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Investing in Sealed Wax with Anthony Loparo

A transcribed interview with collector and investor Anthony Loparo (@topnotchsportsclub).
Conducted by Dan Silvershein, Collectable’s Head of Acquisitions & Strategy.

CollectableU aims to educate, inform, and entertain sports collectors and investors with relevant information on investing in this burgeoning asset class.

Disclaimer: NOT INVESTMENT ADVICE The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Investments in alternative assets are illiquid, speculative and loss of invested capital is possible. A more complete description of these risks is contained in our offering circular, available here. We urge you to review full details and disclaimers on https://collectable.com/disclaimer/.

Dan: Anthony, thanks for joining us on CollectableU! For those who don’t know, you are the man behind the Top Notch Sports Club and Top Notch Investing. We actually met through your breaking company at the time, years ago. Let’s start from the top. How did you get started in collecting and investing? 

My dad owned a little convenience store in our city and he sold sports cards out of it. He always had stuff for us to open, so I’ve been around cards my entire life. As a kid I would open a ton of wax. When I was 16, I stumbled upon someone opening personal boxes in a shop on YouTube and I fell in love with it. That’s what got me heavily into the wax game. Started in 2007, took a break in 2010 and got back into it in 2015. 

Dan: Let’s get into why we’re here. You’ve been pretty open about your alternative asset investing strategies within the collectibles space – notably investing in sealed products, like trading cards and video games.  What do you find so appealing about these markets? 

Yes, I’m always transparent with my investments. I have a passion for what I do and I like to share it with everyone. By doing so, I hope to expand their knowledge and thought process on alternative investing opportunities – always putting their success first.

My thesis on investing in these markets always falls back to one thing – nostalgia. In every investment I make, I’m constantly thinking, “was it big then and why?”. 

During the pandemic, many were stuck at home and bored. I immediately thought about areas of the market that could benefit from a nostalgia surge. I arrived at trading cards, pokemon and video games – a thesis that proved correct to this point – and I went hard on those investment opportunities. I’m a firm believer in sealed products for one simple reason: they tend to get more rare and coveted over time. Very few people have the discipline to keep these assets sealed for long periods of time. The temptation to rip or break open is strong, particularly with popular products! So, if you have the discipline and long term investment mentality, original sealed products is a terrific investment.

Dan: Let’s hone in on sports sealed products. As you think about investment opportunities within the sealed wax space, do you target individual players or products? If so, how do you select your investment criteria? 

I usually identify the athletes I think are highly investable and work backwards from there. My two targets won’t come as a surprise to collectors, but I still think there’s tremendous upside in both players: Tom Brady and LeBron James. They are icons on and off the field/court, with many catalysts on the horizon to increase their value.

Dan: Collectable currently has an IPO open for a sealed 2003-04 Exquisite Basketball box. What do you think makes it one of the premier boxes in the entire NBA hobby? 

It’s simply one of the most iconic boxes in the history of sports cards – and certainly within modern basketball products.  Not a ton of it was made and there’s very few sealed boxes in existence. As the values of certain key cards within the set rises – most notably the LeBron James rookie – the temptation to rip open the product to see what’s inside will be strong!

The wax product is a way to get exposure to the rising card prices within the set, and to own the 2003-04 NBA draft class – one of the most iconic in history.  But you’re getting exposure to it via an asset highly likely to appreciate in value over time. Why? Well, because the population will likely continue to decrease as people open their sealed boxes over time and you don’t!

Simply put, your unopened box becomes more valuable as other people open theirs because the scarcity increases. All about supply and demand! 

Dan: From your experience and data, how correlated are the prices of sealed product to the prices of key cards within the set? For instance, when a LeBron Exquisite RPA sells for a record price, does the sealed wax of the 2003-04 Exquisite Basketball immediately rise in tandem? If so, how closely does it perform? 

The price is certainly highly correlated. For instance, take 2003-04 Exquisite Basketball – most renowned for the monster LeBron Rookie Patch Auto cards. Exquisite boxes were trading for about $35,000. Then, in July 2020, a LeBron James Exquisite RPA sold for $1.8m. The price of wax immediately escalated to over $100,000. Same thing happened with the 1986 fleer wax. The price of the wax moved in tandem with the record Michael Jordan sales. While I don’t have specific correlation data in front of me, these correlations certainly exist all the time and act as a catalyst for wax prices. 

