Invest in CGC (the company)?

[BassGMan]

Hi. OK, this post is just for the fun of it and does not have anything to do with reality but.....

 

If CGC was to go public as an individual small company (let's say ticker symbol CGCX) and they were to start selling their stock on Nasdaq, would you buy the stock?

 

Would this company be a good long term investment idea? Because of upcoming competition in their current marketplace, is their monopoly of the comic grading service in jeapardy? Can they grow and make even more money, expand into grading non-comic mags like Playboy, Life, etc., or start grading pages of original art and more? Would you invest in this company as opposed to other small cap stocks or funds? Just curious is all. Just wondering how much confidence we all have in the longevity and health of this company over the long term. The CGC staff may get a kick out of this info as well. Don't forget, as a shareholder you would have voting rights and could possibly have a microscopic sized say in some major decisions being made within the company.

 

As for me? I would say pass. I believe the massive growth of CGC is mostly behind them and although they will continue to grow, it will be at a much slower pace than the first four years, thus creating a stock that may not move that much. However, getting in on the ground floor 2-4 years ago would have made a great investment. ----Sid

 

P.S. One further thought, if you believe that CGC may not last another ten years, say CGG for example, came up, improved on their idea and knocked CGC out of the marketplace. How would your Silver and Golden age CGC slabbed books fare in a marketplace where the service that graded them was now out of business? Would you buy a slabbed book that was slabbed by a company now out of business?

[sterlingcomics]

I'd buy a few shares, but several internal processes (communication on turnaround times or general improvement of turnaround times) would need to improve. I don't think shareholders could argue with the bottom line however.

 

Interesting thought on the value of the book slabbed by a defunct company. In a strange way the slab could potentially be a collectible in of itself, but I think it could potentially harm the market value of the book. My .02.

[garthgantu]

I'd buy a few shares, but several internal processes (communication on turnaround times or general improvement of turnaround times) would need to improve. I don't think shareholders could argue with the bottom line however.

 

I'd buy one share - and have it slabbed!

 

I'm not sure how you come to the conclusion that "shareholders couldn't argue with the bottom line" ? You're implying that CGC is making $ hand over fist..? I'm guessing that, while they're probably making fairly healthy margins on a per-book basis (and certainly on high-value books that end up costing $500 or $1,000 to slab), they're probably still paying off the startup costs. So if you owned shares, I'm not sure you'd be getting large dividend checks on a regular basis.

 

I'd also argue that the business isn't all that scalable - yes, new comics continue to be printed, and some % of those will probably always be submitted. But those are the lowest moneymakers on the CGC totem pole, and there may well come a day when the number of moderns being submitted drops substantially, either due to increased competition in that area (from CGG, etc.), or because that part of the market crashes (kinda like the sports card market).

 

There must be some precedent in the sports card sector, re: slabbing companies that have gone under...? Of course, it's sort of a self-fulfilling prophecy -- the companies that have gone under are probably the ones that were least effective while in business, so the prices on cards slabbed by such a company may well have been lower than the same cards slabbed by the market leader in the first place.

 

[jeff2004]

It all depends if they are profitable and how profitable of a business it really is. Also, I don't think they would list CGC, they would list their parent company.

 

Also, is CGC privately owned or is it owned by a group of investors?

[sterlingcomics]

I'd buy one share - and have it slabbed!

 

 

I'm not sure how you come to the conclusion that "shareholders couldn't argue with the bottom line" ? You're implying that CGC is making $ hand over fist..?

 

That wasn't my original intent; basically what I should've said is that CGC would no longer answer to themselves; instead they need to answer to the shareholders and prove profitability. I don't think anyone on these boards but the Prez can really answer profitability questions at this point, so let's just leave it at that.

 

I'd also argue that the business isn't all that scalable

 

I would tend to agree if turnaround times are a potential indicator.

[Calamerica]

The SEC has parameters on just how much Shareholders can say to a company. The shareholders THINK they can run the show - this is not the case. The Shareholders need to get items of Directives on a Proxy ballot and hope the Majority of SHARES voted, not number of persons that ARE Shareholders, will vote their way. I have plenty of articles stored away for Financial info such as this, and very few Resolutions actually surface to fruition.

 

A company, any company, needs to sustain growth and Income for a long, long time and must diversify to survive. In this case, CGC would need to branch out and offer other products, maybe like grading post cards as well as Magazines, Playboys, etc. A merger with the Sportscard company would be a real possibility.

 

Peter Lynch used to go to Companies he would be evaluating for his Fund he managed years ago - he would ask the CEO( or whoever he was Interviewing) which company was the most feared competitor in their sector of the Market. The downside of the answer would be that Mr, Lynch would THEN go to that competitor and sniff around and see if that Company would be suitable for the Fund. In our case here, I guess the most feared, or preceived competitor to CGC would be CGG.

 

Just a few thoughts on this Thread. Very different but a fun one!

[sterlingcomics]

very interesting and informative! Thanks!

[Calamerica]

Bump