01 Rolex Science: The Most Precious Rolex


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01 Rolex Science: The Most Precious Rolex

  1. 1. Precious TimeA timeless investment, a passion
  2. 2. Elite Advisers has been created in January 2007 and is registered as a PSF (Professional of theFinancial Sector) regulated by the CSSF (Commission de Surveillance du Secteur Financier)Fund distribution and creation ofniche and elitist productsInvestment advisoryservicesEUR 71.2 million EUR 100 millionDepositary banks Caceis BGL BNP ParibasAuditors Deloitte AbaxLawyers Allen & Overy Allen & OveryOverview
  3. 3. Elite Advisers combines Passion & Investment to meet the needs of aclientele in search of excellence and exclusivity.Passion Investment®De-correlationUnderstandableReasonPerformanceTangibilityDiversificationINVESTMENTPASSIONPleasureEnthusiasmDesireEmotionAwakeningGoing beyond oneselfAccessibility
  4. 4. 4The reasons of a fund dedicated to watchesOn the Investment side On the Passion sideA tangible asset, de-correlated Exceptional time-keepersObjects that hold value over time Provenance and historyAn average annual return of 15% Craftsmanship, the tradition, the quality, therarity, the complexityA limited offer compared to an increasingdemand
  5. 5. 5Watch market Key factsRelatively young market (almost 25 years old)The size of the annual watch market is superior to 25 billion eurosThe vintage watch market for Patek Philippe, Breguet, Rolex, Audemars Piguet, Omega,Cartier is estimated at EUR 5 billion.Very limited productionSignificant returns compared to other asset classesStrong and consistent demand from both International collectors/ investors andemerging market investorsTangible assetsQuality and Rarity driven assets
  6. 6. Investing in WatchesThe Types Important investment categoriesThe Vintage watches (collectible) Growth Section : Exceptional contemporary watchesA Watch is considered vintage when its production hascompletely ceased.Characteristics : ancient style of production for the case, themovements …Bet on the futureA well defined purchase priceAn unkown future sale priceHigh prices but not that muchPerfect qualitative conditionsWrist-watchesThe wrist-watch has been invented by Louis Cartier and HansWilsdorf in 1904.Other type of Watches Value Section : Vintage watchesPocket watchesTable clock (really nice models have been produced by Cartier,Patek Philippe and Breguet)A known market priceStrong negociation on purchase priceHigh prices for exceptional modelsLimited stock with timeCorrelation between rarity and time
  7. 7. Precious TimeInvesting in very fine and important vintage watches (pocket and wristwatches) manufactured by Patek Philippe, Breguet, Rolex, Cartier, AudemarsPiguet, Vacheron Constantin and many other watch manufacturersTarget Return of 15% net of feesLiquidity profile of assets should allow full liquidation within 90 days in normalmarket conditions hence the fund will have quarterly liquidityInvestment manager with a proven and extensive experienceCommittee of Experts composed of relevant professionals in watches andother fine art sectors
  8. 8. 8The Fund ManagerThe Perfect Symbiosis between Finance and WatchesBorn in 1969.After graduating in Economics & Commerce in 1993, heobtained in 1994 a Master in Finance from the BocconiUniversity in Milan.In 1995 he moved to UK and joined the Bankers Trust Groupuntil 1998.At the end of 1998 he moved to Dresdner Bank, where he helda number of managerial positions in Italy and abroad, until hisappointment as Managing Director head of the Italian EquityDerivatives Team in 2004. Since March 2010, he fulfills the roleof Head of Global Markets and Distribution Italy within BBVAGroup.Alfredo is a well-known watch collector and also a passionategolfer and biker. Alfredo ParamicoOver the past 15 years Alfredo has been able to perfectly conjugate his passion for watches that dates back more than 25 years,with his profession as an international investment banker.
  9. 9. 9Precious TimeObjective :To generate optimal capital gains over the long-term by purchasing and selling rarecollectors’ watches, principally Patek Philippe, Breguet, Rolex, Cartier, AudemarsPiguet and Vacheron Constantin, targeting:Asset diversificationRarityExclusivityCollectors’ itemsLow correlation with other assetsHistorical provenanceUnique Pieces“Special Order” watches
  10. 10. 10The Brand SelectionPrecious Time will invest predominantly in watches from the following manufacturers:Patek PhilippeSynonymous of Quality, Rarity, Tradition, History and ValueBreguetBeauty and innovation - prestige watchmakingRolexThe most famous watch Brand in the WorldAudemars Piguet, Cartier, Vacheron ConstantinSynonymous of Elegance, Understatement, StyleLongines, OmegaHigh standard production, massive popularity
  11. 11. 11A Selection of Patek PhilippeThe Ref. 1518Reference 1518 was launched in 1941 and according to literature, only 281 examples wereproduced up to 1954, the majority of which were cased in yellow gold, few in pink gold. Just fourexamples of 1518 cased in stainless steel are known. It was furthermore the first perpetualcalendar chronograph wristwatch produced in series by any watch company.
