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The Mispricing Manifesto - Draft Strategies & Tactics

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by J.J. Brazil

Published, 8/5/13 

As draft season begins, it’s always worth highlighting what the most renowned stock traders and investors do exceptionally well: They go against the crowd when it comes to finding value and quality. Two quick stories: In 1939, when the stock market was churning in the run-up to World War Two, a then-unknown John Templeton borrowed $10,000 to buy 100 shares of every stock trading for less than a $1 on the New York Stock Exchange, including stocks from 37 companies that were in bankruptcy. All but a handful did a one-eighty – and so began the Templeton investment empire. In 1972, Warren Buffett invested $32 million in See’s Candy, a quaint regional brand in an industry not exactly respected by Wall Street alphas, and it returned a ridiculous $1.35 billion over a 35-year period. Templeton famously rejected “technical analysis” (the study of market data focusing on past performance) and instead counted on “fundamental analysis” (the study of overall market conditions focusing on the future). That’s as strong a description as any of the best way to approach a fantasy football draft. Both Buffett and Templeton (and scores of other financial gurus for that matter) chose stocks and companies that were priced too low and possessed underlying value, and they did it without the slightest regard for popular opinion.

Here are the takeaways for fantasy:

1) Recognize that preseason rankings, aka “popular opinion,” will be off base. Always. Often by a large margin. The simple quantifiable fact is that each year 40 to 50 percent of the preseason rankings, especially the top 20 at each position, will be wrong.
2) Identify players in every round who are primed to outperform their average draft position, ie., mispriced players.
3) Pounce on as many mispriced players as you can, round after round.
4) Tune out the static you’ll inevitably receive.
 
Granted, this isn’t for everyone, but approaching a draft and a season like this is a blast and it almost always pays off. If you snagged players like Alfred Morris, Doug Martin, CJ Spiller, Russell Wilson, and Randall Cobb in fantasy drafts last year, you probably got them at a discount relative to their worth, and you already know the value of the mispricing factor.
 
In recent years there has been more and more attention given to how off-the-mark preseason rankings will look come the end of the season, but too many people still think there’s “safety” in making choices based on rankings. Two things: One, the notion that there’s “safety” in player rankings and cheat sheets is misguided. Two, winning a fantasy title is tougher than ever and taking risks goes with the territory. Not gambles, but risks. There’s a difference. A gamble turns on chance and chance alone, like a lottery. A risk, however, is informed by knowledge, experience, analysis and instinct. It’s a more important factor than ever because it’s tough to get an informational edge when there’s so much more being written and shared in the fantasy industry. Prepare better than the rest of your league and you earn the right to trust your gut. Read. Study. Analyze. Then dial up some moxie. Draft like a jewel thief, not an actuary.
 
Don’t get me wrong, preseason rankings remain a critical planning tool – and no one does it better than John Hansen and his crew at Fantasy Guru, whom I’ve relied on for many years.
 
In 2012, 41 of the top 60 players ranked by most preseason publications in the top 20 at QB, RB and WR, actually finished there (top 20 at each of the three positions). That was better than most years, actually. In 2011, that number was 36. In 2010, 35.
 
Last year, in 2012, if you invested in the likes of Darren McFadden, Chris Johnson, MJD, DeMarco Murray, Larry Fitzgerald, Mike Wallace, Ryan Mathews, Greg Jennings, Fred Jackson, Michael Turner or Hakeem Nicks, you know this better than most. The previous year, in 2011, the expensive bust list included popular picks like Michael Vick, Matt Schaub, Peyton Hillis, Darren McFadden, Vincent Jackson and DeSean Jackson.
 
What this also means of course is that, every year, many players who are not part of the consensus top 60 picks in the preseason crack that list at season’s end.
 
The 2012 Mispricing All Stars 

Player Name
Preseason Rank
Actual Rank
RUNNING BACKS
 
 
Doug Martin
27
3
Stevan Ridley
24
9
Alfred Morris
57
5
CJ Spiller
33
7
Frank Gore
17
10
Reggie Bush
21
14
Mikel Leshoure
59
20
Vick Ballard
83
26
Danny Woodhead
73
27
Andre Brown
UNRANKED
29
WIDE RECEIVERS
 
 
Demaryius Thomas
24
5
Eric Decker
26
8
Michael Crabtree
37
14
Reggie Wayne
39
15
James Jones
55
16
Randall Cobb
59
17
Mike Williams - TB
48
18
Lance Moore
35
19
QUARTERBACKS
 
 
Andrew Luck
23
10
Russell Wilson
30
12
RG3
15
7
Matt Ryan
11
5

 The 2011 Mispricing All Stars 

Player Name
Preseason Rank
Actual Rank
RUNNING BACKS
 
 
Marshawn Lynch
30
5
Darren Sproles
50
8
Ryan Mathews
24
9
Michael Bush
39
10
Reggie Bush
38
12
Fred Jackson
26
13
Willis McGahee
41
21
WIDE RECEIVERS
 
 
Wes Welker
22
3
Jordy Nelson
36
8
AJ Green
29
9
Victor Cruz
110
11
Brandon Marshall
25
12
Julio Jones
41
14
QUARTERBACKS
 
 
Matthew Stafford
16
4
Cam Newton
28
5
Eli Manning
11
6
Mark Sanchez
18
10
Ryan Fitzpatrick
19
12

The 2010 Mispricing All Stars 

Player Name
Preseason Rank
Actual Rank
RUNNING BACKS
 
 
Arian Foster
23
1
Jamaal Charles
15
3
Peyton Hillis
63
4
Darren McFadden
38
6
LeSean McCoy
17
7
Matt Forte
21
11
WIDE RECEIVERS
 
 
Brandon Lloyd
123
1
Dwayne Bowe
20
2
Mike Wallace
26
6
Hakeem Nicks
24
7
QUARTERBACKS
 
 
Michael Vick
34
4
Josh Freeman
27
8

Go as far back as you wish; this is the case every year. Ranking fantasy players is a tough game. Only newbies think otherwise. Numerous variables cannot be accounted for, injuries being the biggest. Plus, most preseason rankings are way too colored by past performance.
 
