It's been shown time and time again that it is impossible for a new or existing grading company to break into the "top two." That's why John Albanse is running a sticker company instead of a full service slab company. If you want to get into the upper ranks of the coin grading business, you have to buy a top company, not create one.
I noted this as well. Seems like it's selling for a few hundred million more than it's worth in the long term. Their 2019 annual revenue was only $72.5 million and I don't see last year's growth (9%) as sustainable.
My conversation with a TPG grader... Me: Do you get a lot of coins back for being overgraded? Him: Yes. Me: Do you buy a lot of them back. Him: Nope. If they're for grade review, we stick them in the safe for 2-3 months and then return them to the submitter without looking at them. Me: Him: If it is for counterfeit review we look at them and will buy them back if we made a mistake, but we very rarely ever buy back for grade.
Isn't that what happened to PCGS Currency? It was broken off and became a separate company...and now is history.
Not exactly. For a long time, PCGS had a contract to license the PCGS brand to another company, which graded notes under the license. PCGS chose not to renew the license in 2019, and so the company decided to try making it on their own. They didn't last long. PCGS later started its own in-house paper grading arm. Read more here: https://www.coinworld.com/news/precious-metals/pcgs-currency-contract-expires-new-entity-opens.html
But if memory services, PCGS did grade their coin notes like 15 years ago...but then they sold the branding to another company (or they licensed it). Then, like you said, stopped licensing it. Edit...I see it now. PCGS started grading currency in 2005 and then sold that side of the company with a 10 year license in 2009. That expired last year. That make sense.
Believe me, I'm aware that trying to establish a new grading company to compete or overtake PCGS or NGC is akin to trying to hold your breath and free dive to the bottom of the Mariana Trench. My post was in jest towards a poster here who likes to post his grade guesses in GTG's after the reveal. He made a statement in another thread (a day before the announcement of CU being bought out) that he was talking to financial advisors about buying ICG and making it a "World Class" grading company.
Or they want to expand and think demand will be going through the roof. Also, foreign/overseas expansion a possibility.
Actually, I only see 1 true hedge fund in their Top 10 holders. This wouldn't be a classic hedge fund play....market cap too small, low liquidity. Good point....maybe we'll be dragged up by millions of new collectors bidding up our MS65's !!
For all we know, coin and currency collecting overseas could be close to zero and just a fraction of U.S. interest could represent 20-30% topline growth for a decade or two. If that's the case, the deal pays for itself on an IRR basis within 3 years even at $75/share.
If you have to lock the thread, that's one thing, but keep it in existence as there are tons of good information here. Thank You !
There were more before the dividend was cut a couple years ago. Their dividend used to be absurdly high but even after that institutions still had the majority stake
Where do you see that happening ? This isn't a conglomerate M&A where the sum of the individual parts is greater than the whole. I think they either run the business long-term or get-in and get-out. I presume this is a classic LBO with debt being used....you might very well see an IPO of the company in 3-5 years after a few years of private investor dividends. I'm not sure D1 and Cohen's Family Office want to run a collectibles business the next 10-20 years. This could be a fixer-upper.
It's a duopoly, though the duopoloy on high-end auctions (Sotheby's, Christies) has somewhat been invaded for certain items by Heritage and a few other auction houses/dealers.
We have to see what the growth is this year. Did they just pull demand forward like all the at-home plays or is this a SECULAR change with folks discovering Ebay, HA, SB, GC, etc. Is there a foreign demand component here ? I don't think getting back into currency (BTW, what's the new moniker for their currency grading ?) is enough of a growth driver. And this isn't a company with tons of fat where you can streamline and cut. Unless their corporate properties are on Rodeo Drive and 5th Avenue or The Hamptons and worth alot more today than years ago.....will be interesting to see how D1/Cohen fix this up and re-IPO it in a few years because I don't think they want to own this business for 10-20 years. If they do...it means something even BIGGER is afoot.