Collector's Universe Posts Quarterly Results

Think about this. The only way they're driving those results ($3.4 of the $3.9 million increase is from coins alone) is by accepting increasingly-greasy submission activities (First Strike, anyone?) and controlling labor....

Corporate America demands steady increases in profit. A truly healthy business doesn't always provide that. It's one of the reasons I like NGC in the long term better than PCGS - near as I can tell, NGC is privately-held and not answerable to stockholders demanding unrealistic performance. Constant growth in revenue and profit margin does_not strike me as a good thing, or even a safe thing.

Uh you mean something that NGC and ANACS does as well

How does PCGS still get away with using the First Strike designation?

I vaguely recall NGC and a lawsuit and shortly afterwards they stopped using First Strike and switched to the Early Releases labeling.

Forgive me if this is off topic.

-MV

Its not except that youre using it as a knock against their financials like its something that only they do. They all do it though so any supposed weakness in the numbers for them is a weakness for all of them.

Really though by far the largest submitters for first strike are the massive submitters who get it for pennies a label, their 2.8 million US gain wasnt because of that.

To me almost 20 percent of the profit coming from Asia which is like the holy grail of untapped business right now is the much more important business number for future growth. If that continues to hold or improve that stock price will likely keep climbing, if that falls off the map its going to tank back down to the 10 it was at instead of its current 20.




Their price more than doubled from a couple years ago, its not that uncommon for a major holder to sell some of their holdings after a significant increase when they can get life changing money from it and lock in the gain. Having the value in stock is nice, but until you sell its not going to buy you anything. Cabelas owners recently did the same thing as another example.

Now if he had sold all of it or to the point he minimized his position that would be a red flag.

All of it was reported in revenues with 61% of that being profit across the board for coins. Of the 3.4 million 2.074 million was profit at the reported 61% level. 366k of the Asian money would have been profit with that number with would be 17.65% of their total coin profit.

There could be variations from section to section, but if they brought in 600k they turned a profit in Asia. Their overhead is low after the initial investment in equipment as long as they arent gooning coins and having excessive payouts for them.




While I agree Asia will huge for who has the biggest potential for growth, I disagree their existence depends on it. Neither of them are likely to be going away any time soon without some drastic screw ups. Theres a chance way way down the line they could merge which would be more likely than a giant going under with the type of coins that have been entrusted to them.

Being part of Collectors Universe PCGS also has a huge advantage that NGC doesn't in that their income isn't solely dependent on coins. PCGS was only 68% of the CLCT profit so they have other sources of income that can get them through slumps and their sports section showed an increase which has been their biggest hindrance lately. Also they have their stock offering which as long as it can maintain a dividend offers a value even if that value is closer to the 10 it was at then the 20 it is now.

Another person who posted in another thread summed it up perfectly imo. The big two have been around almost 30 years when at the time people said it wouldnt last 10, just like the special labels and premiums are going on almost a decade now that werent supposed to last 5 years. It seems that every step of the way their failure or demise is constantly predicted but hasnt come.

At what point has their staying power been proven? They just both got through a terrible time in the market with what appears to be relative ease. They may not always be constantly growing revenue juggernauts, but considering their low overhead and ability to adapt to changing circumstances they both appear to be battle tested and still going strong. The only reason why I even say appear is because of NGCs financials all being internal being a private company. I would be shocked though if NGC was mismanaged to the point of barely scraping by

NGC is certainly better positioned than I first thought, if anything though that just speaks to the strength of both of them. Assuming their numbers are similar both are working off of huge profit margins making millions a year. Their business could significantly diminish and still be a profitable company making a lot of money.

I personally believe theres more left in the classic market for about another decade. Theres still a lot of good coins in albums and flips that will change hands at some point where at least some will end up in slabs. I dont believe top populations will explode (though they could on some things) but I wouldnt be surprised to see a lot of mid level stuff coming into the market. Even at more local/regional coin shows theres still dealers there with piles of slab worthy stuff who are just anti grading. Eventually that stuff is going to have new owners who might not share the same anti grading opinion. If push came to shove I would expect to see a new classic tier at a lower price trying to bring in some of that market.

Then theres also the snow ball effect where one thing of a certain type goes for big money and all of a sudden everyone and there cousin is sending them in. There is of course a finite amount of classic coins but at some point those clads arent going to be so modern anymore. A decade from now and youre talking a quarter century since the last true Washington quarter and 60 years since the composition switch.

I do agree the staying power of some of the bullion 70s is iffy with how good the mints getting at making them. Look at the West Point ASE set, minimal premium from the great quality. With that said as long as theres money to be made I dont see why it wouldnt continue. The days of 125 dollar ms 70 billion ASEs are probably over but even at 40 or 50 dollars with what the big boys pay for slabs theres money to be made there.

Like you I would like to see them both continue to stay strong as competition is always a good thing. Short of someone just throwing a stupid amount of money at one or the other to join up I dont see any danger of either going away any time soon.

One good point - I'll bet there's a lot of pent-up AU50-MS63's the owners haven't bothered submitting because the cost of slabbing would hit their margin too hard.




Another good point. I'm no kind of Modern fan, but I acknowledge the difficulty and potential future value of high-MS newer mintages - say, 1970 and newer. They're simply scarce above 65 and when that true rarity becomes more widely-spread knowledge, a grading wave will break.

You're making me more optimistic, man.