Investing in the autograph market

on Freitag, 14 Januar 2011. Posted in Investment Guide

by Rob Mackrill

Would you pay £10,000 for an autograph? Not just any signature, of course... and, in truth, more than one. In this instance, we’re talking John, Paul, George and Ringo. 

They are written on a 1965 photograph of the Beatles on location in the Bahamas for the film Help.

It is a small slice of history and, for fans, an enjoyable possession to own. Alternatively if the stars of the silver screen are more your style, you could pick up a postcard-sized autographed picture of Audrey Hepburn for a mere £595; or a signed picture of Frank Sinatra crooning into a microphone for £1,500 or perhaps even ‘The Godfather’ himself – £1,950 for Marlon Brando’s signature alone.

Though not for everyone, investing in the autograph collectors market is a fast-growing business that is attracting an increasing number of devotees. One 
such was high profile publisher Malcolm Forbes, who commented:

“None of my other investments give me the joy that autographs do, because they make me feel that I am holding a piece of history in my hands. In my view, they are the most undervalued of all areas of collecting, especially when you consider what people are paying for even second-rate paintings.”

It has proven no slouch as an investment either, with the Fraser’s 100 Autograph index having massively outperformed both the UK stock and property markets since 1997 according to London-based Fraser’s Autographs, Europe’s leading autograph dealers.
Their index is compiled of the 100 most sought-after autographs in the marketplace. BP and Royal Dutch Shell may be the most valuable companies in the FTSE 100, but it’s the Beatles’ signatures that come in at number one and two in the Fraser’s 100. And the average value of their autographs rose over 200% between 1997 and 2004.

This is followed by Apollo 11 crew – Neil Armstrong, Michael Collins and Buzz Aldrin. 
Apollo 11 autographs, though of lesser absolute value, grew even faster than the Beatles – up over 350% since 1997. Fraser’s Autographs explain the value here is not only in the historic achievement of the first moon landing but also the reclusive Armstrong is adjudged the world’s most difficult living signature to obtain. For the golfers amongst our membership, Tiger Woods weighs in as runner-up non-signer.

Investing in the autograph collectors market: What to look for when buying

The key elements driving value in this collectors market are a combination of the celebrity power generated by the individual or group concerned, together with the rarity of the signed example. Experts in popular entertainment at auctioneers Christies advise only the biggest screen stars are valuable and cite names such as Marilyn Monroe, James Dean and Greta Garbo. If the stars themselves have died, this is only likely to add to their value.

Established in 1978, Fraser’s Autographs is a wholly-owned subsidiary of world-leading stamp dealers, Stanley Gibbons plc. (‘the geezers with tweezers’) and trades from the same offices in London’s Strand.

The autograph business now accounts for around 10% of group turnover. Business is brisk and interest is increasingly global. As well as the traditional UK and US markets, new markets are opening up. Wealthy Russians now account for around 10% of sales, amongst them a signed autograph of Tchaikovsky hanging in a Moscow bank. In an inaugural Shanghai exhibition in May 2005 the company found huge interest amongst the Chinese, in particular, for iconic figures such as Audrey Hepburn, Marilyn Monroe and Elvis.

Alternative investments such as autographs and stamps have seen renewed interest on the back of the prolonged bear stock market of 2000-2. Stanley Gibbons has been a major beneficiary of the rekindled investor enthusiasm for real assets.

Investing in the autograph collectors market: How to earn a minimum 70% in 10 years

So confident are they in the rising future value within the autograph and stamp markets, they are offering investors an interesting deal. A deal where your upside is unlimited and your downside a minimum guaranteed 15% return after three years or, for those willing to commit to a longer time horizon, 70% return after 10 years. So you can’t lose.
I have to confess at this point, the word ‘guarantee’ in the context of investment makes me nervous. It brings back memory flashes of supposedly copper-bottomed financial products of yesteryear that had the fatal word strapped to them. I’m thinking of course of the ‘guaranteed’ annuities promise that brought Equitable Life to its knees; the ‘guaranteed’ income bonds linked to plunging stock market indices which wiped out investor’s capital and the ‘guaranteed’ company pension schemes that 
destroyed employee pensions when the sponsoring company itself went bust.

So let’s look at this with some caution. Stanley Gibbons are offering investors a guaranteed minimum return contract which applies either to autographs or stamps based on predetermined time periods. The minimum investment amount of £5,000 with contract terms ranging from three to 20 years. Once purchased, you can enjoy the autographs in your own home or leave them in safe storage free of charge with Stanley Gibbons.  
For those concerned about whether their particularly screen or music hero did actually 
sign, Fraser’s Autographs supply a guarantee of authenticity on all purchases. Plus holdings stored with them are regularly reviewed and valuation updates provided.  
At the end of the period you can choose to roll over into a new contract and continue to enjoy ownership or sell privately, via an auction or back to Stanley Gibbons themselves.
Contract Term            Minimum Annual        
(Years)                            Return    0
3                                           5%    £,7
5                                           6%    
10                                         7%    £
Note the return is based on a simple – as opposed to compound – interest. Over time, this is a lesser promise. A 7% simple annual return over 10 years equates to a compound annual return of 5.45%. Nevertheless, all things being equal, this is your worst case scenario as an investment return at the end of the period.

What is the quality of this guarantee? Well, it comes from parent company Stanley Gibbons Ltd. Stanley Gibbons is the world’s leading name in stamp collecting and has been around a long time, having been originally established in 1856. Today it trades as a public company listed on the London AIM market. It has a value of almost £35m and recently reported profits of £2.8m on sales of £13m. Sales have grown in each of the past five years and profits are up in four of the past five years.

In addition, Stanley Gibbons is debt-free. That said, even if the worst came to the worst and Stanley Gibbons went bust you would still be the rightful owner of the autographs you had purchased. That in itself is a major attraction of buying real assets in the first place.

For the purists, investing in ‘alternative’ assets of this nature which yield no income and are essentially bets on future value increases, this is more a collector’s hobby than an investment. But for pleasure of ownership with a guaranteed return, a picture of La Monroe in her prime has to be a good deal more pleasing on the eye than a dusty old share certificate.


Rob Mackrill
for The Daily Reckoning