The bottom line is that a player’s preseason ranking is an important criterion, but it’s only going to be realized 40 to 50 percent of the time. If you lean too heavily on cheat sheet rankings during your draft preparation and execution on draft day, you are virtually guaranteed to miss out on the moves that go into building a winning roster.
 
Every year a few top fantasy performers do rise from the basement of preseason rankings. But if you look closely, these players have certain characteristics in common. It loops back to our investment guru criteria about hidden value. Breakout players almost always emerge from the wave of young talented players who are poised to get increased opportunity, especially when it’s in an offensive system and scheme geared to their skills, and especially if it’s a quality team and program. Another consistent group of breakout players are talented veterans whose situation is suddenly improved, usually by the addition of a key newcomer or a change of scenery. You can see many examples of both of these categories in the charts above. It’s an alignment of talent and opportunity, scheme and quality.
 
·         So, when looking to pump out a list of mispriced players, look hard at:
 
·         New players or young, yet unproven players in offensive schemes that play to their strengths
 
·         Talented players joining quality offenses or teams with elite QBs
 
·         Veteran talents getting enhanced roles or new and improved settings
 
·         Extraordinary talents coming off injury in otherwise strong situations
 
·         Intangibles, most notably work ethic and competitiveness
 
·         Talented players you’re convinced have not had their best season yet
 
Next, design a draft plan that puts you in the best position to draft as many of these players as possible, perhaps even taking them a round earlier than they otherwise might go. You’re not hopingthese players fall to you. You’re going after them. There are mispriced players at every stage of the draft.
 
Many, if not all of these players, are tabbed as sleepers or values or “worth watching” or, John Hansen’s “players to target,” but the difference is that you’re looking to build a roster populated exclusively with these players and in many instances, bypassing higher-ranked, consensus picks. Again, think John Templeton buying neglected stocks in a bear market going against the flow while the rest of the world played it “safe.”
 
For 2013, at RB, we’re talking about the following players, all of whom are a good bet to be ranked next year even higher than they are this year: Jamaal Charles, CJ Spiller, Trent Richardson, Reggie Bush, Steven Jackson, Le’Veon Bell, Montee Ball, Shane Vereen, Bryce Brown, and Danny Woodhead.
 
At WR, mispriced players include: Larry Fitzgerald, Jordy Nelson, Dwayne Bowe, Steve Smith, Pierre Garcon, Miles Austin, Mike Williams (TB), Josh Gordon, Chris Givens, Rod Streater, Vincent Brown, and Golden Tate.
 
All of the following QBs will likely outperform their draft position and projections and, depending on the quality of players assembled around them, could very well be a pathway to a fantasy title as part of a mispricing strategy: Peyton Manning, Matthew Stafford, Andrew Luck, Russell Wilson and Tony Romo. Additionally, because of the surplus of starting QBs this year and the resurgence of going RB-RB in the first two rounds, it’s possible that Drew Brees will be available into the middle of the third round. That’s a hard to resist mispricing if you have two stud RBs and think you can grab WRs like Jordy Nelson, Dwayne Bowe and Pierre Garcon in rounds 4 and 5.
 
Using the most recent ADP chart on FantasyGuru.com (as of Aug. 4), here are some strong starts to realistic draft scenarios that reflect the approach outlined in this article for a 12-team league with standard 2 RB, 2 WR/TE, 1 FLEX roster requirements.
 
Picking near the top of Round One:
 
1.    Jamaal Charles
2.    Julio Jones
3.    Darren Sproles
4.    Dwayne Bowe
5.    Shane Vereen
6.    Matthew Stafford
7.    Tavon Austin
8.    Jermichael Finley
9.    Danny Woodhead
10.Emmanuel Sanders
11.Vincent Brown
12.Carson Palmer
13.Denard Robinson
14.Brandon LaFell
 
Picking near the middle of Round One:
 
1.    CJ Spiller
2.    Reggie Bush
3.    Drew Brees
4.    Jordy Nelson
5.    Shane Vereen
6.    Eric Decker
7.    DeAngelo Williams
8.    Miles Austin
9.    SEATTLE DEF
10.Emmanuel Sanders
11.Michael Bush
12.Chris Givens
13.Brandon Pettigrew
14.Rod Streater
 
Picking near the bottom of Round One:
 
1.    Trent Richardson
2.    Alfred Morris
3.    Le’Veon Bell
4.    Victor Cruz
5.    Torrey Smith
6.    Pierre Garcon
7.    Bryce Brown
8.    Tony Romo
9.    Jared Cook
10.Lance Moore
11.LaMichael James
12.Chris Givens
13.Golden Tate
14.Ryan Tannehill

J.J. Brazil, a Pulitzer-Prize winning journalist, writer and editor based in Southern California, has been playing fantasy football since 1990.

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