The answer is not what you would expect. This company should do very little. The smart thing is to wait for the market. Not try to create it. The market will arrive when it is ready. Not before. Just treat your customers fair and try to run a tight ship. Patience is the key here.
Any coin dealer with a gross profit percentage above 15% on any decent volume is doing superb. Not sure where you got 30-40%. 10% over graysheet for high end material is cheap! I just paid 50% above and 225% above for two very high end coins. Auctions are certainly where the money is at, I agree!
The sheets are always low when someone wants to buy a coin, but whenever you want to sell the market is sooooo soft. And please don't tell me how Legend can't find coins, blah, blah, blah. I've tried dealing with Legend on PCGS MS64 - MS67 seated quarters, both buying and selling. Whenever I have an interest in a coin its so super rare I couldn't let it go for anything less than 10% over than Greysheet. Oh you were wanting to sell, quick someone get my bluesheet. Sorry that BS has driven me out of being a coin collector. A 30% to 40% spread is too much for me to give away when I'm just wanting to have fun collecting.
Wait, before you say auctions - they aren't hurting either. 15% buyers fee, 5 to 10% sellers fee. Not a bad margin for not having to carry any inventory.
I call them like I see them. CLCT management did not know what to do when they had money. Now money is getting rare. They should have bought an income producer when they had the cash. No choice now but to hope for the next big boom in collectibles to be real soon. And it might just be.....in which case we have a $25 stock here. Cross your fingers.
"CLCT is going to make it only if we have another coin boom"
That is not much of a ringing endorsement TT!
Personally, I believe that this company is going to be around for a long time, although I also believe they already missed their best chance to make it big. Since the IPO money is all gone, they really have limited resources to expand - especially when incurring losses. Some tough decisions are going to have to be made in the near future about which unprofitable divisions to cut back on. Having PCGS and B&M as a profit base is an enviable position to be in. Losing money despite that solid foundation is not.
I look for cutbacks in the near future unless all of a sudden everything clicks. This will stabilize the stock as profits stabilize, but they still have the same old problem - how long will investors hold their stock with peak earnings of a few cents per share, limited growth prospects and no prospect for dividends anytime soon?
I made it clear that the company needs to be a very tight ship. Costs should be cut where possible and entrenchment, not expansion the key to success. For instance in the coin business, you may not make money every year. Overhead is not made from the sale of a 50-D nickle. Or a $10,000 93-S either. You need a major collection. You don't get it, you don't make it. In the interim you must be very careful with your money. CLCT is going to make it only if we have another coin boom. It could be this year or another five years. The key is to survive till them. It is OK to disagree with me. I was wrong once back in 1933....LOL
Terrible T - I'm not sure I understand what you are saying. Are you saying that it's ok to lose tons of money right now because the coin market is not at its peak? Are you saying that the company should set its overhead for a peak market and so what if it loses so much money in the meantime that its not in business when that peak comes? Are you so enamored with the possibility of the coin market peaking and what this MIGHT do to CLCT's earnings that you fail to notice the direction this company is headed?
The crackout game was far more important to CLCT's earnings than a coin market peak will ever be. In case you didn't know, the crackout game is pretty much over and the market is pretty hot right now! What exactly are you prescribing patience for??????
I see you don't understand. It is not OK to lose tons of money. A tight ship means cut any overhead you can. Quit trying to market anything. Let me repeat myself. We are not in a coin boom and will not be until common coins are in demand. Silver will have to break $10 and gold will have to pass $400. Very few dealers are willing to buy common inventory for any kind of a fair price. Indian cents are worth less then a dollar. IF and when we get a coin boom you will see submissions increase and the auction business will increase five fold at the very least in dollar volume. I have coins for sale all the time and don't know of any dealer that is anxious to buy anything. We all want underpriced and undergraded but just who is it that wants anything else??????
T, you are absolutely correct. CLCT should be doing everything possible to cut overhead, etc. Instead they run out and hire new people with fancy titles who have had no experience in the collectibles markets. It will be interesting to see what the upcoming quarterly #'s look like. Because of the large decline in the # of items being submitted for grading I wonder if management has put itself in a position where there is no possible way, right now, that revenue can match or exceed costs.
Let's look at the stellar results achieved by those folks with the collectibles market experience:
Period Ending ......... Gain/(Loss)in 000's
June 30th, 2001 ....... ($ 1,509)
Sept 30th, 2001 ....... ($ 1,086)
Dec 31st, 2001 ....... ($ 1,100)
How much worse do you think the fancy titles are going to do?