New Reporter
28-08-20, 18:04
A Birkin for a cool and savvy investment
Ms Antonella Carbonaro, who owns a Birkin bag, has also bought shares in Birkins as an alternative investment. "This is a visual way to participate in different asset classes that aren't as accessible," she says of her fractional investments.
Aug 23, 2020
Ms Antonella Carbonaro, a consultant to financial technology companies, saved up to buy her Birkin bag, a luxury tote made by Hermès that sells new for tens of thousands of US dollars. Since getting her bag in 2018, Ms Carbonaro has stored it in her closet, bringing it out only on special occasions.
But when she heard that there was a marketplace to buy shares in other Birkins, including more exotic versions that can fetch six figures, she was in.
Ms Carbonaro, 30, sees her shares in an exclusive bag as an alternative investment, no different than stakes in private equity funds that invest in a basket of companies.
"This is a visual way to participate in different asset classes that aren't as accessible. Investing in shares of Birkin bags, even though I have one, is getting more exposure."
She bought 10 shares in a Bleu Lézard Birkin bag that was valued at US$61,500 (S$84,000) in an offering last year. Earlier this year, she bought 25 shares in a grey Himalaya Birkin. It was valued at US$140,000 in an offering in May.
Unlike owning a fractional share of a condominium, she will never be able to use her investment. Shares are traded until the owner of the marketplace sells the asset.
Her first Birkin investment is trading up 6 per cent from the purchase price on Rally Rd, a platform that deals in fractional investments in collectible items.
The other one is still in the lockup period and its shares cannot be traded yet.
The market for investing in fractions of items otherwise seen as collectibles has seen an uptick in interest during the pandemic as people spend more time at home.
Rally Rd began by selling shares in exotic cars several years ago but has expanded to art, books, wine and whisky, memorabilia and Birkin bags.
"In the beginning, it was like equity markets: just safe, blue-chip investments," said Mr Rob Petrozzo, a founder and the chief product officer at Rally Rd.
"Over the past few months, we've seen with people being inside, they've gotten access to more information and they have been exploring the app more fully."
He said existing investors on the platform had doubled the number of items they owned shares in. Initial offerings have sold out five times faster than before the pandemic, as new investors on the platform began buying up shares more quickly.
The fractional movement is not limited to luxury items. Fidelity, the mutual fund giant, offers "stocks by the slice" where you can buy a portion of a share starting at US$1. And many private equity funds, which have high minimum investments and long lockup periods, have created mutual fund versions of their funds.
Compounding the risk, an asset typically bought for personal enjoyment or bragging rights cannot be analysed the same way that a private equity investment would be.
"There could be return potential, but who knows?" said Mr Jack Ablin, chief investment officer of Cresset Capital. "There's no liquidity and no control. When do you get your money back? You don't know. The other is the carrying costs could be high."
Another issue is that buying these assets in slices can mean a person is paying more than she or he might if the person could buy the whole asset, and that could dampen returns or make it hard to resell the asset.
As with other alternative investments, buyers are restricted from the selling of these fractions until after the lockup period ends. But when the asset itself - the bag or the horse - is sold is determined by the platform, not the individual investors.
Mr Jimmy Lee, chief executive of the Wealth Consulting Group, a wealth adviser, questions the notion of buying a passion asset with an eye towards profit. "When it comes to art, you only see the ones that go up in value," he said. "If someone buys a piece of art for US$1 million and it doesn't go up in value, it's not going to be sold."
There are other drawbacks. These marketplaces do offer the possibility of a return on the investment, but they deprive people of the joy of owning a painting or a fast car: having it in your possession. "You lose the intimacy of what it's meant to be," Mr Ablin said. "It's normally an asset you can touch, enjoy, ride in, ride on or drink."
But many investors in shares seem unbothered by this.
Ms Carbonaro said not being able to touch or hold the bags she had invested in was not an issue for her. "If I had a (US basketball legend) Michael Jordan rookie card, I don't think I'd want to touch it," she said.
Mr John Cochran, who works in sales in Baltimore, has invested in shares of 76 different collectibles including a shirt Michael Jordan wore in a basketball game, a Muhammad Ali fight contract, a portrait of Abraham Lincoln and a 2006 Ferrari f430 manual.
He said he was happy receiving a photo and some information on the object and was unfazed that he could not hold or touch it. "I like the idea that, just like my stocks, it's all in an electronic portfolio," he said. "I don't have to have the resources to store these things."
