Rare stamps’ total return to outperform bonds fund

Rare stamps’ total return to outperform bonds fund
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First Published: Sat, Jun 09 2007. 12 09 AM IST
Updated: Sat, Jun 09 2007. 12 09 AM IST
Bill Gross’ British stamps, which go on auction in New York on 11 June to benefit a charity, have proven to be a better investment than his bond fund.
The manager of the world’s largest bond fund stands to raise $5 million or more from the stamps he bought for $2 million, mostly in 2000, said Charles Shreve, Gross’s stamp adviser. His $104 billion Total Return Fund had a 6.9% average annual return in the past 10 years, according to Morningstar Inc. data.
Values of collectibles are soaring as millionaires seek alternative investments or trophies. As one example, Macau casino entrepreneur Stanley Ho paid $1.8 million in May for Emperor Kangxi’s throne, which sold in 1994 for $43,700, according to Christie’s International. Gross’s UK stamps may fetch as much as triple the price he paid, one expert said.
“Prices are dictated by high-net-worth individuals,” said Michael Hall, chief executive officer of stamp specialists Stanley Gibbons Group Ltd. “Baby boomers are approaching the age when they have money and time on their hands.”
Gross, the 63-year-old chief investment officer of Newport Beach, California-based Pacific Investment Management Co. with a fortune of $1.2 billion, had no time to discuss his stamps, said spokesman Mark Porterfield, who referred questions on the value of the collection to Shreve.
Dallas and New York-based Shreves Philatelic Galleries Inc., run by Charles Shreve and his wife Tracy, will sell Gross’s British stamps, including 1840 Penny Blacks and Two Penny Blues, in two sessions on Monday to benefit Doctors without Borders, a non-profit organization, said the auction house’s website.
More than 1,500 pairs of catalogues were sold and a London show of the stamps last month drew many new potential bidders, Shreve said in a telephone interview. “Bill Gross is very well known in the financial world, plus it’s a charity sale and he has some great rarities,” Shreve said.
Starting with common modern stamps in his teens, he later pursued rare items as an investment, according to answers he drew up to frequently asked questions, Porterfield said in an email. His most famous stamp is an 1868 One Cent “Z” Grill, one of two known copies and part of his complete collection of 19th century US stamps.
Hall, who said he did business with Gross via Shreve, valued Gross’s remaining stamps at about $80 million. Shreve wouldn’t confirm that, though he said Gross is among the world’s top five collectors, along with retail billionaire Erivan Haub of Wiesbaden, Germany. About $1 billion of rare stamps trade annually in the $10 billion-a-year stamp market, Hall said. “It’s not like this sale floods the market,” he said. Gross’s Total Return Fund returned 4% last year, beating more than 54% of its peers, according to data compiled by Morningstar.
The fund returned 5.2% on an average in each of the past five years, beating more than 70% of its peers. BLOOMBERG
Caroline Baum and Lester Pimentel in New York contributed to this story.
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First Published: Sat, Jun 09 2007. 12 09 AM IST