Shares of Santa Ana-based Collectors Universe Inc. are up about 200% for the year after completing a reorganization plan.
The small, thinly traded appraiser and authenticator of collectible coins, trading cards, tickets, autographs, memorabilia and stamps had a recent market value of $70 million.
Earlier in the year, new Chief Executive Michael McConnell slimmed down the company by selling lagging businesses and cutting expenses.
The company’s third-quarter expenses were $3.8 million, down 18% from a year earlier.
“We dropped what wasn’t working and focused on the basics,” said Joe Wallace, chief financial officer.
The company also bought back 1.75 million of its own shares for about $9 million.
And last month, Collectors paid $1.9 million in dividends to shareholders. Word of the payment in October sent the company’s stock up more than 70% in the weeks following the announcement.
The most significant changes came when Collectors dropped its unprofitable diamond and gem grading businesses, Gem Certifica-tion and Assurance Lab and American Gem-ological Laboratories.
Both were sold for losses after owning them for just a few years, Wallace said.
Collectors also laid off a number of workers. It currently has about 180 employees.
Stock-based compensation costs and ex-penses for professional services also were cut, among things.
“We took a hammer to our core business as well,” Wallace said.
The reorganization came after Collectors rejected pressure to sell itself from Bur-bank-based invest-or Shamrock Capi-tal Advisors Inc., which was backed by Roy Disney, the nephew of Walt Disney Co. founder Walt Disney, who died last week.
In a letter to directors, Sham-rock called the company’s past few years a “litany of lost opportu-nities, frequent chan-ges in strategy, near delisting from Nasdaq, incurrence of a series of operating losses and the board’s pathetic recent adoption of a poison pill” to thwart unsolicited takeovers.
Shamrock since has lowered its stake in the company from more than 7% to less than 5%.
“They could be completely out,” Wallace said. “It’s not public record yet.”
After McConnell re-placed former chief executive Michael Haynes, the company set out to change on its own.
Working?
The changes appear to be working.
For the three months through September, the company reported sales of $9.3 million, up 3% from a year earlier.
The increase was due to an 11% uptick in its coin business, which benefited from higher gold prices as its dealer customers tapped its services more.
That offset a 7% drag in its sports memorabilia business, which suffered from a weak economy, according to the company.
“Our strategy for the current fiscal year is to manage our core coin and trading cards businesses well—a simple ‘back-to-basics’ mandate,” McConnell said in an earnings statement.
Collectors saw net income of $1.7 million for the September quarter, versus a loss of $1.3 million a year earlier.
For the 12 months through September, Collectors saw revenue of $36 million, down 4% from a year earlier.
Collectors, which isn’t covered by any major Wall Street analysts, hopes its business will pick up with what many hope to be a stronger economy next year.
But it may have to run company moves by a new investor.
Recently, investor William Sams and his family paid $2.6 million for 388,500 shares, or more than 5% of its stock.
Sams might speak with the company’s management, board or other shareholders to enhance shareholder value, according to a Securities and Exchange Commission filing.
Collectors became a public company in 1999. It was started by David Hall, who wanted to commercialize a childhood business—he began selling rare coins as a 12-year-old on the streets of Santa Ana.
Hall is the company’s president and chief operating officer and owner of about 991,000 shares, or nearly $9 million worth.
The company’s main brands are Profes-sional Coin Grading Service, Professional Sports Authenticator, PSA/DNA Authenti-cation Services, which is for autographs, and Professional Stamp Experts.
On the coin side of the business Collectors competes with Numismatic Guaranty Corp., or NGC, in Sarasota, Fla.
In sports memorabilia it has a number of smaller competitors throughout the country.
