Collectors Universe, the parent company of the coin grading business PCGS, was sold for about 700 million dollars to a group of private investors. Nat Turner, a collector of sports cards, acquired the company for the price of 75.25 dollars per share together with D1 Capital Partners and Cohen Private Ventures. The deal is to be closed in the first quarter of 2021, as Collectors Universe stated in a press release on 30 November 2020. Coin collectors will be affected by this transaction, too.
PCGS – 30 Years of Coin Grading
PCGS (Professional Coin Grading Service) was founded in 1985 by coin dealers as a company providing an independent grading service for coins, which are then sealed in holders to make sure their condition does not change in the future. A few years later, the company expanded its grading portfolio and changed its name to Collectors Universe (trading code: CLCT). From then on, coins were just one group of many collectibles the company specialized in, however, they were by far the most important one. Coins were considered a field of collection for adults – and have always been investment products too. The field of sports cards on the other hand, which is extremely popular in the USA, remained a sector for young people, which the PSA (Professional Sports Authenticator) focused on. The former President of PSA, Joseph Orlando, became CEO of CLCT in 2017. However, things seemed to remain the same for the time being.
Covid Makes Sports Cards Overtake the Coin Business
During all these years, the market value of CLCT bounced between 14 and 25 dollars per share, with occasional peaks of about 29 dollars. A solid figure for investors. And then came the surprise: since January 2020, the company’s market capitalization has climbed to unprecedented levels. In January the share price had been roughly 15 dollars. When CLCT was sold, its market capitalization was more than 70 dollars per share and the buyers raised its value by another 3.7% to breath-taking 75.25 dollars. This makes you wonder: how can the company be suddenly worth so much?
A.J. “Bert” Moyer, Chairman of the Collectors Universe gave a clue in his statement: “After careful consideration, we are pleased to have reached an agreement that reflects the remarkable value creation Collectors Universe has achieved through its consistent execution during these challenging times. This transaction will deliver an immediate cash premium to our shareholders, and create exciting opportunities for our employees, collectors and dealers around the world.”
There’s a good reason why he mentions the pandemic. The coin trade is doing well – despite Corona, one must add. Sports cards, on the other hand, are doing tremendously well, and Corona seems to be the very reason for this. What had previously been a children’s hobby is currently booming so much, at least in the USA, that cards left the numismatic niche hobby in the race course of the market in the dust. Therefore, it is certainly no coincidence that the group of investors that are to be CLCT’s new owners is led by Nat Turner, a well-known collector of sports cards, who shares this hobby with Joseph Orlando, CEO of CLCT. Orlando will continue to run the company.
What Are the Consequences for Coin Collectors?
What does this mean for coin collectors? Let’s be honest: we don’t know it yet. John Feigenbaum speculated that CLCT might sell the company’s numismatic division. Certainly, Feigenbaum adds, the future for CLCT will no longer be characterized by the coin business but by the profitable trade in sports cards.
However, we don’t know if this trend will continue. The investors apparently do believe that it’s a long-term phenomenon. Although coins aren’t experiencing such a drastic increase in value as sports cards do, they are quite resistant to the adversities of economic developments. Nobody can be sure that the world of sports cards won’t collapse as quickly as its value skyrocketed. Healthy growth looks different. Then, CLCT’s opinion of coins could change again for the better – provided that PCGS will still be part of the company.
You can watch CLCT’s share prices on the NASDAQ website.
You can read the official statement on the website of CLCT.
Bloomberg fills you in on the financial details of the transaction.
And here you can read John Feigenbaum’s analysis.
If you haven’t heard of these cards before, have a look at the PSA website, where you can find an overview by category telling you how much individual cards are currently worth.
