Institutional Investor's Alpha Magazine - November 2007 - (Page 41)

Strategies Investing in Art O ctober is often called the cruelest month for stocks. This year it wasn’t very kind to the art market. The auctions of postwar and contemporary art that took place this October in London — precursors to the bigger November auctions in New York — seemed to validate concerns across the art world that this would be the season when the art market bubble would finally burst. Auction houses Christie’s, Sotheby’s and Phillips de Pury & Co. all failed to meet their top estimates. Several higherend lots were left unsold. But Christie’s impressionist and modern art evening sale on November 6 allayed fears that buyers would disappear as quickly as the billions of dollars that have vaporized in the aftermath of the collapse of the U.S. subprime mortgage market. The Christie’s sale brought in $395 million, including $33.6 million paid by an undisclosed buyer for Henri Matisse’s L’Odalisque, Harmonie Bleue, more than 50 percent higher than the previous auction record for a work by the artist. On November 13, Christie’s postwar and contemporary evening auction also had some surprises. The big piece of the evening, Liz, a silkscreen of actress Elizabeth Taylor by Andy Warhol, brought in a disappointing $23.5 million; its preauction estimate was $25 million to $35 million. But Mark Rothko’s Untitled (Red, Blue, Orange) went for $34.2 million, well above the $25 million to $30 million estimate and the second-highest price for a work by the Russian-born American abstract expressionist. One of the evening’s biggest hits Art Masters of By Danielle Beurteaux was Warhol’s Muhammad Ali, which went for $9.2 million, three times its preauction high estimate of $3 million. In total, Christie’s took in $325 million that night, as 16 individual artists set new auction records and all but seven of the 67 lots sold. Although the evening fell short of matching Christie’s record $385 million postwar and contemporary auction in May, it brought a collective sigh of relief in the art world. By applying skills The number of top-level collectors who can spend they’ve honed in the millions for a single piece of work is relatively small — ﬁnancial markets to and hedge fund managers collecting, hedge fund have joined their ranks by making some spectacular managers are helping acquisitions. Last year, Kenneth Grifﬁn of Chicago’s to shape the future of Citadel Investment Group contemporary art. and his wife, Anne Dias, paid $80 million for Jasper Johns’s False Start, a bright oil painting from 1959 dominated by bursts of red, yellow, orange and blue that plays on the disjunction between words and image. Steven Cohen of SAC Capital Advisors has already spent a reported $500 million to $700 million on art since he began collecting in 1999. In 2005 he paid a reported $12 million for a 13-foot shark in a tank of formaldehyde by British artist Damien Hirst. Daniel Loeb of Third Point has NOVEMBER 2007 • INSTITUTIONAL INVESTOR’S ALPHA • 41

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - November 2007

Institutional Investor's Alpha Magazine - November 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Patriot State The Good Guys: College Connection Interview: Currency of Change Cover Story: Comeback Kid Strategies: Masters of Art Research Center: Alpha Awards: Top Technology Providers Top Analysts Alpha Bytes: Critical Choice Unhedged: Commentary: Banking on a Bubble

Institutional Investor's Alpha Magazine - November 2007

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