This series builds off each volume, so if you haven’t read The Intelligent Fantasy Football Investor (IFFI) Volumes 1-7 yet, please stop and read them on Dynasty Nerds. This series aims to bring investment concepts and a different thought process to the fantasy football community.
The premise is that we should value fantasy players based on the relationship between a player’s price and his earnings. Or his P/E ratio. Price is the number assigned to him on KeepTradeCut (KTC). KTC = Price. Fantasy per-game (PPG) points are a player’s earnings. So, putting it all together: P/E = KTC / PPG (note: divided by 10 for simplicity). When comparing similar assets (like for like), the lower the P/E, the more value you get from that player. The best way to use P/E is to look at clusters w/in each position group for value.
The IFFI Process
My process isn’t about trying to figure out where projections are wrong. I’m not in the business of telling Mike Clay he’s off on his PPG estimates for a particular player. More intelligent people than me are better at doing that. My process is about capturing market inefficiencies and finding discrepancies in a player’s KTC price vs. his PPG projections relative to similar players.
As we established in IFFI Vol. 4, my process has a format. There is a recommendation: Buy, Hold, or Sell. Then there is a target price which implies an explicit upside or downside to current KTC prices. The higher the upside or downside, the more significant the discrepancy between price and PPG relative to their peers. It’s a process, defined, and as inputs change, the outputs change, i.e., recommendations change. We switched the model to 2022 PPG projections, and our inputs have changed. So my recommendations are going to change.
Last IFFI volume, we discussed a portion of this update, the change in earnings (PPG) growth year over year. That led to some changes in my recommendations. I upgraded Javonte Williams from Sell to Hold and downgraded Cooper Kupp & Derrick Henry from Buy to Hold.
In addition to updating each player’s PPG to 2022, I adjusted the clusters (like for like players around age and upside), given the new information, and added the rookies. And now, with these changes to the inputs, we have more changes to the recommendations.
I’m using Pro Football Reference for the 2021 actual PPG. And for the 2022 projections, I’m using ESPN’s 2022 PPG projections from 6/29/22. 2022 projections will change over time based on new information, they are not static, so these PEs will move around a bit when you get new projections.
There are two sets of PEs we are dealing with now; the old PEs are based on the actual 2021 PPG, called the 2021 PE. And the new PEs, which are based on the 2022 projected PPG, are called the 2022 PE. I thought it was important that I explicitly state that we have rolled forward the PE model to account for 2022 PPG projections and, from now on, will revolve around 2022 PEs.
With the update to 2022 PPG and changes to clusters, here are some positional trends I’ve noticed. As position groups, quarterbacks & running backs are projected to have PPG growth year over year. While wide receivers & tight ends are projected to have PPG declines year over year. This equates to quarterbacks & running backs looking cheaper than they were four months ago using the 2021 actual PPG. And it also means wide receivers & tight ends are looking more expensive vs. 2021 actual PPG. This isn’t for every player, but these are the trends as a group.
I’m not exactly sure what this means yet. Still, my hope is at some point, I will start making position group calls. Like, now’s a good time to buy running backs because the position group is trading at a cheaper valuation than it has in the past. Or the position group is trading cheaper than it has relative to where it typically sells relative to wide receivers. As I collect more data on this topic, more on this will come over time.
Summary of rating changes
Upgrade to Buy: Trey Lance, Justin Fields, Tom Brady, James Conner, Rashaad Penny, Amon-Ra St. Brown, Brandin Cooks, JuJu Smith-Schuster, Christian Kirk, Wan’Dale Robinson, & Hunter Henry.
