Hot Topics by Laura Sperber - Legend Numismatics
Consolidation in reverse! I expected a few firms to fold and smaller dealers to shut. Out of the blue comes the mega merger of Stacks and Bowers and Merena. I was not so shocked because for the last 3 years it had been no secret I tried to talk the owners into selling Stacks to Legend. The apparent loss would have been too great and doing a deal this way, they get a shot at some stock that could go up. Regardless, I feel it was a tragic end to once powerful and glamorus dealership.
It is my strong opinion, in this mergers case, bigger is NOT better for the coin market. Why? We already have one mega monster firm who obviously has reached their limits-Heritage. They know they can't expand any more with in coins, so they did the smartest thing, branched out into other areas. I give them tons of credit for that because it seems as they grow, they do not forget their roots and promote coins to this new crowd.
To satisfy two large auction companies with huge staffs, where are all the coins going to come from? These firms need expensive coins to generate large fees. If these firms on their own were not getting much prior, where are the coins going to come from after the merger? Think about how big each firms overheads are. Will fees rise? Will coin values artifically inflate because of excessive tiny demand with each auction?
This new mega merger concerns me. My goal in going after Stacks was not to make it bigger-just better. In my opinion, the potential of Stacks combining with Legend was huge. I believe it would have greatly benefited collectors. I do admit, I was nervous about where the consignments would come from, but Legend has sold OVER $600,000,000.00 RETAIL so we have some contacts. I have always viewed owning an auction company as a natural extension for us and our customers. Unfortunately, I do not have the time or energy to try again to enter the auction field from scratch. I saw the demise of Stacks as inevitable. I would have loved to have fixed it. It is frustrating to me ownership decided to end the misery this way. When I was told about it I was angry for one second and have moved on. Now I just wonder if bigger is really better? And how will it effect the marketplace?
I do wish The B+M team good luck in their merger. Greg Roberts, CEO of Spectrum is one of the sharpest executives in this business.
My prediction is that FUN will be a good show. Out of the clear blue, collectors were buying strong in December-a time when they normally fade away. Yet again, only supply was the problem. So if nothing else, dealers will need to replenish at FUN.
Gold coins are still screaming crazy hot. Prices are NOT moving up, but collectors do want them. We think 2011 will be the tell tale year for gold. It will be interesting to say the least.
The Heritage Sale will be insane-espcially the RARE PROOF GOLD. The best way to determine how the market is-watch what the really FRESH material does. The B+M Sale has the Malibu Collection. I predict strong prices for that too. The demand is clearly bigger than the supply of great coins right now. Thats why I am so perplexed at how TWO HUGE auction houses can survive and thrive. Maybe I just do not know economics.
LEGEND AND THE MARKET
2010 was a surprisngly good year for us. Legend was profitable. We sold $45,000,000.00 worth of coins to collectors. That figures does NOT include our auction representation. I am also extemely proud to say we sold over 10,000 INDIVIDUAL McClaren coins (that is a ton of coins!). Those ranged from $100.00 to $2,000.00 each. Our market is really the highest graded rarities, but with McClaren, we sold as many smaller coins as anyone. We are NOT just a dealer who sells expensive coins! Legend definately was a market leader in most catagories.
In 2011, I can promise Legend will NOT look to get bigger. I have turned down requests to grow. Our formula is perfect or close to it. We will probably add a person, but our plans are to be BETTER, not bigger. I really do not see the room to grow. I had trouble supplying coins to collectors in 2010, so I have no idea where I would find additional coins to cover a larger overhead.
Financially, we are as big as anyone. Maybe thats why we buy tens of millions of dollars from the public each year quickly and quietly. If any size deal comes up (try us on a $100 million), Legend can easily buy it. We are one of the biggest market makers of CAC coins. We are no nonsense when it comes to how we deal. We are also loyal as heck to people who are the same to us (we have MANY customers who date back to the late 80's still active with us). Unlike other firms, George and I have been partners since 1986, and Bruce since 1997. If you notice, most other firms are revolving doors trying to act stable. There is something to be said for longevity of a partnership in the coin field. The only thing we lack, the ablitity to make up good stories to fool people. Sorry, thats just not our style. Also, you can find a copy of our Mission Statement on our web site.
My point, the beginning of 2011 you will see many changes with dealers. Currently, there are a few bigger retail dealers who are operating pretty much dead broke. You WILL see them fail, so do NOT be surprised. There will be a consolidation-which will be healthy. I was just stunned that an expansion (Stacks and B+M) could try and happen in this enviornment.
Back to looking out the window. Since I started writing this over 4 inches of snow have piled up (an hour and half) ! The winds are now easily 40 MPH plus. Can't see the beach. Nothing like a good blizzard to stimulate me to write a Hot Topics!
Everything said in this article is the sole opinion of the author and not any other member of Legend Numismatics.
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