Extreme Alternative Investing: T206 Honus Wagner

When you hear the term investing, you probably first think of stocks, mutual funds, bonds, commodities, ETFs, or even real estate.  Beyond hedge funds and derivatives is a world full of alternative investments in collectibles, memorabilia, art, jewelry, cars, coins, stamps, antiques, fine wine and more.  If you have ever collected any vintage baseball cards, there is one standout rarity that is considered the Holy Grail of baseball cards: the T206 Honus Wagner tobacco card from 1909.  One of the rare Honus Wagner specimens recently came up for auction, was bought for what will seem like an almost crazy sum of $220,000.00, and amazingly went to a second buyer after the first buyer did not pay for the auction win of what was supposed to be $262,900.00 after the buyer’s premium.

Perhaps the most odd issue about the card outside of its incredibly poor condition garnering such a high price was that it was being auctioned by a group of Catholic nuns in the Baltimore-based School Sisters of Notre Dame to pay for charitable operations.  The School Sisters of Notre Dame apparently inherited the Honus Wagner card from the brother of a deceased nun. Heritage Auction Galleries was the auction house and the original estimates were $150,000 to $200,000.  The $220,000.00 sale price is after the auction house commission buyer’s premium paid.

The sum paid is almost unbelievable, even to a collector and even to most investors in vintage baseball cards and sports memorabilia.  The reason is not just because of the sum itself, but the condition of the card was actually atrocious and is under any sort of grade scale that investors would consider if it were not for the fact that this is the rarest and most sought-after card by collectors and investors.  Heritage Auction Galleries even noted in its auction description, “… Condition is admittedly imperfect, though this is the case for all but a few of the tiny supply of surviving examples. The borders were trimmed and the card coated in shellac ages ago. Creases snake across the body of the card and a tack hole hovers over Wagner’s head. Scrapbook removal has skinned some paper from the “Sweet Caporal 150 Subjects” advertising on verso.”

The grade “A” is not like an A in school; it is for “Authentic.”  While this card was graded as Authentic, this auction may have inadvertently put an even higher premium on the low-quality samples all the way up to the highest quality samples of the pinnacle of collectibles in baseball cards and memorabilia.

There are only about 60 or so known Honus Wagner cards in circulation from the great T206 series, and the top version of the card called “The Gretzky Honus Wagner” sold in 2007 for a whopping sum of $2.8 million to a collector named Ken Kendrick.  That card was named the Gretzky card because it had been previously owned by the great Hockey player Wayne Gretzky.  The new owner of the latest Honus Wagner sale is Dr. Nicholas DePace, a Philadelphia cardiologist and sports memorabilia enthusiast of about 30 years.

What is the line between collecting and investing?  Collectors hoard.  Sometimes investors hoard as well, but investors generally buy with the intent of buying to sell for more money in the future at a higher price.  This was no Christmas present.  It is said to be going into a private museum collection next year.  Oddly enough, it is possible that it might even be considered a donation considering who sold the card.

This is just one example of card auctions fetching extreme high prices, and it pales in comparison to some of the auctions of other collectibles.  This is the more fun side of Wall Street, and maybe even Main Street.