NYTIMES
Ms Antonella Carbonaro, who owns a Birkin bag, has also bought shares in Birkins as an alternative investment. "This is a visual way to participate in different asset classes that aren't as accessible," she says of her fractional investments.
Aug 23, 2020
Ms Antonella Carbonaro, a consultant to financial technology companies, saved up to buy her Birkin bag, a luxury tote made by Hermès that sells new for tens of thousands of US dollars. Since getting her bag in 2018, Ms Carbonaro has stored it in her closet, bringing it out only on special occasions.
But when she heard that there was a marketplace to buy shares in other Birkins, including more exotic versions that can fetch six figures, she was in.
Ms Carbonaro, 30, sees her shares in an exclusive bag as an alternative investment, no different than stakes in private equity funds that invest in a basket of companies.
"This is a visual way to participate in different asset classes that aren't as accessible. Investing in shares of Birkin bags, even though I have one, is getting more exposure."
She bought 10 shares in a Bleu Lézard Birkin bag that was valued at US$61,500 (S$84,000) in an offering last year. Earlier this year, she bought 25 shares in a grey Himalaya Birkin. It was valued at US$140,000 in an offering in May.
Unlike owning a fractional share of a condominium, she will never be able to use her investment. Shares are traded until the owner of the marketplace sells the asset.
Her first Birkin investment is trading up 6 per cent from the purchase price on Rally Rd, a platform that deals in fractional investments in collectible items.
The other one is still in the lockup period and its shares cannot be traded yet.
The market for investing in fractions of items otherwise seen as collectibles has seen an uptick in interest during the pandemic as people spend more time at home.
Rally Rd began by selling shares in exotic cars several years ago but has expanded to art, books, wine and whisky, memorabilia and Birkin bags.
"In the beginning, it was like equity markets: just safe, blue-chip investments," said Mr Rob Petrozzo, a founder and the chief product officer at Rally Rd.
"Over the past few months, we've seen with people being inside, they've gotten access to more information and they have been exploring the app more fully."
He said existing investors on the platform had doubled the number of items they owned shares in. Initial offerings have sold out five times faster than before the pandemic, as new investors on the platform began buying up shares more quickly.
The fractional movement is not limited to luxury items. Fidelity, the mutual fund giant, offers "stocks by the slice" where you can buy a portion of a share starting at US$1. And many private equity funds, which have high minimum investments and long lockup periods, have created mutual fund versions of their funds.
Compounding the risk, an asset typically bought for personal enjoyment or bragging rights cannot be analysed the same way that a private equity investment would be.
"There could be return potential, but who knows?" said Mr Jack Ablin, chief investment officer of Cresset Capital. "There's no liquidity and no control. When do you get your money back? You don't know. The other is the carrying costs could be high."
Another issue is that buying these assets in slices can mean a person is paying more than she or he might if the person could buy the whole asset, and that could dampen returns or make it hard to resell the asset.
As with other alternative investments, buyers are restricted from the selling of these fractions until after the lockup period ends. But when the asset itself - the bag or the horse - is sold is determined by the platform, not the individual investors.
Mr Jimmy Lee, chief executive of the Wealth Consulting Group, a wealth adviser, questions the notion of buying a passion asset with an eye towards profit. "When it comes to art, you only see the ones that go up in value," he said. "If someone buys a piece of art for US$1 million and it doesn't go up in value, it's not going to be sold."
There are other drawbacks. These marketplaces do offer the possibility of a return on the investment, but they deprive people of the joy of owning a painting or a fast car: having it in your possession. "You lose the intimacy of what it's meant to be," Mr Ablin said. "It's normally an asset you can touch, enjoy, ride in, ride on or drink."
But many investors in shares seem unbothered by this.
Ms Carbonaro said not being able to touch or hold the bags she had invested in was not an issue for her. "If I had a (US basketball legend) Michael Jordan rookie card, I don't think I'd want to touch it," she said.
Mr John Cochran, who works in sales in Baltimore, has invested in shares of 76 different collectibles including a shirt Michael Jordan wore in a basketball game, a Muhammad Ali fight contract, a portrait of Abraham Lincoln and a 2006 Ferrari f430 manual.
He said he was happy receiving a photo and some information on the object and was unfazed that he could not hold or touch it. "I like the idea that, just like my stocks, it's all in an electronic portfolio," he said. "I don't have to have the resources to store these things."
NYTIMES