When You Can’t Lick the Collectibles


When you don’t give a lick about stamps there is still a way to protect purchasing power with collectibles.

Yesterday’s message Protect Purchasing Power With Collectibles  looked at ways to invest in stamps via Stanley Gibbons a 150+ year old British form that is one of the leading stamp experts in the world.

Being involved in collectibles can be interesting, fun and profitable.  However some investors don’t give a lick about stamps.

jenny invert stamp

The  Inverted Jenny stamp… worth more than a lifetime of savings?

For example, this stamp is known as The Inverted Jenny, is a misprinted 1918 US postage stamp with the image of the Curtiss JN-4 airplane upside-down.  Only 100 of these invert stamps was ever found and one was sold at a Robert A. Siegel auction in November 2007 for US $977,500.  In December 2007 one was sold for $825,000.

However the respected “Scott Specialized Catalog of US Stamps & Covers 2011”, is cataloging a single Inverted Jenny stamp for the price of $500,000.

Stampcatalogue.com explains this:  Scott catalog suggests an unused single of the Inverted Jenny is worth $500,000. However, typically stamps of this rarity means that the catalog is thrown out and the value depends on what the highest bidder is willing to pay, which is often many times above what the catalog value would suggest.

Such stamps come up for auction only rarely so collecting just one or a few stamps is not the best way to invest in stamps.  This type of uniqueness in collectibles leaves some investors unsettled.  The Stanley Gibbons collectible program balances out such ups and downs with diversification and expertise, but some investors do not want such fuzziness.  They prefer the instant pricing and liquidity of a stock market.

Another way to invest in collectibles is via the stock market.  One can simply invest in shares of Stanley Gibbons.  They are traded on the London stock exchange.

The Stanley Gibbons Group PLC sysmbol is SGI.L

Here is a share chart showing the Stanley Gibbons share price in British pounds to March 2013.

stanley gibbons shares

Here are excerpts from their 2012 annual report.

The Stanley Gibbons Group plc, whose principal businesses comprise Stanley Gibbons, Fraser’s Autographs, bidStart and Benham First Day Covers, today announced its audited results for the year ended 31 December 2012.

Key Financial Highlights

•    Sales of £35.6m (2011: £35.7m), reflecting a shift in sales mix to higher margin business.

•    Adjusted profit before tax* of £6.0m (2011: £5.4m, as restated) up 11%

•    EBITDA** of £6.5m (2011: £5.8m) up 12% •    Adjusted earnings per share of 21.44p (2011: 19.40p, as restated) up 10%

•    Gross margin of 43.7% (2011: 38.7%)

•    Internet sales from core website, www.stanleygibbons.com, up 55% in the year (2011: up 27%)

•    50% of revenues now from outside UK (25% in 2009)

•    Proposed final dividend of 3.75p per share (2011: 3.50p per share) up 7%, giving a total dividend for the year of 6.50p (2011: 6.00p) up 8%

•    Cash at 31 December 2012 of £6.8m*** (2011: £3.2m)

•    Stock at 31 December 2012 stated at historic cost of £20.7m (2011: £16.8m) sufficient to deliver future organic growth from core trading activities.

Key Operational Highlights

•    Acquisition of bidStart, a US-based online collectibles trading platform in November 2012 for a total consideration of $1m, provided a base from which to leverage the Stanley Gibbons brand in the low value/high volume segment of the collectibles market

•    Successful placing and fundraising of £6m to fund the consideration for bidStart and to provide funds to develop its trading platform

•    Appointment of the founder and vendor of the bidStart website, Mark Rosenberg, as Group Chief Digital Officer based in the USA and Paul Zimmerman, formerly of Play.com, as Director of E-commerce Operations, based in Jersey to lead the implementation of online strategy

 •    Increased gross margin achieved from acquisition of top quality collections at attractive values

•    Hong Kong office opened in September 2011, contributed sales of £2.6m and profits of £0.7m in the year ended 31 December 2012, including sales of £1.9m transacted to residents outside of Hong Kong

•    Prevailing strong demand for Chinese rare stamps with sales up by 83% to £2.1m

• Auction commissions up 60% in the year benefiting from the sale of the
prestigious “Arnhold Collection” achieving a total realisation of £1.6m

• Sales of rare coins and military medals were up 31% to £1m, with profit
contribution up 80%

• Benham first day covers benefited from sales of commemorative collectibles related to the Queen’s Diamond Jubilee and the London 2012 Olympics

Outlook

• Stanley Gibbons is well placed to become a leader in the global market for collectibles through the provision of key services online and by acquisition of quality businesses in rare stamps and related collectibles

• bidStart online trading platform and associated fundraising enables the acceleration of the delivery of the key aspect of the Group’s online strategy

•    This strategy is further supported and complemented by our international offices and planned growth of our auction business

•    The favourable economic fundamentals for collectibles have never been stronger and should ensure appreciation in value for the foreseeable future and an effective hedge against inflation

Martin Bralsford, Chairman, commented:

“The continued growth in the profitability of the Group in 2012 was achieved at the same time as substantial investment was made and corresponding progress in the implementation of our broader online strategy, which is expected to deliver material growth in future years.

Specifically, the bidStart acquisition brings us the technology required to develop the global online collectibles trading platform. The successful fundraising completed in November last year provides the capital required to invest in the acceleration of the roll out, backed by the prestige our brand carries in the global collecting community.

The market for rare collectibles continues to demonstrate its resilience. This was evidenced by the performance of the benchmark GB250 Stamp Price Index over the past year, showing growth of 11% in 2012.

Following the acquisition of bidStart and the recruitment of top quality senior personnel in our online division, the Board looks forward to its enhanced business.

You can have a free copy of the Stanley Gibbons annual report and updates on collectibles and Stanley Gibbons by clicking here.

You can buy shares of Stanley Gibbons from Michael McDonald at Aegion Capital. Contact Michael at mmcdonald@aegiscap.com

Gary


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