Coin and stamp dealer Noble Investments (UK) is growing profitably despite the downturn, thanks to its resilient rare and collectables market

Coin and stamp dealer Noble Investments (UK) is growing profitably despite the downturn, thanks to its resilient rare and collectables market

AIM-listed Noble Investments (UK) is something of a rarity, being the only UK-listed ‘numismatic’ trading and investment company. For the uninitiated, numismatics is the study and collection of coins and was a passion of Ian Goldbart, who formed the business in 2003 as a pure play coin trader and shapes its growth strategy to this day.

Trading mainly through Adelphi Terrace-based AH Baldwin & Sons, a long-established and well-respected name in the field, Noble, strong of balance sheet, has put together a formidable recent track record of growing sales, profits, assets and dividends.

In the year to August 2008, pre-tax profits grew by 21 per cent to £1.9 million, management increased the group’s net asset value by 10.5 per cent to £13.7 million. More recent interims to February, unearthed in April, revealed a near-40 per cent sales surge to £6.35 million, reflecting growth from the existing retail and auction divisions as well as the Apex acquisition, while profits powered ahead 26 per cent to more than £1 million. Noble even finished the half with an ungeared balance sheet, despite buying back 10 per cent of its equity for £1 million.

Other positives underpinning prospects include Noble’s focus on driving sales from the internet, as well as the recent weakness in the value of sterling, which is giving the company an edge when it comes to its overseas auctions.

Much of its success stems from its unrivalled expertise in the numismatic field. Impressively, its band of professional numismatists, sourcing and selling carefully selected coins as well as banknotes and other numismatic material, collectively boast more than 150 years of experience in the trade.

Noble’s coin-trading activities have shown surprising resilience, particularly with regard to high-quality, rare coins, while a recent acquisition has laid the foundations for expansion in the philatelic (postage stamps) market. Despite all of this, Noble, additionally expanding into other rarities such as commemorative medals and military decorations, remains substantially undervalued by the stock market.

Strategy

The architect of Noble’s growth strategy is its eloquent and ambitious founder and CEO, Ian Goldbart. ‘I was a stockbroker for 30 years and coin collecting was my hobby,’ he explains, ‘and it was my idea to take coin collecting, which was an undercapitalised cottage industry, and see if I could cherry-pick the best specialists, give them capital and move the trade forward.’

Since its formation, Noble has pursued this very strategy, taking individuals or teams of specialists, then providing them with the capital and infrastructure to grow their business, while seeking out opportunities to diversify the product range.

Already AIM-listed and active in the coin trading business at the time, Noble boosted its numismatic market presence in late 2005 through the transformational £4.45 million takeover of Baldwins, a business with a history dating back to 1872, in a transaction that took Noble into the auctions business.

Today, Noble is regarded as one of the most diversified coin dealers in the world, dealing in coins ranging from Ancient Greek, Roman and Byzantine (Gold, silver and bronze), to Indian, Russian, European and Islamic. In addition, it buys, stocks and sells colonial coins as well as top-quality English gold and silver hammered coins.

Through Baldwins (the largest UK stockholder of coins, commemorative medals, tokens and numismatic books), Noble organises auctions in London as well as New York, Singapore and Hong Kong.

Expansion and diversification are high on Goldbart’s strategic list of priorities. So just a few days before the end of Noble’s financial year, the company gathered up postage stamp trader and auctioneer Apex Philatelics for £1.34 million in cash and shares. Based near Lingfield in Surrey, the acquisition of the profitable Apex introduced a new revenue stream and has provided Noble with a strong expansion platform in the philatelic market.

‘Some of our growth has been organic and some acquisitive,’ adds Goldbart, ‘and there is plenty more to go for. We continue to look for acquisitions, either of companies or of individual specialists. And there is plenty of opportunity to expand, not just in the UK but in Europe and the US, where we could provide specialists with capital and they would then represent us.’

Management

Ian Goldbart, a collector of coins for more than 25 years with a network of numismatic contacts, is the man in the chief executive’s hot seat. Setting the company up in 2003 and becoming full-time CEO following the acquisition of the Baldwin companies in 2005, Goldbart is as informed about the City as he is about numismatics. He was previously a partner at stockbroker Townsley & Co, until its acquisition by Bank Insinger de Beaufort in 1999, at which point he became a director of institutional sales.

Providing further experience in the numismatics field to the Noble board is executive director Dimitri Loulakakis, a man with a global network of professional contacts and relationships forged over 40 years. In an indication of how respected his numismatic knowledge is, he also acts as a consultant and buyer for the National Greek Numismatic Museum as well as for the Greek Ministry of Culture no less.

Another numismatics mover and shaker is fellow executive director Seth Freeman, a history graduate who joined Baldwins in 1996 before rising to the role of director. Today, he runs Baldwin’s auction department, overseeing events in London, New York and Hong Kong.

Non-executive chairman Jasper Allen is a serial non-executive director and former member of the London Stock Exchange. Previously, Allen was a director of Insinger de Beaufort, Noble’s one-time broker and nomad.

Prospects

Noble offers exposure to attractive long-term growth in the original coin business and other rarities markets. In the numismatics field, a key strength is its ability to source top-quality rarities, demand for which has remained strong despite global recession.

The resilience of the rare coins market reflects the fact that supply is, by its very nature, constrained, while the fact that there is a worldwide pool of collectors ensures liquidity. Moreover, rare coins benefit from low correlation with other assets – since so many investors have had their fingers burned in property and the stock market, numismatics is growing in popularity as an alternative asset class.

Furthermore, rare coins are going for record prices. Noble’s auctions arm fairly recently produced a catalogue containing four ‘excessively’ rare Russian coins once owned by Grand Duke Georgii Mikhailovich. These subsequently sold for £2.1 million, with one in particular, the ‘Elizabeth 1755 20 Rouble’, fetching £1.78 million, a world record price for a non-US coin.

As Goldbart explains, ‘these [rare] coins come up once in a blue moon, so even in this environment, collectors will buy the high-quality stuff’. Significantly, long-term collections, deemed to be those owned for more than 50 years, have racked up compound annual returns of between 8.7 and 10.5 per cent.