matisse capital management

Current Returns in the Art Market

Art markets are feeling the same pressures as housing and stocks.  According to Bloomberg, prices for many styles of art declined in the fourth quarter, but less so in the Impressionist market which has "remained solid." A painting by Monet, left, will be auctioned at Christie's London on the 4th of February.  The painting is estimated to bring $21.1 million.  It last sold in 1999, in New York, for $15.4 million.  If it sells at the current estimate, it will have appreciated at an annual compound rate of 3.2 percent.  A painting by Toulouse-Lautrec titled "L'Abandon" will also be sold.  Its high estimate is about $9.8 million.  The painting last sold in 2000, for $9.4 million.  This would equal an annual compound rate of appreciation of 0.5%.

Artists Outperforming the Dow

Over the last week or so, Christie's and Sotheby's both held auctions and judging by some of the prices paid, you wouldn't know there was a recession.  Several records were set.  An Edvard Munch painting from 1902, entitled "Girls on Bridge," pictured left, sold for $30.8 million.  It had previously sold for $7.7 million in 1996.  This equals a compound annual rate of appreciation of 13.1 percent.  During the same time period, the Dow grew at an average rate of 8.2 percent. 

Sculpture is the New Architecture

It seems like it all began with Frank Gehry's Guggenheim Museum in Bilbao, Spain.  It was a sculpture first and a building second.  Ask anyone who has been there.  But, it was a fascinating design and the start of architecture as sculpture around the world, although Gehry did take cues from Oscar Niemeyer, the designer of Brasilia.  At any rate, the "new sculpturism" is here.  I think it is an interesting contrast to the equally great Mies van der Rohe idiom of "less is more" that dominated a lot of the 20th century.  Above is BMW's very sculptural headquarters in Munich, designed by Coop Himmelblau.  More buildings as sculpture after the jump.

London Sails, Banksy Soars

If auctions are a barometer of the economy, then a US recession is underway.  At an auction of modern and impressionist paintings at Christie's London this week, the prices were high, but there were significantly fewer American buyers.  About 15% of the lots were bought by Americans, while in the November's similar auction the figure was 50%. The money quote: ``The average rich aren't rich anymore,'' from Asher Edelman.  Rival auction house Sotheby's is optimistic that the art market will hold up. "There are no jitters in the art market. The buyers look at art as refuge, during periods of turmoil," said its manager.  The full story is at the International Herald Tribune.  Meanwhile, across town, another work by London graffiti artist Banksy (above left) sold at a record price.  A property owner sold graffiti that Banksy sprayed on the side of his building for £208,100, on E-Bay.  The full story is here at the Independent.  A manager at the auction house Bonham's said "In 2003, you could have picked up a Banksy print for £300. Last year, we sold one for just under £300,000." Not a bad return.

Art as Recession Safe Harbor?

Consider some recent returns.  On the left is Mark Rothko’s “Homage to Matisse.”  In 2005, Christie’s sold the painting for $22.4 million. It was previously sold in 1984 for $975,000; the seller was Meshulam Riklis, husband of Pia Zadora.  This equals a compound annual rate of return of 16.1 percent.  Over the same time period, the Dow had an equivalent annual rate of return of 10.7 percent.   In May, Sotheby’s auctioned a Rothko owned by David Rockefeller.  It was titled “White Center, with Yellow, Pink and Lavender.”  He acquired the painting in 1960 for $10,000.  Sotheby’s gave him a guarantee of $46 million.  At this price, the painting had a compound annual rate of appreciation of 19.7 percent.  During the same time frame the Dow grew at an equivalent annual rate of 6.7 percent. 

Art Market, Returns by Artist

The art market is still surging, perhaps an alternative to the stock market, given rising uncertainty, the spectre of recession and volatility.  There were a number of important auctions in November and December that brought record prices for works by several artists.  The reasons for the high prices include the weak U.S. dollar, as well as growing wealth in other parts of the world that has brought new buyers into the game.  New buyers have emerged in particular from the BRIC countries, Brazil, Russia, India and China.  Below are the annual returns generated by four artists based on recent sales.

Pissarro +17.9% per year. Les Quatre Saisons (the Four Seasons) by French painter Pissaro, a cycle of four landscapes, sold for $14.6 million in November of this year.  It had previously sold for $8.9 million in 2004.  This equals a compound annual rate of appreciation of 17.9 percent. 

Modigliani +10.3% per year.  Amedeo Modigliani's 1916 painting "Portrait of the Sculptor Oscar Miestchaninoff" sold for $30.8 million.  It had previously sold for $9.5 million at Christie's in 1995.  This equals a compound annual rate of appreciation of 10.3 percent.

