Institutional Investor's Alpha Magazine - November 2007 - (Page 46)

Investing in Art to their business, to make sure the work goes to the right hands,” says Lindemann. “That generally means it doesn’t go to auction at an inappropriate time or price point.” Adam Sender, 38, began his fund, New York–based Exis Capital Management, and his art collection in 1998, after working as a trader for SAC Capital. He has amassed a comprehensive body of contemporary art, numbering about 800 works, including pieces by Prince, American photographer Cindy Sherman and British artist Chris Oﬁli. The collection is reportedly worth more than $100 million, though its curator, Todd Levin, will not comment on the ﬁgure. Levin, who has worked with Sender since 1998, spent several months discussing art and collecting with him before the initial work was acquired. “Adam was one of the ﬁrst of his generation to begin in a serious, methodical way,” Levin claims. “He sees this as a very longterm situation.” In 2006, Sender sold 30 works at Phillips de Pury. They brought in $19 million, signiﬁcantly more than he had paid for them. One of those was American artist John Currin’s Fishermen, which he had bought for $140,000 and sold for $1.4 million. Sender’s fund hasn’t fared so well, as of late — with losses in 2004 and 2006, he closed to reorganize and is — MICHAEL STEINHARDT, now a short-only fund. “He’s arFORMER HEDGE FUND MANAGER guably made more money with art than trading,” says one investment manager and collector. David Ganek also worked at SAC Capital before founding his own fund, Greenwich, Connecticut–based Level Global, in 2003. His parents were collectors, and he and his wife, Danielle, began buying art together when they were in their early 20s. They’ve assembled a collection that includes works by Prince, Hirst and conceptual artist Jeff Koons, and they paid $4.4 million for Quality Material , by American conceptual artist John Baldessari, surpassing the artist’s previous record of $992,000, at the Christie’s auction in May. Some of the Ganeks’ best-known works are a group of prints by Diane Arbus, the photographer whose black and white shots have become American icons. The Ganeks bought 23 signed prints directly from the photographer’s estate in 2004, 13 of which they’ve promised to the Metropolitan Museum. In 2005 the Ganeks sold one of the prints for a profit at the same time that a popular Arbus retrospective was being held at the Met. A large show at an esteemed institution can improve an artist’s reputation — and value — and the Ganeks were accused in the press of proﬁting from the event. Third Point’s Loeb, 45, began collecting in the late 1990s, buying works by Kippenberger before the German artist’s paintings became popular. Kippenberger died in 1997 at the age of 44, and prices for his work have since increased. Sources say Loeb is selling a few pieces from his collection, though to date he has sold just one, UNOGebaude Haus per la pax. Many collectors scoff at the idea of buying in bulk, as Loeb has done. At least he won’t lack for things to hang on the walls of his home — he recently bought a penthouse in a new luxury building near Columbus Circle for $45 million, making it, briefly, the most expensive apartment in New York City. In 2001, New York University’s Stern School of Business professors Michael Moses and Jianping Mei recognized a demand for a long-term method to track art as an investment. They developed the Mei Moses fine art index, which was up 18.3 percent last year, outperforming the Standard & Poor’s 500 index by 250 basis points. But traditionalists reject outright the notion that art is a good investment vehicle and point out that today’s younger collectors haven’t been through a downturn and don’t have long-term experience with the vagaries of the art market. Legendary hedge fund manager Michael Steinhardt, 66, began buying art in the early 1980s. Like his trading activities, which focused on making macro bets across a variety of asset classes, Steinhardt’s collecting is based on courage and conviction. He buys what he likes, avoids trends and never uses a consultant. Steinhardt’s first art purchase was either a Paul Klee or an Egon Schiele — he says he doesn’t remember which — and his collection also includes works by Jackson Pollock and Pablo Picasso. He says he wouldn’t buy contemporary art in the current market because it is overpriced, and he derides thinking of art as an asset class. “You shouldn’t buy art as an investment,” he says. “You should buy art because you love it. That’s certainly been gobbled up by the idea of buying art because it will appreciate.” For all the similarities between the stock and art markets, the parallels are limited. The art market has nothing comparable to regulatory ﬁlings that list transactions and holdings, and valuation is hardly an exact art. Even seasoned art professionals recognize the difﬁculties inherent in predicting which artists, and which works of those artists, will be meaningful in the long term. “The stock market is a much more regulated market, it’s a much more secure market, it’s a much safer market,” says Steinhardt. “The machinations that go on in the art market make the stock market seem saintly.” Professor Jonathan Brown of New York University’s Institute of Fine Arts says that the big names of the Gilded Age — robber barons like Henry Clay Frick, Andrew Carnegie and Henry Osborne Havemeyer — provided the model for art collecting in America. They were shrewd businessmen who spent a large portion of their wealth amassing important art collections. Just as it did for the robber barons, art still brings a singular level of prestige, particularly in times of great wealth, when it takes more than a few mansions and a collection of cars to signify prosperity. “If you’ve got a major work by [American artist Robert] Rauschenberg, then you’ve got something that’s in short “The machinations that go on in the art market make the stock market seem saintly.” 46 • INSTITUTIONAL INVESTOR’S ALPHA • NOVEMBER 2007

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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