Collectors Universe releases fourth quarter and fiscal year end earnings today

[Sean1125]

In 2017 and 2018 I worked with an brilliant signal processing engineer to explore the option of light diffusion (surface), computer vision (edges, corners, centering), and a neural network built around the concept for grading sports cards.

It is very possible; however, was too time and resource consuming for me to bring the concept to reality while I worked on IIB and other endeavors. I still have the prototype including the server to run it sitting in a closet. The sample size of data needed to curate real and proper grades was immense and the system is only as good as the engineer and the grader educating the engineer to work on it. Needless to say, a proper education process would take one person years or a team of industry experts many months (and a far more complex system to mesh their grading opinions into the database). Even then, if something were done so well a human couldn't detect it, how could a human built system detect it? There are impossible to identify restoration jobs.

The barrier of entry into the market is the denial of the collectors holding billions of dollars in inventory that do not want to hear that what they have has been altered, even if that is the reality. It is, without a doubt, immense.

That being said... there are restoration jobs so perfect that they would fool any professional including a well trained system. If fragments of the Dead Sea Scrolls sold for $500,000,000 can be faked so well that they fool experts who spent months inspecting them for authenticity, are displayed in a museum exhibit, and was only found out after more than a dozen industry scholars inspected them and committed to, out of their own pocket, expensive tests to prove their opinion-- what makes you think some nefarious individual(s) with a mid to high level set of skills can't alter, or even create from scratch, a sports card? Don't fool yourself.

[Peter_Spaeth]

Sean as you seem knowledgeable in this area, how concerned are you that we are close to the point where people can create counterfeits that at least current review techniques won't be able to distinguish?

[steve B]

Originally Posted by Peter_Spaeth

Sean as you seem knowledgeable in this area, how concerned are you that we are close to the point where people can create counterfeits that at least current review techniques won't be able to distinguish?

In my opinion that point was met in maybe 1981-2.
The local dealer I hung out at showed me an extremely nice 51B Mantle. After holding it for a couple minutes I handed it back saying "It's really nice, and fake. But I can't explain why"
They said that was the opinion of 5-6 other dealers, who had also passed on buying it. (Yes, at the time occasionally a card like that would get shopped around by mail!) Everyone thought it was fake but couldn't explain why it was fake. Somehow it just "felt " wrong.

I 100% believe that card would pass TPG today and would grade very high, at least an 8. For all I know it is in a holder today. The guys I knew passed on buying it, and I never heard about it again.

[Peter_Spaeth]

https://seekingalpha.com/article/428...int-grade?dr=1

Collectors Universe Will Escape Latest 'Scandal' With Near Mint Grade

I respect the fact collectors are concerned about the trimmed/altered cards, and several investors called into Collectors Universe’s Q4 conference call to ask about the impact it has on the business.

But after examining the company’s Q4 numbers - talking about trimmed cards is akin to asking a batter why he struck out in the 4th after hitting home runs in every other at bat!

[Peter_Spaeth]

THIS.

Additionally, given there are few alternatives for collectors to turn to for grading trading cards - it’s not like collectors can change grading company’s like consumers can do in more competitive industries.

[Peter_Spaeth]

Heh.

From the analyst call. Re Mark's question, this is how you (potentially, if it later turns out the warranty reserve was inadequate) commit securities fraud.

"In terms of our warranty, we take a very conservative view in terms of warranty and what our expectation is, in terms of our balance sheet. So I think this whole trimming issue that we spent a lot of time talking about today is really something that we don't consider material to our business."

If I were on the CU Board I would be cringing at unqualified statements like that, just saying.

[WhenItWasAHobby]

My limited observations from the Blowout Forum is that tally of discovered doctored cards is ever increasing at a still alarming rate and the cumulative damages are far from trivial. It would be very informative if they had a spreadsheet compiling of all of their findings and see what we're talking about in terms of the sum total of final prices of doctored cards discovered. I'm guessing we're talking about multiple millions dollars which is well above their warranty limits which is not only for cards but also for coins.

Also, a CEO of a publicly traded company has a fiduciary duty towards it's shareholders which includes loyalty, good faith and fair dealing and exercising candor on material company matters. Orlando's responses and actions during that analyst meeting may warrant some serious scrutiny regarding his duties.

