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By Avi Krawitz
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Posted: 02/18/09 07:28
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RAPAPORT... Codiam Fund, which invests in high-end polished colored diamonds, is upbeat about the prospects for the colored diamond market, according to an announcement it released on Thursday. The fund, which launched in September, reported a 9 percent increase in its net asset value in the first three months of operation. (Editors note: Codiam Fund is not related to Codiam Inc. of New York.)
Mahyar Makhzani, managing director and cofounder of the fund, stressed the investment value of colored stones, whose prices have remained at a reasonable level through the financial crisis. “The investment in this category rather than white diamonds has been proven correct as we are not dealing nor speculating but intelligently investing in a very rare commodity,” he said.
The fund reported that colored diamonds have not decreased in price on a wholesale level in 35 years, and that their value has increased between 10 and 15 percent a year on average. “Colored diamonds have held their value and not suffered from the current economical crisis as other traditional assets have,” Codiam explained in its statement.
The fund was founded by Makhzani and Philip Baldwin, who have more than 50 years experience in the diamond and jewelry industry between them, having served in managerial positions at the likes of Bulgari, Tiffany & Co. and Habsburg. At Codiam, they have laid out a very clear investment strategy. They only look at polished colored diamonds, avoiding the riskier rough market and the volatile market for white stones. The fund therefore only buys intense colored diamonds larger than 1 carat, in the top colors, including red, intense purple, intense green, purple red, purplish-red, bluish-green, greenish-blue, pink, blue, orange and yellow.
The focus on colored diamonds has allowed it to capitalize on traders’ need for liquidity, particularly those with both white and colored diamonds in their inventory. They are still able to sell their colored stones at some profit, which is not the case with white diamonds, Makhzani explained. Codiam also sources stones from private sellers, and while it has in turn resold some of its stock to private buyers and to its own investors, the focus for now is on buying.
Having launched with an estimated kitty of more than $5 million, Makhzani reported that the fund has the cash to make the purchases for now. “We do not need to borrow at this stage to make purchases. What we raise is what we spend,” he added.
Which is not to say it has an open checkbook. The fund sticks to its strict purchasing guidelines, and Makhzani explained that its investment strategy extends beyond merely buying diamonds and hoping they rise in value. The increase in the fund's net asset value, he noted, has resulted from creating collections by matching stones of different colors. “The sets are worth more than if we sold the stones individually,” he said. Makhzani stressed that the valuation was based on the opinion of third-party dealers.
Still, Codiam will be hoping the fund’s increase in net asset value, along with its spending power, will woo members of the colored diamond market, particularly at its next major stop, the BaselWorld Watch and Jewellery Show in late March. “We are ready for Basel,” Makhzani said.
NC
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1. Aron K I agree 100%
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I was reading this joke of an article and said to myself, "Self. If a 1ct Red diamond is close to 1 million dollars, and a very nice 9ct Pink VVS1 I own cost me close to 1 million. This joke of a Makhazani is going to end up with a company with about 5 diamonds or less." WOW. He must be learning the Diamond business from Martin Rapaport himself. Hold no inventory and carry a big rap sheet with you. Well watch out Lawrence Graff, "Makhzani" is on the move.........
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By:
it does not matter..
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2/22/2009
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2. five million
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sounds like your going to buy alot of intense colored diamonds larger than 1 carat, in the top colors, including red, intense purple, intense green, purple red, purplish-red, bluish-green, greenish-blue, pink, blue, orange for five million .... maybe like a whole ten stones wow and you call that being in business?
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By:
aron k
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2/18/2009
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