Downgrade to Hold: Marquise Brown, Austin Ekeler, Kirk Cousins, & Rob Gronkowski
Upgrade to Hold: Terry McLaurin, CeeDee Lamb, Dalvin Cook, & Mac Jones
Downgrade to Sell: Joe Burrow, Joe Mixon, Nick Chubb, James Cook, Deebo Samuel, Michael Gallup, TJ Hockenson, & Dawson Knox
Upgrade to Buy
Let’s start with the new quarterbacks added to the Buy list: Trey Lance, Justin Fields & Tom Brady. In the 21 PE model, I recommended a pair trade of Buy Justin Fields and Short Trey Lance. The pair trade’s point was that Fields and Lance should be priced closer. But neither of them was added to the Top Buy/Sell list. Using 2022 PEs, I’m now saying Lance & Fields are both Top Buys. Lance’s PPG goes from 11 in 2021 to a projected 18 in 2022, 50%+ of PPG growth year over year. Fields’ PPG goes from 11 in 2021 to a projected 16 in 2022, and he looks like a steal compared to his peers.
Brady is well; well, he’s Tom Brady, the GOAT. As much as it pains me to say it, he is the best, and in a year, people were expecting a bit of a drop-off; he put up 22 PPG last year and is projected to put up 19 PPG in 2022. People might be skeptical, with Godwin maybe not returning to start the season, Gronkowski retiring (although I think Gronk comes back if the Bucs are looking like they may make a Super Bowl run), and the guy getting one year older, but boy oh boy does Brady put up points. If you are buying him in dynasty, you put that he retires soon into your calculations, and anything you get after that is gravy. Brady is a Buy and Hold into the sunset type of recommendation.
Upgrade to Buy – RBs
James Conner and Rashaad Penny get moved up to Buy at running back. Conner had a great fantasy season last year. If you had him on your squad, you probably finished very well in your league. Given his somewhat checkered fantasy past, people are baking in some PPG reversion, which is reflected in his price. However, ESPN is projecting no change to his 17 PPG from 2021 to 2022. No change in PPG makes him look reasonably cheap on a 2022 PE basis.
As far as Rashaad Penny goes, the Seahawks invested in the RB position in this year’s draft with the high selection of Kenneth Walker III out of Michigan State. I’m looking for Walker and Penny to split the backfield work with Chris Carson primarily out of the mix. Penny put up some great games last year after what has to be considered a disappointing start to his career, given the high expectations of being picked in the first round of the NFL draft. ESPN is projecting Penny’s PPG to stay around 12 in 2022, exactly where he was last year. But given that the Seahawks drafted an RB early this year, it is natural to see Penny’s price drop, making him look cheap now.
Upgrade to Buy – WRs
Then at WR, Amon-Ra St. Brown, Brandin Cooks, JuJu Smith-Schuster, Christian Kirk, & Wan’Dale Robinson all get moved up to Buy. I was a little surprised St. Brown made this list, given that he is young and had a great second half of the season last year. Usually, in that scenario, your price rises a little too high. I think St. Brown’s price has declined because of the outlook for less of a market share for him in the Lions’ offense in 2022. The Lions will get a healthy TJ Hockenson & D’Andre Swift back and add to the wide receiver core with first-round pick Jameson Williams (who is coming back from an ACL injury himself). This said ESPN is projecting St. Brown at 14 PPG in 2022, up from 13 PPG in 2021. Earnings growth even with the new competition for targets.
Cooks continues to be one of the cheapest good wide receivers in the league year after year. Sure, there have been some concussion concerns, but he showed he could put together an entire season of high-caliber play last year. I’d look for second-year quarterback Davis Mills to improve this year and for Cooks to continue to be the guy in that offense.
Upgrade to Buy – WRs Cont. & TEs
Both JuJu and Kirk changed teams this offseason. JuJu gets the Chiefs’ bump and is projected to go from 7 PPG to 12 PPG. I’m not sure how the Chiefs’ new wide receiver core shapes up in distribution, but if Juju commands a large enough share of that offense, he could look like a steal at this price. And no need to project tons of earnings growth for Kirk as he put up 12 PPG last year and is projected to put up 12 PPG this year even with the change of teams to the Jaguars. Kirk seems like a pretty safe & cheap bet.
Wan’Dale Robinson is a surprise. I was expecting all the rookies to tilt toward being too expensive. You could argue that I possibly have him in a cluster that is too high for him, but I liked his prospect profile, and I think he gets unfairly punished for being too short. His shortness and possibly the team he was drafted to have pushed his price down a bit too far. 2022 projections are at 8 PPG for Robinson; who am I to argue with that, but I think there is an upside if things go his way this year.