  12. 12. 12Auction Sotheby’s 1987One of the first auction ever
  13. 13. 13Price Evolution of the Ref. 1518Sotheby’s auction in New York in 1992
  14. 14. 14Price Evolutionof the Patek Philippe. ref. 15181945 20113.582.941 CHF416.584 CHFIRR:8%*2.265 CHF2.800 CHFIRR:12%*Yellow goldStainless steel* The official figures for the CHF inflation rate are back to 1971, no earlier figures are available.We took from 1945 to 1971 the US inflation rate as a proxy.The correlation from 1971 to 2010 is almost 60% but the average in US was 4.40% vs 2.73% in CHF which means that our proxy is very conservative. If we compare these two values with the averageinflation rate, 2.92%, it is clear that there was an incredible outperformance
  15. 15. 15A Selection of Patek PhilippeThe Ref. 2499Reference 2499, widely acknowledged as one of the worlds greatest watch models evercreated, was introduced to the market in 1950 to replace the reference 1518. Over a periodof 35 years, reference 2499 was made in four series in a total production of only 349 pieces,the majority cased in yellow gold, very few pieces cased in pink gold. The rarity of this modelbecomes evident when considering that an annual average of only 9 watches left PatekPhilippes workshops.This watch was sold for CHF1,079,400 at Christie’s Geneva the12th May 2008
  16. 16. 16Price Evolution of the ref. 2499Sotheby’s auction in New York in 1992
  17. 17. 17A Selection of Patek PhilippeThe Ref. 1463Reference 1463 was launched in 1940 and remained in production until 1965. This referencecased in stainless steel yellow gold and pink gold is the first water resistent resistentchronograph ever produced by Patek Philippe and it is today one of the most sought afterreferences for sophisticated collectors.This watch was sold for USD 254,500at Christie’s New York the 16th June2010
  18. 18. 18Price Evolution of the ref. 1463Auction in Geneva in 1992
  19. 19. 19A Selection of RolexThe Daytona “Paul Newman”It is said that Paul Newman wore this watch until his death in 2008,and had done so since 1972.The watch was offered to him by his wife, Joanne Woodward, when Newman took upautomobile racing. The original Daytona watches were not in demand when produced, and werequite inexpensive, but now they have gained rapid esteem amongst collectors, are known as the"Holy Grail" of collectible watches and reach considerable prices at auction.This watch was sold for CHF 105,000 atChristie’s Geneva the 17th November 2008
  20. 20. 20Price Evolution of the Daytona “PaulNewman Dial”Auction in Vicenza in 1992
  21. 21. 21A Selection of RolexThe Oyster Moon Phase ref. 6062During the early 1950s, Rolex launched reference 6062, considered by many collectors as theultimate Rolex wristwatch. Reference 6062 is the pinnacle for the savvy Rolex connoisseur sinceit combines all key elements a demanding watch collector could expect: a sporty yetdistinguished look, a complicated movement with full calendar and moon phases indicationhoused in the purist of all Oyster designs.This watch was sold for CHF 597,000 atChristie’s Geneva the 16th November 2009
  22. 22. 22Price Evolution of the Rolex ref. 6062306.000€47.000€52€1953 1992 2011IRR: 15,50% for 58 years.The same amount invested at a rate of 7,2% for 58 years would be 4.060 €*…* Considering an average inflation rate in Italy of 7.2% during the last 58 years (in theory we should skip the queue values of the oil crisis in 1974 when the inflation in Italy went to 24% but let’sassume 7.2% conservatively).
