cards at a valuation of $368k.
That same set is up at auction at Goldin auctions split into two parts.
The Michael Jordan rookie, currently sat at $288k including buyer’s premium.
And the rest of the set is currently trading at $115.2k including buyer’s premium.
That puts a FMV of $403k on this set compared to $368k on Otis. Worth noting this auction still has a few days left, and the value will almost certainly rise by another 10% or so.
Potential return on $1,000 invested: $96 - $205 | ROI 10% to 20%
Last one I’m going to highlight, and this one takes a bit more conviction than the previous two, because game valuations are less mature than sports cards and comics.
Both Rally Rd and Otis have a 9.4 graded copy of Pokemon Blue on their platforms. The one on Otis is trading freely, while Rally’s is still in its lockup period for another 80+ days.
Market cap on Otis is $12,500, while the copy on Rally IPO’ed at $24k
There are two differences between the items:
The Rally game has a slightly better seal (A++ v A)
The Rally game is slightly older (has a white E rather than a black E)
These are important differences, but they’re not distinct enough to merit the valuation delta. Game valuation is still more art than science, but I’ve put an Inferred Value of $18k to $22k on the Otis title, which is around 50% increase on current market cap.
Potential return on $1,000 invested: $440 - $760 | ROI 44% to 76%
There are several more of these out there at the moment, and as each platform adds more drops, the number of arb opportunities will continue to increase.
With that in mind, I’m introducing my first paid-for product.
Fractional Arbitrage, a paid newsletter that highlights opportunities like this.
The introductory price is $20/mo or $200/yr, and I’m limiting the initial batch to 20 subscribers.
It’s important to keep the size of the community small to preserve the arbitrage opportunities, so the price will go up as the number of subscribers increases.
Everyone who selects the annual plan will be guaranteed that price for at least a year regardless of any price rises.
Disclaimer 1: I own shares of both the Pokemon Blue on Otis and the Daredevil 1 on Otis.
Disclaimer 2: Nothing in this email is intended to serve as financial or legal advice. Do your own research, you lazy rascals.
I really like your Newsletter.
I have a question I tried to install this app but look it's not allowed investing for European users (I'm located in Italy).
Do you know how could I do it?
Always enjoy reading your posts - just subscribed to Fractional Arbitrage! Question for you - it looks like I'm unable to buy shares in the Daredevil card since it hasn't started trading. Am I looking at this correctly? Do we know when it will start trading so I don't miss the boat on buying shares at this preferred price?