How to Value SOIs?

With the Oneseason market just a week old, how can I know if a player is trading at a fair price? When is an SOI overvalued or undervalued? What can I do to tell the difference between a cheap SOI and an expensive SOI?

When determining whether a player (SOI) is overvalued or undervalued you must do two things:
1. Look at a player’s Total Value instead of their SOI price
2. Determine the Percent of Ownership you would be Buying

It is important to look at a player’s Total Value instead of their SOI price because the SOI price can be misleading. Not all players have the same number of SOIs outstanding and the number of SOIs outstanding can change because all SOIs are required to split when they reach $20 (In a split the number of SOIs outstanding is increased and the price/SOI is decreased. For example, in a 2 for 1 split you would have twice the number of shares worth half the price. This is done at the end of the trading day). A player could be trading at a higher price but if they have fewer shares outstanding then their Total Value could be lower.

Here is an example to show you what I mean:

We are going to look at two of the youngest stars in the NBA: Chris Paul and Lebron James. Chris Paul (PAUL), trading at $7.83, has a higher SOI price than Lebron James (KING), who is trading at $5.61. Does this mean that KING is undervalued compared to PAUL? Does the market think that Lebron is not as good of a basketball player as Chris Paul? The answer is NO because you have to look at a players total value when comparing SOIs. In this same example, PAUL has 1,268 shares outstanding with a total value of $9,560.71 and KING has 9,472 shares outstanding with a total value of $53,137.92. These two Gold Medal winners are separated by $43,577.21.

- PAUL: $7.83 (Price) x 1,268 (# of Shares) = $9,561 (Total Market Value)
- KING: $5.61 (Price) x 9,472 (# of Shares) = $53,133 (Total Market Value)

Although PAUL’s SOI price is higher then KING’s you can tell by Lebron’s Total Value that he has more value in the market. Lebron’s SOI has split 7 times and Paul’s has split zero times which can explain why KING has more shares outstanding. If you bought 100 shares of each player at their current prices you would pay more for PAUL but you would get a significantly greater percentage of ownership in him as shown below.

- PAUL: $7.83 (Price) x 100 (Shares) / $9,561 (Total Value) = 8.2% (Ownership)
- KING: $5.61 (Price) x 100 (Shares) / $53,133 (Total Value) = 1.1% (Ownership)

In this example you can see that although PAUL’s SOI is more expensive he is significantly undervalued when compared to Lebron James. If you believe that based that Chris Paul should not be trading at such a big discount compared to KING then this could be a great buying opportunity.

Look at the Total Value of a Player compared to others that you believe are similar and you might find some great opportunities that could make you money.

Written by RickWildThingVaughn