NEW YORK — Graff’s longtime U.S. chief executive officer Henri Barguirdjian left his post after 16 years last week to establish a fine gem investment firm, Arcot Finance.
Barguirdjian, along with partner and controversial former hedge fund magnate Philip Falcone, will scour the globe for incredibly rare stones to purchase as investments. While many private individual collectors purchase stones as investments, it is difficult to pinpoint a financial firm solely focused on buying stones for profit.
The venture is a particularly interesting mode of investment for Falcone, who is banned from the hedge fund community by the Securities and Exchange Committee following a 2013 settlement in which he admitted to “wrongdoing.” Falcone — whose personal wealth was once valued at more than $2 billion — had reaped success in betting against the subprime mortgage market.
Prior to establishing Graff’s presence in the U.S., Barguirdjian worked at the French jewelry firm Chaumet as managing director. In addition to buying stones through Arcot Finance, Barguirdjian is looking at other fine jewelry investments. As reported by WWD.com, he is in talks to purchase jewelry brand Marina B with potential partner Guy Bedarida, former creative officer and half-owner of Bali-based jewelry brand John Hardy.
Barguirdjian said of Arcot Finance, which will be based in New York: “The whole idea is that the price of real fine-quality gems continues to go up through the years; they are a great opportunity on the market if you know what you are looking at.”
The two partners plan to acquire stones both at auction and through private channels. “It’s a function of networking and seeing what’s available. A lot [of stones] are in private hands, you can make a great acquisition,” Barguirdjian said.
Stones will be bought and sold according to individual circumstance — some with purchasing partners, some to be quickly flipped, and others to be held as their market value matures.
While the gem-mining industry has seen a sharp downturn in valuations due to global economic uncertainty and changing consumer tastes, Barguirdjian said this curtailed demand is concentrated in the lower end of the stone market. Stones such as Kashmir sapphires, Burmese rubies and fancy blue diamonds continue to fetch unprecedented prices on the auction circuit.
“Yes, there was a moment given the uncertainty in the retail world where stone [prices] were weaker, but if you focus on really rare stones, it’s a completely different market because some savvy investors see those stones as a refuge for investment.”
Particularly as global currencies continue to waver, stones — along with other liquid investments like real estate and art — continue to prosper.
“There is so much uncertainty everywhere in the world at the moment so people are looking for safe haven, and they have to be a little bit unconventional. [Stones] I think are a very clean way of investing money,” he said.
“If you look at the art market, it’s a bit similar; what’s really driving the market are exceptional pieces. Those that are not exceptional are stagnant or have even gone down — so there are a lot of similarities, but the great difference between art and precious stones is that precious stones are a lot easier to transport — you can transport millions of dollars in a very small box,” he said.