  23. 23. 23A Selection of RolexThe Moon Phase ref. 8171Together with the ref. 6062 the ref. 8171 combines the functions of hours, minutes and seconds,with the functions of the triple calendar and the moon phases. Produced during the 50’s instainless steel, yellow gold and pink gold, today the steel version is extremely sought after by themost important wristwatch collectors of the world.This watch was sold for CHF 236,000 atChristie’s Geneva the 15th November 2004
  24. 24. 24Price Evolution of the ref. 8171Auction in New York in 1992
  25. 25. 25A Selection of RolexThe “Dato Compax”The “Dato Compax” is one of the rarest and most attractive Rolex model. Produced from the late40’s until the 70’s in four different references (4767, 5036, 6036 and 6236) in steel, yellow goldand pink gold, it is today a milestone of the Rolex production combining the chronograph withthe functions of the triple calendar.This watch was sold for CHF 387,000 (USD350,000) at Christie’s Geneva the 11th May2009
  26. 26. 26Price Evolution of the “Dato Compax”Auction in New York in 1992
  27. 27. 27A Selection of LonginesThe Magnificient movement 13ZNThe 13ZN, whose production started in 1936 (74 years ago!) can be safely considered as one ofthe best chronograph movements ever produced. Developed during World War II, it soonbecame a milestone of the watch industry. The 13ZN is still considered today as ``TheChronograph” by scholarship and sophisticated collectors.
  28. 28. 28A Selection of OmegaThe Moonwatch ref. CK-2915/1Launched in 1957, the celebrated Omega "Speedmaster" was the creation of Pierre Moinat,head of Omegas "creative" department, with case designed by Claude Baillod and the prototypemade by George Hartmann. The watch was originally aimed at "men who count time inseconds", i.e. automobile racers, athletes, engineers and scientists. As the thought of men onthe moon was still in the realm of science fiction at the time, it was only later that it became the"Moon Watch".This watch was sold for CHF 85,000 atChristie’s Geneva the 12th November 2007
  29. 29. 29The Value of a Watch:4 Golden Rules in the selection processCase MaterialQualitySpecial FeaturesHistorical Provenance
  30. 30. 30The Value of a Watch:Case MaterialWatches have usually been cased with five different metals:• Stainless Steel• Yellow Gold• Pink Gold• White Gold• PlatinumThis rule DOES NOT apply to all the watch production.For example the Patek Philippe ref. 1518 has never been produced in White Gold orPlatinum, while the Rolex ref. 6541 has only been produced in Steel.
  31. 31. 31The Value of a Watch:Case MaterialSame reference but different case material:This watch was sold for CHF 1,079,400 atChristie’s Geneva the 16th November 2009This watch was sold for CHF 2,736,000at Christie’s Geneva the 14th May 2007
  32. 32. 32The Value of a Watch:QualitySame reference but different quality:
  33. 33. 33The Value of a Watch, Special Features:“The Three Tones Dial” and “The Breguet Indices”Same reference but one of the two has very Special Features:
  34. 34. 34The Value of a Watch, Special Features:“The Black Dial”Same reference but one of the two has the most sought after Black Dial:This watch was sold for CHF 260,000 atAntiquorum Geneva the 11th November 2007This watch was sold for CHF 43,750 atChristie’s Geneva the 11th May 2009
  35. 35. 35The Value of a Watch, Special Features:“The Special Dial”Same reference but one has a particular feature on the dial:This watch was sold for CHF 411,000 atChristie’s Geneva the 16th November 2009This watch was sold for CHF 945,000 atChristie’s Geneva the 12th November 2007
  36. 36. 36The Value of a Watch:Historical ProvenanceThe Duke Ellington Watch and The Briggs Cunningham Watch:This watch was sold for CHF 4,137,000 atChristie’s Geneva the 12th May 2008This watch was sold for CHF 2,300,000 atPhilips de Pury Geneva the May 2002
  37. 37. 37The “Steel Paradox”Steel cased watches from the 40’s are extremely important and rare. Only a few exampleshave been produced and it is possible to count them on the fingers of just one hand perreference. Without exception, these watches are all proudly-cherished trophies in the worldsmost distinguished private watch collections.
  38. 38. 38This watch was sold for CHF 1,337,000 atChristie’s Geneva the 12th November 2007The “Steel Paradox”
  39. 39. 39The “Steel Paradox”
  40. 40. 40How Expensive can a Watch be?Price Realized (CHF6,259,000) ($5,708,885)At a Christie’s auction, held on Monday May 10th2010 in Geneva, a yellow gold Patek Philippeperpetual calendar chronograph, was the highlight ofthe evening.This beautiful piece, ref. no. 1527, was made in 1943and sold on August 22nd 1946. Bidding ended at thesum of CHF 6,259,000; which is more than double theestimate of CHF 1,500,000 – CHF 2,500,000. This isalmost $5,700,000, which makes it the mostexpensive yellow gold Patek Philippe ever auctioned.
