Part IV
Afinisa spokeswoman Sonia Rodriguez Mosquera claims the consumer organization had retracted its complaint. But the group's Ileana Izverniceanu says that isn't so, and Barron's found little evidence of a retraction.
Meanwhile, some stamp professionals say Afinsa has been shopping actively over the past few years for large volumes of cheap stamps with high catalog prices -- to resell through the investment program.
Onno Breouwer of Breouwer Philatey in Kollum, Holland, confirms that his firm had been a middleman for such purchases by Afinsa . Most of the stamps were from Eastern Europe, not unlike the ones sold to the hedge-fund reps. Breouwer says he stopped supplying the stamps to Afinsa because his profits on them weren't sufficient.
Afinsa's Abajo says there's nothing unusual about Afinsa's strategy. "I have always thought that the usual proceeding of a dealer's activity is to sell something for a higher price than the one paid at time of purchase," he says.
The question is whether the investors in the program realize, or care, that some of their stamps might be worth considerably less than what they'd fetch at an auction.
They may not think much about the real values of the stamps, focusing instead on the promised returns over periods as long as 10 years. And most people probably aren't in the program for love of stamps: Afinsa , rather than the consumer, holds the stamps, preserving them in a climate-controlled vault for resale and providing only photocopies.
It's unclear whether Afinsa will always be able to honor its promise to buy back the stamps. If Spain's economy weakened, for instance, and investors lined up for redemptions, where would the money come from? At the end of 2003, according to financial documents filed annually with the Spanish government, the company reported a reserve of €57.9 million and owner's equity of €40 million, for a cushion of €97.9 million. Plus, it could conceivably liquidate its shares of Greg Manning for about €139 million, at the stock's current price, for a grand total of €237 million. But that pales in comparison with the value Afinsa puts on the stamps now in its vault for the program: €1.2 billion, based on contract prices.
To cover massive redemptions, therefore, Afinsa apparently would have to sell many of those stamps -- and hope for prices similar to those promised to investors. But if a portion of the stamps were initially valued too optimistically, getting those promised prices would be difficult.
Afinsa appears unfazed by this prospect, saying it has ample reserves of cash and short-term investments; its financial statements put those at €38.5 million. And the firm says mass redemptions are highly unlikely. "If the U.S.A. was called upon to answer all of its creditor nations at the same time, what would happen?" general secretary Abajo wrote. "That scenario is impossible to imagine, no? Then this is the same scenario for us -- and our 25-year history guarantees us that." |