Dan: What recent product lines do you think have real investability? In other words, which recent products do you believe will hold or increase in value over time? 

Here, it’s important to think in terms of supply and demand. Remember, the more popular the product, the greater likelihood it gets ripped open and not kept sealed! So naturally, if you’re investing in a sealed product, you want to find products you feel will be so popular that most of the supply gets ripped open – thus making your unopened product that much more scarce and valuable! Panini Flawless of any sport falls into this category. So does National Treasures Football and Basketball. Other than that, I would say Bowman and Bowman Draft Baseball have staying power. 

Dan: Let’s talk about valuations. Wax isn’t typically as “liquid” as single card sales. How do you think about valuing sealed products when recent direct sales comparables are not available to you? 

This can be a unique challenge with certain wax products, just like it woud be for investing in illiquid cards that don’t have recent comps. In fact, I recently ran into this situation with Skybox Metal Universe where a direct comp did not exist. 

In these cases, I look at the market overall and the market of the cards within the sealed product and essentially do a probability analysis. What’s my likelihood of pulling a certain card and what’s the probability that it would receive a certain grade? That’s essentially how I think about wax. From there, I can come up with a fairly educated guess on the valuation you can assign. 

Remember, as cards from a product trade higher in value, so will corresponding prices of wax of that product and vice versa. 

Dan: From our intel, it seems like the market is smartening up to sealed product as a terrific investment opportunity. Do you anticipate more investors buying sealed product to keep it sealed? 

Yes absolutely. Many new investors are getting into the sealed market strictly for investment purposes. But in many cases, the damage has already been done as people already opened product from years prior. In future years, I do anticipate more people storing sealed product away in hopes of generating superior returns. If this were to happen, it may be the case that sealed product underperforms given the increased supply of sealed.

That said, with the expansion and popularity of breakers, a lot of wax product is being ripped and the demand is much higher. Eventually the product will dry up. Interesting dynamics to consider here. 

Dan: Aside from the pure investment potential, what is it about sealed product that makes it “exciting” for collectors? 

Aside from the scarcity and rarity component, and the investment potential, I think it’s the “What If” factor. There’s always the possibility that you have a monster card or multiple monster cards in your sealed product, but you just don’t know. It can be tantalizing and fun to dream about what’s inside. 

Dan: Do you think we will ever see a registry or pop report for sealed product? BBCE (Baseball Card Exchange) is the king of authenticating sealed product at the moment.  Would you like to see one of the main card grading companies get involved in order to keep track of populations?

A lot of people don’t know this, but BBCE actually grades the packs for PSA. I believe BBCE will continue to be the only company collectors will go to and trust for wrapped wax – and I prefer it stays that way!

Honestly, if another company got into the wax authentication business, such as PSA, it might bring more wax out of the woodworks – and actually decrease the perceived scarcity.  That said, the population counts would likely still be really low and supportive of strong investment returns. 

Dan: Can you tell us about a few of your favorite boxes/cases that you have in your collection?

Love the 2003-04 Exquisite Basketball box and the 2003-04 Topps Chrome NBA, both of which Collectable has on the platform, due to the iconic LeBron rookies. I also had a handful of 96/97 Metal Universe NBA boxes but I just recently moved those. I also own a case of 2017 Contenders NFL with the Mahomes rookie card auto potential. I believe in that kid!

Dan: CollectableU is read by some big players in the industry. Is there anything on your wishlist that you want our readers to keep an eye out for you?

I’m always looking for rare Lebron rookie year stuff and will continue to! Next on my list is a horizontal exquisite RPA.

Dan: Thank you again so much for sitting down to chat with us. As a final question, if you could give any one piece of advice to someone collecting out there, what would it be?

Thanks for having me! My one piece of advice would be this: when you have conviction in something, don’t be afraid to size it up accordingly. You won’t win every time but if you truly believe in something and understand the intricacies of the market, your odds for success are great.