Barron's article part I. Leans very heavily towards short sellers!
Sticky Situation
By NEIL A. MARTIN
VICENTE MARTÌN PEÑA, a top executive of Afinsa Bienes Tangibles, was examining photocopies of two sets of stamps at the firm's luxurious new headquarters in Madrid. One set was issued by Bulgaria in 1980, the other by Ingermanland, an ethnic Finnish enclave in Russia, in 1920. A reporter from Barron's had brought the stamps to Pena and wanted to know what they might be worth.
"They are of too recent origin to really be considered investment-grade," concluded Peña, whose firm is a giant in the global collectibles market. Speaking alternately in Spanish and English, he said he definitely wouldn't buy them himself. "There are many people selling things in the stamp market who don't have many scruples and will take advantage of buyers who don't know much about philately," he said.
He asked where the stamps had come from.
"From you, sir," the reporter replied, producing two Afinsa contracts for the sets. The contracts, showing that each set had been sold for €600, or about $780 at the time, were signed by none other than...Vicente Martìn Peña.
In one transaction, Afinsa sold 30 stamps issued by Ingerland, a Finnish enclave in Russia, for about $780, but dealers say the set is worth no more than a third of that. Afinsa says its pricing is based on catalogs.
A silence fell over the room, as a small tape recorder whirred away on the conference table. "You trapped me," he said at length. "It was a very good trap, but now I have to find out why we put this price on the stamps."
The question is far from academic. Afinsa , the world's largest stamp dealer and, after Sotheby's and Christie's, the third-largest player in all collectibles, has been stirring controversy with an unusual stamp-investing program for the public. Under it, consumers buy stamps from Afinsa and the firm guarantees to provide annual returns of 6% to 10%. It promises to buy back the stamps, at the purchase price, at the end of the contract.
With Spain's benchmark government bonds yielding just 3.5%, it's little wonder that nearly 150,000 Spanish and Portuguese investors have signed up for the stamp investments. The program has become so popular that it accounts for nearly three-quarters of Afinsa's roughly $450 million in annual revenue. |
