Part III
The reporter showed the stamps to dealers in New York, London, Madrid and Barcelona. Their view: The stamps were at best worth a third of the value stated by Afinsa .
"Why would anyone want to buy these kinds of stamps, when there are so many better-quality Spanish stamps available in this country?" asked Hipolito Sanza, a prominent dealer in Madrid.
Though many stamp experts are wary of programs with promised returns, Afinsa makes no bones about the practice. A purchase of €600 of stamps from the firm in December '04 yielded a check dated for December '05 for €36, representing the guaranteed 6% return.
Afinsa says it bases its prices on published catalogs and discloses such to investors. In the case of the stamps bought by the hedge-fund representative, a spokesman said, the firm relied on the French catalog Yvert & Tellier.
But European stamp catalogs, many experts say, generally provide only "reference values" -- figures designed to leave dealers with ample room for discounting. Actual sale prices are often 50% to 60% lower than reference values. The American Scott catalog, in contrast, uses a "retail value" system that approximates market prices.
What's more, prices can vary widely even among European catalogs. While each stamp set bought by the hedge-fund representative was valued by Yvert & Tellier at €600 -- the price Afinsa charged -- the German catalog Michel suggests they're worth about half that.
"You really can't trust catalogs for stamp pricing," says Jose Maria Sempere, an auctioneer in Barcelona and former head of Afinsa's Portuguese collectibles operation. "About the only way you can really test value is in the marketplace, through auctions." He says he quit the firm two years ago, partly because of concerns about its pricing; Afinsa claims he was dismissed.
Ken Lawrence, vice president of the American Philatelic Society and head of its enforcement board, maintains that Afinsa and its main supplier, Greg Manning Auctions, have become so powerful in the market that they can exert pressure on catalog publishers to keep reported prices high. "Can any collector or 'investor' rely on catalog prices that are dictated by the principal market maker in stamp?" he asks.
Bill Jones, associate editor of Sidney, Ohio-based Scott's, disagrees that dealers can influence can influence the industry's catalog prices. Officials of Yvert & Tellier declined to comment.
Afinsa , for its part, maintains that catalog prices are entirely appropriate measures for actual prices. "The fact that some dealers feel this is a high price is really their problem, but in actual fact our clients are not of the same opinion," Joaquin Abajo, Afinsa's secretary general, wrote to Barron's in an e-mail.
It's possible, of course, that the relatively high prices of the two stamp sets bought by the hedge fund aren't representative of Afinsa's other sales. But in February 2004, the Spanish consumer group Organizacion de Consumidores y Usuarios issued a warning about the danger of investing in stamps, citing its experience with Afinsa .
Like the hedge fund, the group had purchased €600 worth of country stamps, in this case from Guinea and Colombia. The group says it found that the stamps had a retail value of no more than €200. |