I also find it rather amusing that card submissions have been on the increase the last several years. Maybe everyone and their brother wants to make big money doctoring cards while the market is still hot.

[drcy]

Good point about older altered cards that got past. I assume they would easily be identified under close inspection.

I don't know the grading process, but, from what I hear, many cards are examined in seconds by graders. So, even if they have the abilities and capabilities, they go too fast to apply them properly. As noted often times, many of the BO altered cards clearly don't make size specifications.

[benjulmag]

Originally Posted by Sean1125

In 2017 and 2018 I worked with an brilliant signal processing engineer to explore the option of light diffusion (surface), computer vision (edges, corners, centering), and a neural network built around the concept for grading sports cards.

It is very possible; however, was too time and resource consuming for me to bring the concept to reality while I worked on IIB and other endeavors. I still have the prototype including the server to run it sitting in a closet. The sample size of data needed to curate real and proper grades was immense and the system is only as good as the engineer and the grader educating the engineer to work on it. Needless to say, a proper education process would take one person years or a team of industry experts many months (and a far more complex system to mesh their grading opinions into the database). Even then, if something were done so well a human couldn't detect it, how could a human built system detect it? There are impossible to identify restoration jobs.

The barrier of entry into the market is the denial of the collectors holding billions of dollars in inventory that do not want to hear that what they have has been altered, even if that is the reality. It is, without a doubt, immense.

That being said... there are restoration jobs so perfect that they would fool any professional including a well trained system. If fragments of the Dead Sea Scrolls sold for $500,000,000 can be faked so well that they fool experts who spent months inspecting them for authenticity, are displayed in a museum exhibit, and was only found out after more than a dozen industry scholars inspected them and committed to, out of their own pocket, expensive tests to prove their opinion-- what makes you think some nefarious individual(s) with a mid to high level set of skills can't alter, or even create from scratch, a sports card? Don't fool yourself.

You make fair points. The most obvious response is that what is currently needed is not a method to expose tomorrow's alterations, but instead to expose yesterday's that were done with older methods and that I bet would light up under current detection methods.

The numbers of such slabbed altered cards IMO number in the tens of thousands and have a staggering collective market value. Yes, undoubtedly card doctors/counterfeiters will then be fast at work to come up with the latest method to elude detection, much the same way, say, manufacturers of radar detectors constantly update their devices to keep up with the latest radar guns. But presumably a TPG run the right way will too be constantly advancing and improving its methods.

Will altered/fake cards still get through? Undoubtedly, which just means it will not be perfect. But what is perfect? It won't take much for it to be a HUGE improvement over what currently exists. And for a person thinking about shelling out a five, six or seven figure sum for a card, which company do you think such a person would turn to for an opinion as to whether the card is altered/fake?

[Peter_Spaeth]

Originally Posted by benjulmag

You make fair points. The most obvious response is that what is currently needed is not a method to expose tomorrow's alterations, but instead to expose yesterday's that were done with older methods and that I bet would light up under current detection methods.

The numbers of such slabbed altered cards IMO number in the tens of thousands and have a staggering collective market value. Yes, undoubtedly card doctors/counterfeiters will then be fast at work to come up with the latest method to elude detection, much the same way, say, manufacturers of radar detectors constantly update their devices to keep up with the latest radar guns. But presumably a TPG run the right way will too be constantly advancing and improving its methods.

Will altered/fake cards still get through? Undoubtedly, which just means it will not be perfect. But what is perfect? It won't take much for it to be a HUGE improvement over what currently exists. And for a person thinking about shelling out a five, six or seven figure sum for a card, which company do you think such a person would turn to for an opinion as to whether the card is altered/fake?

Who is going to crack out a card that expensive to have it reviewed and take the chance it isn't legit?

[perezfan]

Originally Posted by Peter_Spaeth

Who is going to crack out a card that expensive to have it reviewed and take the chance it isn't legit?

Not Ken Kendrick

[benjulmag]

Originally Posted by Peter_Spaeth

Who is going to crack out a card that expensive to have it reviewed and take the chance it isn't legit?

