Author Topic: CLCT - Collectors Universe  (Read 10900 times)

Foreign Tuffett

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Re: CLCT - Collectors Universe
« Reply #30 on: June 18, 2020, 02:59:32 PM »
A hedge fund has bought up 5% of the company and is seeking board seats

https://finance.yahoo.com/news/alta-fox-nominate-slate-six-202500211.html

Former Teldar Paper Vice President


Cigarbutt

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Re: CLCT - Collectors Universe
« Reply #31 on: June 19, 2020, 04:37:22 AM »
^These undertakings always bring mixed feelings.
It smells like somebody looking for a short term profit (looking for visibility etc).
My take: If it ain't broke, don't fix it.
i didn't know Harvard were awarding BAs in "Government". You learn something every day.

fishwithwings

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Re: CLCT - Collectors Universe
« Reply #32 on: June 22, 2020, 12:26:01 AM »
^These undertakings always bring mixed feelings.
It smells like somebody looking for a short term profit (looking for visibility etc).
My take: If it ain't broke, don't fix it.
i didn't know Harvard were awarding BAs in "Government". You learn something every day.

Great timing!  Almost time to close the books for Q2.

Foreign Tuffett

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Re: CLCT - Collectors Universe
« Reply #33 on: June 30, 2020, 09:09:31 AM »
I agree with the two posts above that are skeptical about the activist involvement. I have followed this name for several years, feel like I have a decent understanding of the biz, and just completed my second round trip in the stock.

Activist claim: Operating margins have declined over time
My thought: He's not wrong, but the likely culprit of the decline is the lower gross margin in the trading card grading segment versus the coin grading segment. In 2019 the card grading segment charged an average price of $9.36 per unit, but the comparable number for the coin grading segment was north of $17.

The trading card segment has grown much faster than the coin grading segment, so it stands to reason that margins for the overall company have come down.

Activist claim: The board doesn't own much stock, is full of senior citizens, and is long tenured
My thought: Again, he isn't wrong, but is completely ignoring the bigger picture. This is a company that just had a huge board shake up less than two years ago (September 2018), with President David Hall and his board allies leaving the company. This saved the company something like $800K per year pre-tax.

Also, while the board is long tenured, management largely isn't. Joe Orlando was appointed CEO less than three years ago. Steve Sloan replaced Orlando as the head of the card grading division. Brett Charville took the reigns at PCGS at the beginning of 2019.

Activist claim: "slow turnaround times and a record backlog at PSA"
My thought: Yet again, while he isn't wrong he ignores the larger picture. Due to COVID-19 CLCT's facility was closed for nearly a full month. At the same time, everyone being stuck at home + stimulus checks + enhanced unemployment payments resulted in an orgy of speculative activity in the trading card market. So yeah, no duh that the backlog has exploded recently. PSA has rapidly expanded its headcount since being allowed to reopen, but this isn't something it can solve overnight.

Activist claim: "CLCT has a more than capable leader in Joe Orlando"
My thought: This one I agree with. So why is the activist trying to throw Orlando off the board ("While we are nominating a full slate of directors, we reserve the right to remove a nominee(s) from our slate at a later date to leave room for Joe Orlando.")!?

I know this won't happen, but I would be very interested to hear the activist's response to my thoughts. I would also be interested in knowing how long he has had a position in the stock. The Q1 call featured zero questions...


* Edited to fix a typo

« Last Edit: June 30, 2020, 09:11:28 AM by Foreign Tuffett »
Former Teldar Paper Vice President

fishwithwings

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Re: CLCT - Collectors Universe
« Reply #34 on: Today at 08:03:48 AM »
Anyone know why revenue for the coin division declined so much from 2017 to 2018?