And finally, at tight end, Hunter Henry gets bumped up to a Buy, as well. ESPN is projecting a reversion to his PPG from 10 in 2021 to 9 in 2022. However, his price is so low (<2000 KTC) that being one of those TEs that can consistently get to 9-10 PPG a year makes him look cheap.
Downgrade from Buy to Hold
Marquise Brown, Austin Ekeler, Kyler Murray, Kirk Cousins, & Rob Gronkowski are all downgraded from Buy to Hold. Brown was a big win for my process, with +20% appreciation since being added to the Top Buys list. Ekeler, Murray & Cousins are small misses, depreciating low to mid-single-digits since being added to the Top Buys list. Small misses. Similar to the discussion from the last volume, I’ll chalk my Ekeler miss into the same category of why I missed on Kupp and Henry (not taking into account the PPG reversion projections appropriately).
Gronk was a big miss, and it happened quickly. His KTC fell from 1,234 to 576, -53%. It was a risk/reward recommendation with a binary outcome, and the result went against us. Gronk retired, and even if we believe he may come back halfway through the season, we have to take him off the Top Buys list and take the loss.
Upgrade from Sell to Hold
Terry McLaurin, CeeDee Lamb, Dalvin Cook, & Mac Jones are all being upgraded from Sell to Hold. McLaurin, Cook, & Jones were all small wins, all depreciated mid-single-digit from when they were added to the Top Sells list. CeeDee Lamb was a slight loss; he appreciated 5% since he was added to the Top Sells list. I’m not exactly sure what I was supposed to learn from the small miss on CeeDee Lamb, but I’m sure there was something to be learned; I’ll think about it and see what I come up with.
Downgrade to Sell
And now to the new Top Sells. I feel as though every time I talk about Top Sells (mostly because I don’t want to be negative), I need to remind people of the following. These recommendations have nothing to do with the players themselves and have nothing to do with actual football. All we are doing is applying valuation techniques to fantasy football. Also, when I say someone is a sell, I’m saying they are a sell at current KTC prices; I’m not saying you sell for peanuts to offload him. Hold if you can’t get the premium price on a Sell.
Joe Burrow, Joey B, Joe Cool, or whatever nickname you got for him is incredible. One of my favorite players. I love his story. And he had a fantastic year in 2021, leading his team to the Super Bowl. They didn’t win, but we are talking about the Bengals in the Super Bowl. Not only did he have an excellent year, but Burrow also had an incredibly efficient year. I think he can keep his efficiency very high, but I’m not sure he can sustain those levels every year.
ESPN is projecting his PPG to fall from 20 in 2021 to 19 in 2022. 19 PPG is excellent, but does he have the elite fantasy upside, the critical word being fantasy. That elite fantasy upside comes from having a quarterback that is a runner as well as an elite passer. Now Burrow can move around well as a quarterback but has yet to put up an elite quarterback rushing year to add to his incredible passing. I’m reluctantly moving Joe Burrow to a Sell for the reasons above and because he is expensive on a 2022 PE basis.
Downgrade to Sell – RBs
We are moving Joe Mixon, Nick Chubb, & James Cook to a Sell at running back. ESPN has both Mixon and Chubb’s PPG declining year over year. Mixon from 18 to 17 PPG and Chubb from 15 to 14 PPG. I like both these running backs, especially Chubb as an NFL running back, but from a PE perspective, they both look expensive relative to their peers.
And Cook, finally, one of the rookies, shows up on the Top Sells list. ESPN is projecting Cook to get to 9 PPG this season. However, so many RBs of his caliber are projected to have more PPG this season who trade at a lower KTC. For what it’s worth, I also have my own rookie prospect profile process, and I was not very high on Cook. All this to say, Cook won the team lottery by getting drafted by the Bills, and we all have given him credit for that even though his profile isn’t that great. That’s a Sell for me.
