Let’s say that you’ve done your research and you’re interested in antiques as an investment. Congratulations! You’ve taken an important step forward to secure your future.
But let’s also assume that, for whatever reason, you can’t actually buy physical antiques. Maybe you don’t want to go through the hassle of buying and selling physical assets. Or perhaps you would love to buy some high quality vintage items, only to find that all of your free cash is tied up in retirement accounts.
The latter scenario can be a big problem for antique collectors because, with few exceptions, art and antiques are forbidden in retirement accounts. Yes, there is one little known loophole for precious metal IRAs that allow U.S. citizens to own select, numismatically-oriented coins in their retirement accounts. But this unusual trick only works if coins are your thing – and for a lot of antique lovers, they just aren’t.
So the question looms: what if you want to invest in antiques, but discover that owning physical examples is off limits for whatever reason? Are there any substitute stock investments for antique collectors out there?
Well, the answer to this question is complicated. Yes, there are definitely some companies that deal in businesses that are tangential to the antiques industry. But there aren’t very many of them. And they oftentimes dabble in other, unrelated business lines, as well. Regardless, there are still a few antique or fine art-themed stock investments that rise above the pack.
So without further delay, here are the 5 best stock investments for antique collectors, as compiled by the Antique Sage:
1) eBay Inc. (NASDAQ Ticker: EBAY)
eBay is the global e-commerce giant that got it all started way back in 1995. It connects buyers and sellers all over the world, and many of them choose to trade antique watches, coins, art and silver, in addition to many other collectibles. Although eBay isn’t a pure-play on antiques, the e-commerce platform is well-established and very profitable.
eBay is the largest company featured on this list, with a gargantuan market cap of almost $42 billion and 2017 revenue totaling more than $9.5 billion. In spite of its solid profitability, the company does not pay a dividend, but instead chooses to deploy its excess free cashflow on share buy-backs. The stock currently trades for $34 a share and has been flat over the past 12 months.
It might not be the most innovative stock investment for the antique collector, but eBay is still a good choice with high profit margins.
2) eBay Inc. 6.0% Notes due 2056 (NASDAQ Ticker: EBAYL)
This next security is a bit of an anomaly. It isn’t a common stock like the other securities in this list, but is instead an exchange-traded debt security, otherwise known as a baby-bond. Small investors can invest in these bite-sized, $25 increment bonds while enjoying the convenience and liquidity of a security that trades on a major stock exchange.
This particular exchange-traded debt security is a senior, unsecured bond issued by eBay with a $25 par value and a 6.0% interest rate. It can be called (redeemed at par value) at eBay’s discretion anytime after March 1, 2021, although the final maturity of the instrument isn’t until February 1, 2056.
While baby bonds don’t have the same upside potential that stocks do, they are much lower-risk because the issuing company is legally obligated to make both principal and interest payments. EBAYL currently trades for around $26 and would be the perfect security for antique enthusiasts looking to add stable income to their investment portfolios.
This security has been called and subsequently delisted.
3) Etsy Inc. (NASDAQ Ticker: ETSY)
Etsy is a successful e-commerce platform that specializes in handmade and vintage goods from small sellers. It has done incredibly well in this niche, carving out an important online venue for artists, handcrafters and antique dealers alike. And while it is a stretch to say that Etsy deals exclusively with art and antiques, it comes pretty close.
Etsy has a market cap of $5.9 billion with annual revenue of $441 million. While it doesn’t currently pay a dividend, Etsy has experienced robust revenue growth over the past few years and finally became profitable for the first time in 2017. The stock trades for about $49 a share.
I really like Etsy as a platform and believe it has excellent growth potential, making it one of the better stock investments for antique aficionados.
4) Collectors Universe Inc. (NASDAQ Ticker: CLCT)
Collectors Universe is a third-party authentication service that is focused on a few specific areas in the antiques and collectibles market. It runs three different business units: PCGS, PSA and PSA/DNA.
PCGS (Professional Coin Grading Service) grades and authenticates old and rare coins. PSA (Professional Sports Authenticator) certifies vintage sports cards. PSA/DNA (PSA/DNA Authentication Services) authenticates celebrity, historical and sports autographs. The company collects fees for performing these services, but in return its third-party certified collectibles are easier for collectors to buy and sell on the secondary market.
Collectors Universe is a relatively small company with a total market cap of only $121 million and annual revenue of around $70 million. However, it makes up for this by occupying an important niche in the antiques market that has little competition. Because of this, CLCT is quite profitable and pays an enticingly high dividend.
Out of all the stock investments listed here, I believe that CLCT is the most intriguing from a conceptual standpoint. CLCT trades for around $13.50 per share at the moment.
This company has been taken private and subsequently delisted.
5) Sotheby’s (NYSE Ticker: BID)
Sotheby’s is one of the world’s two major art and antiques auction houses. It organizes and markets public sales of high-end art, antique jewelry, medieval manuscripts, rare coins, vintage watches and fine wine, just to name a few. If you want to buy or sell the very best of the best that the world has to offer, then Sotheby’s (or its rival, Christie’s) is the place to be.
This makes Sotheby’s one of the leading stock investments for the antiques collector. The firm has a market cap of $2.4 billion and annual turnover of nearly $1 billion. Because it is an established, top-tier auction house, Sotheby’s is reliably profitable, although the company chooses not to pay a dividend. BID currently trades at $46.50 a share.
I do feel compelled to point out one potential weakness of Sotheby’s business model: it has evolved to cater exclusively to a high-end clientele, thus divorcing the firm from trends in the broader antiques market. This could be either bad or good, depending on your industry outlook.
As an aside, I would also have also included Sotheby’s chief competitor, Christie’s, on my list of the 5 best stock investments for antiques collectors, but it was taken private by Groupe Artémis S.A. in 1999.
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