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10/21/02 Stanley Gibbons Tells Investors
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From Independent.co.uk

A serious collector in tune with the times

Business Profile: The head of Stanley Gibbons tells investors that stamps have got equities licked

By Nigel Cope, City Editor

21 October 2002

Enter the Stanley Gibbons shop on the Strand in London and you feel an immediate sense of nostalgia. On the left is a display of die-cast model cars from Corgi. There are stamp albums galore, as well as piles of price guides, books and, of course, stamps. It is quiet and dark and most of the customers are men. There is quite a high anorak count.

Upstairs is the autograph gallery, where signed photographs of stars are kept. They range from pictures of the actress Holly Hunter (65) to a signed photograph of Muhammad Ali flooring Sonny Liston in their 1964 rematch (575). Behind a glass screen are more expensive items, such as a 25,000 framed collection of John Lennon writings, including parts of the script from a 1968 play, In Our Own Write.

When Paul Fraser, Stanley Gibbons' chairman, emerges from the back office he is about as far from the philatelic stereotype as you can get. He is a youthful 47, with longish sideburns and a trendy high-buttoned suit with trousers that are flared in a very up-to-the-minute 2002 way rather than an out-of-date 1974 way.

"A lot of people keep stamp collecting quiet," he admits. "The Queen probably has the best collection in the world, and a lot of businessmen are collectors. Sir Ron Brierley [the New Zealand investor] is a collector and used to own a stake in Stanley Gibbons. Louis Figo [the dashing Portuguese footballer] is due to be given an award from the International Federation."

He says the UK is unusual in perceiving stamp collectors as figures of fun. "In Europe it is seen as a very classy thing to do. If you travel to Milan and Paris and you go down the equivalent of Bond Street, you'll find a stamp shop. And it will look very traditional and prosperous."

Perhaps philately's image will start to change now that stamp-collecting is increasing in popularity as an investment because of the stock market crash. Stanley Gibbons has certainly noticed a change. In August the Aim-listed company reported trebled half-year profits of 2.1m, helped by the sale of a rare 71,000 Mauritius stamp.

"The thing about collecting is that it's a tangible asset," Mr Fraser says. "Historically, prices might go up by 5-10 per cent a year, so when interest rates were 10-12 per cent it didn't even come on the radar. But in time of low inflation and low interest rates, things like this come into their own."

It was the same in the early Seventies, when stock markets also crashed, he said. "In terms of investment, stamp collecting is seen as a safe haven. Stamps are portable, easily traded and the prices are readily available."

Asked if we are seeing an asset bubble build up in alternative investments just as we saw in equity markets, he says: "At the end of the day, it depends what you buy. You can always sell quality."

Mr Fraser is not a stamp collector himself. He is more of an autograph hunter. As a keen philographer, he has more than 10,000 items, worth around 100,000.

"I do like history and with autographs, manuscripts and letters things go back 500 years. If I'm holding a Charles Dickens letter I'll think that he sat there writing this in candlelight with his quill. That brings it alive to me."

A bit like the protagonist in Zadie Smith's new novel, Mr Fraser is on the hunt for particular treasures in his case, a Van Gogh letter and original lyrics by the Beatles.

"It's an unusual market. If you go up to Paul McCartney in the street and get his autograph on a bit of paper, it might be worth 100. But if you happened to be walking along with a guitar and you get him to sign that, it would be worth a lot more.

"I've got a lot of good signed photographs of people taken by famous photographers as well as lyrics from the Rolling Stones and the Who. It's fascinating because there'll be a song you've known for years and you'll see all the crossings out and see that it could easily have said something completely different.

"I also have quite a lot of signed menus. Often there'll be a dinner given for something like the first flight across the Atlantic. So you'll see the menu, who was on the guest list, who gave the speeches and so on."

It is as a collector-turned-entrepreneur that Mr Fraser made his money. He set up a chain of rare record shops, then dabbled in antiques and property. He started making stock market investments and put money into Stanley Gibbons in 1989. By that time the business had been trading for more than 140 years. Edward Stanley Gibbons had founded it after the purchase of a sackful of rare triangular Capes from two sailors who had just returned from South Africa.

Mr Fraser bought a further 30 per cent from Sir Ron Brierley, then acquired the whole company for around 5m.

Just a few years later he struck what looked like a terrific deal when he sold it to a mail-order company called Flying Flowers (now called Flying Brands) for 13.5m. But three weeks after the all-share deal, Flying Flowers issued a shock profits warning and the shares sank, costing Mr Fraser millions. "Clearly I was shocked. The business had got itself in a bit of a tizz and started buying lots of stock and credit limits weren't properly controlled."

Eventually Stanley Gibbons was demerged as a separately quoted company in 2000. "We've got the business back to the core activities. What we are best known for is price guides and catalogues. Getting stamps in, cataloguing them and selling them is very labour-intensive."

While revenues will mostly come from catalogues, advertising, stamp sales and the sale of stamp albums and other accessories, the longer term aim is to put the internet at the heart of the business.

For example, Stanley Gibbons' 2001 catalogue came in three volumes two inches thick, and cost 100. Next year's version will be in four volumes. Putting it all on the internet and selling advertising and other services on the site should raise more funds while cutting costs.

"It will be free for basic information but it will probably be tiered so that other services will be available on subscription," Mr Fraser explains.

The business is still working on a new service which will enable collectors to put up their own collection and have its value regularly updated. Mr Fraser has also moved into eBay territory with stampsatauction.com, which enables individuals to sell their stamps on the website in return for a commission.

The company hopes to raise the investment profile of stamps by launching its SG100 index, recording the fluctuating prices of the world's most valuable stamps. In other words, you will be able to benchmark your penny black against the performance of your BP shares.

PAUL FRASER AUTOGRAPH MAN

Position: Executive chairman, Stanley Gibbons

Pay: 94,000

Career record: Ran businesses in rare records, antiques and property before first investing in Stanley Gibbons in 1989. Chairman between 1990 and 1998, and again since 2000.

Interests: Collecting autographs and pop and rock memorabilia.

Advice to collectors: "It is best to theme your collection. But I do exactly what I tell everyone not to do and buy whatever takes my fancy."

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