Im sure a few members here own CLCT as it pays an excellent dividend and is one of the few ways we can directly "invest" in our hobby. CLCT has had a rough ride the past few weeks and especially today where it closed down 7.68% blowing past its 52 week low. Anyone know what is going on? I was considering throwing some money in CLCT with my bonus money, but lately it seems as if something may be going on with PCGS. CLCT isn't really covered by analysts and here is a link to the only thing i can see as causing the stock price to fall this dramatically. http://homes.yahoo.com/news/gross-fixing-cliff-mean-high-152443663.html
I am no finance or stock expert and, with that said, will put forth an idea. I would think big and small money is not flowing into graded coins in an appreciable way at this time. Therefore, submissions are probably down. If submissions are down, they are not producing, thus the value of the company goes down. Does NGC have stock? If so, how is it doing? This could be an indicator of the grading industry as a whole. Also, check the stock price of companies that grade comics and cards. That may also shed some light on PCGS reaching an all time low.
More to it than that. CU is the parent company of PCGS. CU grades sports cards, authenticates autographs and grades stamps too.
Here is a copy of the conference call by CLCT. Basically their submissions declined by about 28% during the quarter, while the comics and collectibles ( autograph authentication, etc.) increased by about 9%. They also are not doing as well in Hong Kong as they hoped at this time. Interesting, one of the comments was that very few coins come from mainland China due to the difficulty of moving them into Hong Kong. Not a very good Quarterly. IMO. http://seekingalpha.com/article/994...results-earnings-call-transcript?source=yahoo Also with the increasing concern on the tax increase on dividends if the old tax does not renew, almost all dividend yielders over 4-5% were dinged today.
Most stocks were down the past few weeks, like they usually always are the last quarter of the year. As an avid investor, though, I wouldn't touch that stock if you gave it to me. I've always taken an old fashioned approach to investments and it's paid off well for me, even during the recession. CLCT's product is an opinion, not even a tangible product. But, just because it doesn't work for me doesn't mean it hasn't for others. I'm sure they'll pull through just fine. After all, more people collect third party opinions than coins anyways. Guy
Yes, excellent info - thank you desertgem! A few comments on particulars from the transcript (& looking at SEC filings) : From the transcript: Their business is mostly coin grading, and other collectibles are dumping = the collectible market is weakening considerably! To the contrary, the WGC just suggested that falling price led to increased global demand - ex-USA. Something different is happening to our mkt. Are they scaling back the 'coin operating expenses' from $11 mln ( 2011) to $10 mln or something more dramatic? http://clct.client.shareholder.com/sec.cfm CFO Joseph Wallace: I wonder how long they anticipate this trend, beyond several quarters (obviously.) Oh well, dismal for current investors but for future collectors it's sweeter buying opps in 2013. I've been saying it for awhile now; numismatic value is dropping and 'better deals are ahead!'
All of which are hobbie related. When Americans "tighten the belt" usually the first thing that gets cut is funding to hobbies. That being said, the "buy low, sell high" verse might be something to consider in this case but again who really knows what the next year or so will bring. On the flip side of things, I think I would be more concerned if this sort of stock had a price that went through the roof with the current economic situation. To me, the downturn is sadly expected.
I looked at the stock before, and what bothered me the most was their payout was greater than their NI. Seems to me it was on a downward sprial where some day that dividend, which is proppoing up the stock, would come crashing down.
I guess they will have to decide whether to offer more for the submission, reduce the fee, raise the fee, or convince the public that the can slab a common coin as MS-71, First Strike, cameo in a limited edition gold film slab. Reducing or raising the dividend will create even more problems. Maybe try a "forever submission" pricing like the P.O. Buy multiples now at a given price ( sure to raise in the future) and use at any time in the future that the company exists.
Now is the time for the company to be purchasing its own stock. If it doesn't, then something is not quite right somewhere, either it doesn't think things will get better soon or it does not have the cash to do so.
That is what they will do. Politicians cannot comprehend raising dividend taxes will not increase tax revenue. Corporations will stop paying dividends and buy back shares instead. In fact, I could see tax revenue decreasing due to the tax hikes.
I reiterate my evaluation of the stock--it is a dog stock, with a decent yield. However, the growth has NEVER been there, and it is not rated by any legitimate analyst as a strong or even decent "buy." Its dividend is based on a low P/E ratio, but the company as a whole has only a niche market for the stock--collectors. There are many other stocks with growth potential, and double figure yields.
