Billionaires Steven Cohen and Dan Sundheim just struck a $700 million deal to take a collectibles company private — and it could be a brilliant move into an increasingly popular niche market

• In a deal involving multiple billionaires, Steven A. Cohen is teaming with Dan Sundheim and Nat Turner on a $700 million deal to take Collectors Universe private.
• The November 30 deal brings together Cohen Private Ventures and D1 Capital Partners with Turner, an avid sports-card collector, in a bid for the collectibles authentication company, whose shares have tripled in value during 2020.
• Investing in sports collectibles and trading cards has been on the rise in recent years, Robb Petrozzo, cofounder and chief product officer of rival investment platform Rally, told Business Insider.
• Petrozzo said this deal has the potential to expand Collectors Universe into a "full-service platform" that can support the entire collecting journey, "from the data that validates the creation of new products all the way through the sale in the primary and secondary market."

Collecting assets, such as sports memorabilia and trading cards, is having a moment — like, a huge moment. A new deal to take collectibles-authentication service company Collectors Universe private for $700 million proves it.

The deal was announced on November 30, with Cohen Private Ventures, the firm that handles the personal investments of billionaire Steven A.Cohen, teaming up with Dan Sundheim's investment firm D1 Capital Partners and entrepreneur Nat Turner to take Collectors Universe private for $75.25 a share.

Sundheim, who Business Insider's Bradley Sacks and Alex Morell likened to the "LeBron James of investing," specializes in investing in categories such as technology, media, and real estate. Meanwhile, Turner, besides being a serial investor who cofounded the health startup Flatiron, sold in 2018 for $1.9 billion, is also an avid sports-card collector.

"Collecting sports cards and connecting with like-minded hobbyists has been a lifelong passion," Turner said in the press release. "We are committed to bringing the resources and expertise necessary to expand the Company's operational capacity and technological capabilities, while enhancing the accuracy and consistency for which Collectors Universe is known."

Collectors Universe, which authenticates and grades memorabilia, including sports cards and vintage autographs, saw its shares triple during the pandemic, with hobbies like collecting an ideal match for the pandemic-era trend of solitary leisure.

Cohen Venture Partners and D1 Capital Partners declined to comment when reached by Business Insider. Nat Turner didn't immediately respond to a request for comment from Business Insider.

This deal has the potential to legitimize sports and trading cards as an investment asset, according to an expert

Robb Petrozzo, cofounder and chief product officer of the investment platform Rally, told Business Insider that buying memorabilia, specifically within the sports category, has been on the rise in the past few years, and the overall toy category has proven to be a class that is both better yielding and more "interesting" than standard investment funds.

"There is this emotional connection and passionate investment from something that you recognized from childhood or from a good moment in your life," Petrozzo told Business Insider.

This latest deal, Petrozzo said, speaks to the potential of the sports card and memorabilia space, "not just in terms of collecting, but in terms of legitimizing the data associated with the asset class, the investment-worthiness of memorabilia, and the potential mass-market opportunity for hobbyists and institutions alike."

With this deal, Petrozzo said Collectors Universe has the potential to expand from primarily grading and cataloging into a "full-service platform" that can support the entire collecting journey, "from the data that validates the creation of new products all the way through the sale in the primary and secondary market."

"The big-name, low-population early cards in mint condition are still where the big money goes," he said, citing such names as Kobe Bryant, Mickey Mantle, LeBron James, and Michael Jordan. In a volatile market, he said, prices tend to stabilize faster for those names, even when they see corrections, as collectors quickly buy them on the way down, or on the dip. Original Pokemon sets and Michael Jordan Rookie cards are continuing to see strength, with 300%-plus returns since the start of 2020, Petrozzo said.

Over time, many childhood items become hard to find, which also increases their investment value, he said, pointing to wrestling memorabilia as an example:

"What you'll see is that a Hulk Hogan mint-condition rookie card from his WWF days will skyrocket in value," Petrozzo said. "What's happened is that all the figures and elements, all those ancillary items from his rise to fame in sealed condition are extremely hard to find."

"The same collectors who are buying mint-condition cards might now be sitting on a $20,000 or $30,000 Hulk Hogan card," he continued.

And though collecting toys and memorabilia as an asset class is still in its "first inning," Petrozzo said he expects the investment value of this asset class to only rise. It seems Steven A. Cohen is betting on that, too.