RI$K / Reward

You can’t have a conversation these days without talking about gambling in some form.

For better or worse, we’ve become a society that values the big wins over consistency and compounding. But in many instances, big wins that seem like flukes are the product of years and sometimes decades of preparation behind the scenes. The payoffs are the result of all that work, and a little bit of luck.

This week, the work-to-payoff results are intersecting all around us. The news of our friends at beehiiv (the platform on which this newsletter is built) raising an incredible $33M financing round converges with the annual Berkshire Hathaway shareholder meeting happening this week in Omaha, all on the same weekend as the 150th running of the Kentucky Derby (and if you want to gamble, we’re deep into one of the most memorable NBA playoffs in recent history).

The winners in all cases put in the work long before the outcome gets published. The cash tends to follow…

In this week’s 130th installment of Shiny Thing$, we take a quick look at 3 of the most ridiculous returns in alt investing history. At first glance, all of them are pure luck. But in each instance, work, preparation and opportunity made that luck a reality.

Mike Markkula - Apple’s 1st Investor

After retiring from Intel at the age of 32, where he had made a fortune, Mike Markkula was looking for new investment opportunities. He was introduced to Steve Jobs and Steve Wozniak through a mutual acquaintance, venture capitalist Don Valentine. Valentine himself was not interested in investing but saw potential and referred them to Markkula.

Impressed by the Apple I computer that Woz had created and Jobs' charisma and vision, Markkula saw the potential for the company to make a significant impact on the computer industry. After a few convos, some diligence on the two, and a gut feeling, he decided to invest $91,000 and provide a $250,000 loan toward production in exchange for 26% of the company. 

He then followed through on the classic venture question “how can I be helpful?” by co-authoring Apple’s first business plan and creating the fine points of Apple’s go-to-market strategy. He even had a short stint as CEO from 1981 to 1983, structuring the “business” of Apple, allowing Jobs, Woz, and the engineering team to focus on creating hardware.

His involvement was instrumental in Apple's transition from a fledgling startup to a serious competitor in the computing world. When Apple went public in 1980, his shares became liquid, making him $203M (a 220,552% gain)

We can’t not mention that had he held until today, that fortune would be worth 900 Billion dollars. 

The ‘52 Mantle - $12M in the Basement

The most expensive card ever sold came from a scenario that everyone in the hobby hopes for, but rarely ever happens - a box of cards someone found in a basement.

A 1952 Topps Mickey Mantle Rookie Card, graded a near-perfect 9.5 by SGC, was sold by Heritage Auctions for a record-breaking $12.6M in August of 2022, setting a new high for any sports-related item ever sold. The story of how it was found and the insane return it provided to the owner traces back to 1986 when Alan Rosen, a prominent figure in card collecting known as "Mr. Mint," received a tip from a forklift operator that a bunch of ’52 Topps cards were for sale in the Boston area. This led him to Ted Lodge, a guy who had found a cache of 1952 Topps cards in a home he inherited.

Among them were numerous Mantles, which had sat undisturbed for decades in a basement.

After some negotiation, Rosen secured all of the cards, including the Mantles, for just over $125,000. “Mr Mint” was THE guy screaming from the mountaintop about baseball card investing during this period. But he was a businessman too, and holding on to cards - even the grails - wasn’t good for business. He put the most pristine Mantle to the side, and in 1991 negotiated a deal to sell that raw ungraded ’52 Mantle for $50,000. 

For decades, the buyer of that card and its whereabouts remained anonymous, and the card remained ungraded. Thay buyer was reveled only recently to be Anthony Giordano, a collector who over the years had turned down what he called “multi-million dollar” private offers for the Mantle. He didn’t ever consider selling throughout those two decades. When the pandemic card boom started to catch steam, however, his sons persuaded him to get the card graded and to think about auctioning it. It had the potential to be life-changing money. 

After a few months, he caved and sent the Mantle in to grading/authentication service SGC. The card came back a 9.5, and was noted by Heritage as “the finest example” of a 1952 Mickey Mantle card to ever hit the market. 

When it sold in 2022, it crushed the previous world record card sale by over $6M, selling for $12.6M via Heritage Auctions and setting the new high water mark in the collectibles space, returning over 25,000%. 

The (maybe) fake $450M da Vinci 

The most expensive item ever sold at auction was hanging on a staircase wall in a Baton Rouge Louisiana home for decades. As turns it out, it was a da Vinci. 

The painting, known as "Salvator Mundi," was found in 2005 when a pair of New York art dealers bought a box of random assorted items for less than $10,000. The purchase was part of an estate sale of items belonging to Basil Clovis Hendry, owner of a local sheet metal shop who had at some point gotten the painting from his aunt.

The box that was purchased in the sale contained a lot of the typical junk. But one of the items looked a bit different - a damaged depiction of Christ which after first being authenticated was attributed at the time to one of Leonardo's followers. It was decoration in the Hendry home to a certain degree, without any thought that the painting was one of an estimated 20 surviving pieces from the renaissance master. 

The painting was heavily overpainted, which made it look like a copy, and it was in poor condition. However, after extensive restoration and research, experts began to suspect that it might be an original da Vinci. This suspicion was confirmed through scholarly research, scientific testing, and comparison with other known works by Leonardo. The painting was officially attributed to Leonardo da Vinci and generated a huge amount of interest, marking the first time in over a century that a “new” da Vinci was discovered.

"Salvator Mundi" was subsequently sold at auction for $450.3 million in 2017, making it the most expensive painting ever sold. The discovery is remarkable not only for the painting's eventual worth but also for the art historical significance, adding to the very short list of pieces by one of history's most celebrated artists.

During the auction process, a deep dive on the provenance and sales records over the last century was revealed. Turns out the painting was sold for $120 in 1958, to “Kuntz,” (Hendry’s aunt) according to Christie’s provenance records, indicating it is highly likely the buyers were the Kuntzes. Twelve days after that sale, the Kuntzes boarded a ship from Southampton, England, bound for Houston, travel records show - with painting in tow that would eventually find its way to their nephew, Basil. 

The epic $450M sale represents an unprecedented 374,999,900% return.

Until Next Week…

(+ Knicks in 5)