Downgrade to Sell – WRs & TEs
At WR, Deebo Samuel and Michael Gallup get added to the Top Sells list. I like Deebo as a player. He put up a 21 PPG season in 2021, but I’m not sure if and when he will be able to do that again. Sure it will always be a possibility, but how likely is it? ESPN is projecting him to have a 17 PPG season, just under young studs Ja’Marr Chase and Justin Jefferson. Given all the unknowns with Deebo, like new quarterback, what position he plays, how his contract issue turns out, etc., it would be tough to bet on him given his relatively high price. Gallup is about his injury/when he gets back, and his valuation looks expensive.
And finally, at tight end, we are adding TJ Hockenson and Dawson Knox to the Top Sells list. Hockenson put up TE1 level points each year, but there is little differentiation between back-end TE1 production and the next 10-15 tight ends. I’d rather sell him for one of the cheaper tight ends with similar production and practice some compounding. I currently have a pair trade to Buy Noah Fant and Sell TJ Hockenson, and now both players are officially added to their respective Top Buy/Sell lists. And Knox has new competition in town by the name of OJ Howard, and will there be enough work to go around. Knox’s PPG is falling from 11 in 2021 to a projected 9 in 2022. Knox looks expensive on a 2022 PE basis.
Rest of the Buys
Lamar Jackson: [NEW] Target Price = 8825 (+12%)
Leonard Fournette: [NEW] Target Price = 4700 (+23%)
Diontae Johnson: [NEW] Target Price = 5250 (+9%)
Noah Fant: [NEW] Target Price = 3325 (+23%)
Brevin Jordan: [NEW] Target Price = 2125 (+23%)
These are the Buys from the 2021 actual PPG PE model that carried over to the 2022 projected PPG PE model. The only thing that has changed on these guys is their target price. Given the new inputs, Lamar Jackson’s target price rose ~6%, from 8300 to 8825. Leonard Fournette’s target price fell ~10%, from 5200 to 4700. Diontae Johnson’s target price fell ~21%, from 6650 to 5250. Noah Fant’s target price fell ~6%, from 3525 to 3325. And Brevin Jordan’s target price was raised ~9%, from 1950 to 2125. Even though their target moved around a bit, they all remain Top Buys.
Rest of the Sells
Derek Carr: [NEW] Target Price = 4150 (-13%)
AJ Dillon: [NEW] Target Price = 3600 (-22%)
These are the Sells from the 2021 actual PPG PE model that carried over to the 2022 projected PPG PE model. The only thing that has changed on these guys is their target price. Given the new inputs, Derek Carr’s target price is raised ~8%, from 3850 to 4150. And AJ Dillon’s target price is increased ~22%, from 2950 to 3600. Even though their target prices were raised, they both remain Top Sells.
Summary of recommendations
Here are some players I think have valuation upside but weren’t added to the Top Buys list for whatever reason: Matt Ryan, Michael Thomas, Keenan Allen, David Njoku, & Evan Engram
Here are some players I think have valuation downside but weren’t added to the Top Sells list for whatever reason: Jalen Hurts, Mitchell Trubisky, & Darren Waller.
So far, I’ve closed out 13 trades, and 6 of those 13 worked, ~46%. Eh, not great. But if you study the performance column, you may come to a different conclusion. Look at the big movers: I gained ~900 KTC from the Tyreek Hill trade, ~725 KTC from the Marquise Brown trade, & lost ~650 from the Gronk trade. If you net that together, that’s positive. And if you figure out how much KTC was gained and lost by each closed transaction and add it together, it totals to approximately +600 KTC of added performance. Not bad at all. Although I’m not satisfied, I think it can be much better.
Well, that was a lot, but we made it. With the transition from the 2021 PE model to the future-looking 2022 PE model came many changes. We closed out some trades, changed price targets, and made some upgrades and downgrades. These new Top Buy and Sell lists are my best recommendations using my 2022 PE model. The goal here is to build on some of those successes I’ve had so far and get even better with higher hit rates and better performance.
If you are interested in learning more about Dynasty/Devy fantasy football, please follow along on Twitter @_jasonstein and let me know what questions you have and how I can help.
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