Picasso +22.6% per year. (pictured above left). A  painting by Picasso of his mistress "Femme Accroupie au Costume Turc (Jacqueline),'' which had previously been purchased for $2.6 million in 1995 sold for $30 million, at Sotheby's. The rate of appreciation is 22.6 percent per year. 

Warhol +10.5% per year.  According to Artnet, the mean estimate of a Warhol at auction was about $442,000, up from $66,000 in 1988.  Warhol is among the most easily traded of all artists, and has an established market.

Major Artworks Stolen in Brazil

A painting by Pablo Picasso and and one by Brazilian artist Candido Portinari were stolen in Sao Paolo yesterday.  The paintings were in the Sao Paolo Museum of Art, located on the busiest street in the city.  Thieves used a crow bar to get in just before dawn.  This was their second attempt; on the last try, the alarms went off, but this time they did not.  The Picasso, titled "Portrait of Suzanne Bloch", could be worth as much as $50 million and the Pontinari $5-6 million.  The detailed story can be found at the International Herald Tribune.  What, exactly can you do with such well-known paintings?  Hold them for ransom?  Or sell them at a huge discount to a collector that would keep them hidden?  The painting by Portinari, O Lavrador de Cafe, above left, is an equally outstanding work and is pictured after the jump.

Outperforming the Dow: Art Appreciation Rates by Artist

The rates of return in the world of art vary greatly by artist.  Some incredible returns have come from modernists like Pollock, Rothko, and Kline.  But what kind of numbers do they generate?  On the left is Mark Rothko's "Grey and Black," a painting bought by an Iowa couple in 1996 for $800,000.  It sold last month for $10.7 million, appreciating at a compound annual rate of 26%.  As a brand, Rothko has provided consistently high returns to investors. In 2005, Christie’s sold an orange-colored Rothko for $22.4 million; it had previously sold for $975,000 in 1984, so it appreciated at an annual rate of 16.1%.  Over the same time period, the Dow had an annual return of 10.7%.  In May, Sotheby’s auctioned a Rothko owned by David Rockefeller titled “White Center, with Yellow, Pink and Lavender,”  for $73 million.  He had acquired the painting in 1960 for $10,000, so it appreciated at a rate of 21.0% per year, while the Dow grew at an annual rate of 6.7%. 

An artist generating some of the highest returns today is a newcomer named Banksy.  He began as a graffiti artist and his true identity has never been revealed (at least in public). Banksy is simultaneously commercial, political and controversial. He painted the words "I want out" inside the elephant enclosure of the London Zoo.  In 2005, he hung his own artworks in the Museum of Modern Art, Metropolitan Museum of Art, and the American Museum of Natural History in New York. In 2004, Banksy created "spoof £10 notes, substituting Princess Diana's head for the Queen's and changing 'Bank of England' to 'Banksy of England'."  At that time, 50 signed posters, each containing 10 uncut Diana notes were sold for £100 each. One of these posters, called "Di Faced Tenners," recently sold at Bonham’s for £24,000.  This means the work appreciated at a rate of 521% per year.  Other Banksy works have generated similar returns.

 

Upcoming Auction: Quittenbaum, Munich

The catalog says: " Some 100 exhibits will document influential design and applied art of the 20th century, with a critical focus on the floral theme." i.e., "Flower Power."  Increasingly, the 1960's and 1970's have arrived in the conscience of the art world.  Quittenbaum will hold a lecture about the "Flower Power" designs of that time with a corresponding auction on November 19.  In addition to the lots that will be auctioned, there will be an exhibit.  For those of us that lived through the period of Nehru jackets, bell bottoms and love beads, it doesn't quite seem like "history" yet.    On the left, Verner Panton, Four Lamps, 1968, estimate € 5.000.  On the right, Gruppo 14, 'Fiocco' Chair, 1970, estimate € 5.000.  More highlights and memories after the jump and at the Quittenbaum site.

Is Art A Good Investment?

Again, yes, if has been created by the "right" artist.  Consider the returns to the holders of the following works of art.  At left is Andy Warhol's portrait of Liz Taylor, bought for $3.6m in 2001 and sold by Christie's for $21m in 2007.  The annual compound rate of appreciation over this period of time was 34.2%.

On the left is Jeff Koons' sculpture Blue Diamond - you can see the scale of this piece by comparing it to the people on the right.  It was bought two years ago for $3.5 million and just sold at Christies for $10.5 million.  This indicates an annual compound rate of appreciation of 73.2%.  Blue Diamond was bought by the dealer that had sold it originally.  No doubt, he thinks the price has further to run.

These returns have bested almost any offered by Wall Street hedge funds, and are just below those of Chinese equities over the last few years.  This begs the question:  why aren't funds investing in art?