The buyer. Assuming such a TPG company is up and running and has properly marketed its product (which will include well publicized random statistically significant crack outs of high grade vintage registry cards and showing them to have been altered), such a buyer will make his/her purchase contingent on the card being regraded under this new method. And if the seller is not willing to allow that, then the card will not hold its value relative to a card that is crossed over.

[Peter_Spaeth]

Originally Posted by benjulmag

The buyer. Assuming such a TPG company is up and running and has properly marketed its product (which will include well publicized random statistically significant crack outs of high grade vintage registry cards and showing them to have been altered), such a buyer will make his/her purchase contingent on the card being regraded under this new method. And if the seller is not willing to allow that, then the card will not hold its value relative to a card that is crossed over.

That seems very high risk to me unless the seller is absolutely certain of the provenance.

[benjulmag]

Originally Posted by Peter_Spaeth

That seems very high risk to me unless the seller is absolutely certain of the provenance.

Or the seller can instead choose to take the risk, and if the card is no good, try to invoke PSA's grading guarantee. The alternative for the seller will the unenvious position of seeing the value of his registry cards steadily fall in value due to their failure to be graded by this new superior grading company.

[Peter_Spaeth]

Originally Posted by benjulmag

Or the seller can instead choose to take the risk, and if the card is no good, try to invoke PSA's grading guarantee. The alternative for the seller will the unenvious position of seeing the value of his registry cards steadily fall in value due to their failure to be graded by this new superior grading company.

No guarantee if the card is removed from the holder, as you know.

[Aquarian Sports Cards]

Originally Posted by Peter_Spaeth

Who is going to crack out a card that expensive to have it reviewed and take the chance it isn't legit?

Lots of guys if a new TPG starts blowing PSA out of the water. Admittedly that's not happening tomorrow.

[drcy]

I tend to see it as a company, but publishing of standard methods to identify alterations that many people, groups could use.

For a simple example, many collectors use a black light.

Though, certainly, with the available techniques and technologies, company or companies could do the work.

Personally, I would love it if any auction house or serious/advanced collector or dealer had the ability to examine holdered cards for alterations. Considering a learned collector or dealer would spend more time on any given card, they may prove better than the assembly line grading company.

I imagine a scanning/imaging system that not only would identify alterations but give an image as evidence, including evidence that can be emailed, posted, etc. Anything you examine can be photographed, and there are UV/IR cameras and digital microscopes that take digital photos. There are such advanced forensic light/imaging systems already. Thus, it's no longer "someone far away looked at it and said so and so," but here are the forensic images that were made for all to see.

[steve B]

Originally Posted by drcy

I tend to see it as a company, but publishing of standard methods to identify alterations that many people, groups could use.

For a simple example, many collectors use a black light.

Though, certainly, with the available techniques and technologies, company or companies could do the work.

Personally, I would love it if any auction house or serious/advanced collector or dealer had the ability to examine holdered cards for alterations. Considering a learned collector or dealer would spend more time on any given card, they may prove better than the assembly line grading company.

I imagine a scanning/imaging system that not only would identify alterations but give an image as evidence, including evidence that can be emailed, posted, etc. Anything you examine can be photographed, and there are UV/IR cameras and digital microscopes that take digital photos. There are such advanced forensic light/imaging systems already. Thus, it's no longer "someone far away looked at it and said so and so," but here are the forensic images that were made for all to see.

The first step towards that would be making a database or even a list of what the card should be if unaltered. Not just the usual standard size, but thickness, specifically how it reacts to UV, etc.

[drcy]

Yes.

This is actually something that should be looked into, and would solve many of the problems that currently exist.

As noted, forensic light systems, which go through the whole range of frequencies, exist and are used in other areas. And there could be a company or service that just provides the scans.

I also thing microscopic, or very large, scans be simultaneously be done to authenticate of the card. I have people email microscopic images or huge scans, and I can identify real from fake from those.

There are also systems that mathematically calculate the gloss by shining slightly off from head-on light at the surface, and systems for measuring the opacity (how much light goes through the material) These could be parts of the scanning systems.

In the future, cards may be able to be identified, authenticated and checked for alterations just via scans. And the great thing about scans is many people all over the place can look at them.