  41. 41. Precious TimeSpecialised Investment Fund, Luxembourg registeredManager combining experiences in both finance and the sector of investmentA bottom-up investment process combining both value and growth strategiesClearly defined investment ratiosA pertinent risk management policyOpen ended and 10% liquidity at all timesA sophisticated control process – an external valuatorRegular and transparent reportingA Specialised Investment Fund but managed like a classical UCITs
  42. 42. Investment decision processEconomical concepts, market analysis, expertise have to be unified within oneunique decisional process.Great experience of the market as the parameters to take into accountare numerous.Excellent mastering of quality is fundamental to the investmentprocess.To know how to choose the products that will have ahigh-added value in the future.Deep understanding of the productionsector.In this sector, approximation is banned.DecisionExperienceExcellent mastering ofqualityTo know how to chooseDeep understandingof the production
  43. 43. 43Investment ratiosBy sectorMax. 70% -Max. 30% -Min. 10% -Vintage WatchesContemporary watchesCashBy typeMax. 80% -Max. 20% -Watches with complicationsWatches with simple technologyBy producerMax. 50%Max. 30%Max. 10%Min. 10%Patek PhilippeBreguet, Rolex, Audemars Piguet, VacheronConstantin, CartierOmega, Longines, MovadoCashBy metalsMax. 50% -Max. 35% -Max. 15% -Yellow, white or pink goldStainless SteelPlatinum
  44. 44. Main Investment GuidelinesThe Fund will invest according to the following guidelines :Vintage watches are the main focus of the fund. This compartment is mainly driven by three keyfactors:– Rarity– Quality– HistorySome contemporary watches might be included in the portfolio, but are strictly related to verycomplicated and limited editions Patek PhilippeVintage watches50% Patek Philippe30% Breguet, Rolex, Audemars Piguet, Vacheron Constantin, CartierContemporary watches10%Cash10%
  45. 45. PerformanceNet asset valueEUR110.64Asset under managementEUR 7,861,4591st quarter 2nd quarter 3rd quarter 2011 Performance+2.82% +6.76% +0.79% +10.64%
  46. 46. Parameters Value Strategy Growth StrategyAdded-value Added value at purchase Future added-valueProduct risk Conditions of the product Certainty of the product integrityAvailability Rare Relatively easyLogistics Storage structure Storage structureForgery and Imitation Possible forgeries Possible forgeriesDuration of detention Short/Long Medium/LongRisk/Return Relatively low A little higherRisk Management
  47. 47. 47Cash Management• Always 10% in cash• A selection of very «liquid» watches (ie produced in relatively high quantities and unitprice reasonably accessible)• The sale of investment grade watches through auctions- With over 30 sales per year in the world- This worldwide watches auction market ensures liquidity for the various parties.• The sale of investment grade watches through merchants
  48. 48. The Investment Advisory CommitteeMichel StasserAn entire career devoted to private banking(40 years) within renowned companies, and apassion, for over 25 years, for collectiblewatches.Role within the Committee:Michel will bring his expertise with his financialbackground in the analysis of the acquisition ofthe time keepers and their interest as aninvestment in the fund.The right balance between Passion and InvestmentNicolas MauboussinA career entirely devoted to his passion forwatches and collectible watches, through thedifferent positions held within renownedgroups and auction houses.Role within the Committee:expertise of the watch and evaluation of itsauthenticity, state and interest within theframework of a collection.The Role of this Committee consists in advising the fund, validating the fund manager’sinvestment proposals and analysing the acquisition and sale.
  49. 49. 49The external valuatorEntityie Sotheby’s or Christie’s, or an international expert of themarket (person that has worked within these houses and that isindependent)RoleValuation of the watch according to different criteria : origin,history,…Objective ValuationAway from any excess : average between the prices from theauction houses and the merchants
  50. 50. 50AdministrationStoragePort Francs GenevaStorage in safes inside secure zonesTransportation Carriers specialized in the routing of collectors items : BrinksInsurances Specialised insurance company : AllianzValuation External valuationRedemption in kind The investor can after a period of time in the fund redeem part or all of his investment in kind.Subscsription in kind Subscription can also take place in kindDepositary bank CaceisAuditors DeloitteLawyers Allen & Overy
  51. 51. 51Technical InformationISIN Code LU0566795539NAV QuarterlyFeesentry and exit :from 0 to 4%Management fees 2,5%Performance fee 20% of performance exceeding 5% with a high watermark
  52. 52. 5, Allée Scheffer - L-2520 LuxembourgTél. : (+352) 2625 9984 - Fax: (+352) 2625 9985www.eliteadvisers.com