Skate’s Annual Art Investment Report for 2013 – Part 1

January 29, 2014
Welcome to Part 1 of Skate’s Annual Art Investment Report for 2013!

2013 will be remembered and cherished by global art market observers as a year that repeatedly proved that there are no boundaries when it comes to the value of art. Auctions continued to test the market and push bidders, with higher estimates resulting in even higher sales prices. The past year became a turning point for many artists’ markets with new records being set. This was particularly the case with contemporary art. The performance of living artists, which this year was in line with the performance of the most prominent artists of all time, causes us to question once again the criteria that push artists into the market’s premium echelon.

In this edition of Skate’s annual report, we address the art market’s top segment through Skate’s proprietary rating, Skate’s Top 5000, which contains the 5,000 most valuable artworks sold at public auctions worldwide since 1985. In analyzing results from premium auction sales, we focus on the most significant trends in the commercial world of art and address a number of key art market topics in the current report, including:

  • The global state of the premium art market
  • Art trading results for 2013
  • The most notable achievements by individual artists at auction

Another unique tool used by Skate’s involves the tracking of repeat sales. By identifying artworks that have appeared at auction more than once, it is possible to measure their financial performance. Among other things, this allows us to determine:

  • The most liquid artists
  • The best and worst investment performers on the art market

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Annual Report Cover-Part 1


Noble Investments Leaves Skate’s Art Stocks Index

December 2, 2013

On September 26, 2013, the boards of Stanley Gibbons and Noble Investments announced that they had reached an agreement on Stanley Gibbons’ acquisition of a 100% stake in Noble, and on November 21, Stanley Gibbons announced that the acquisition had been completed under the terms initially proposed. As a result, Skate’s is announcing that Nobel Investments, in ceasing to exist as a publicly traded company, has been removed from Skate’s Art Stocks Index effective November 22.

This consolidation deal in the collectibles segment gives the new Stanley Gibbons several key advantages, including greater scale, product diversification, and better access to capital. Skate’s believes that it makes considerable strategic and business sense and therefore applauds this transaction.

As a result of the consolidation, oligopolistic market dynamics in the coins and collectibles segment between Collectors Universe and the new Stanley Gibbons will resemble the similar dynamics long observed in the auction world between Christie’s and Sotheby’s, as well as in the price database market between artnet and Artprice.

Skate’s Art Stocks Index has been updated to reflect Stanley Gibbons’ acquisition of Noble Investments. To read more about and view the current index, please visit http://skatepress.com/?cat=2.


artnet Management Admits to Giving Shareholders Incorrect Financial Statements at Time of Hostile Takeover Bid, Weng Fine Art AG Exceeds 5% Ownership Threshold in artnet

November 25, 2013

artnet AG has released its nine months financial results, which present an overall bleak picture caused by declining revenues, among other factors. The EUR 0.5 million shareholder loan that the company’s founder and majority owner, Hans Neuendorf, had to provide in March to keep it out of insolvency was a further sign of trouble. The most important new information, however, is the disclosure that artnet’s management supplied its shareholders with “incorrect” financial statements dated June 30, 2012.

The inaccurate accounts pose a potential threat of major litigation for artnet. The company’s shareholders received a hostile tender offer from Redline Capital Management SA in September 2012 when the Luxembourg-based and Russian-owned investment firm offered EUR 6.4 per artnet share, which at the time represented a 40% premium to the market price. A majority of shareholders voted to reject the offer, however, and artnet’s stock is currently trading well below EUR 3 per share.

In other words, artnet shareholders relied on “incorrect” financial information when making their decision about the tender offer received from Redline last September.

Page 14 of artnet’s September 30, 2013 financial disclosure reads:

The German Financial Reporting Enforcement Panel (DPR) established that the condensed interim consolidated financial statements were incorrect for artnet AG, Berlin for the period ended June 30, 2012.

As of June 30, 2013, the condensed interim consolidated financial statements have posted a revenue of 229,000 EUR from the continued operations, and a loss of 1,374,000 EUR from discontinued operations. The expense of 232,000 EUR was falsely allocated to the discontinued operations. This expense would have carried on despite the closure of the magazine.

Additionally, as per the definition, the closure of the Paris office does not fulfill the requirements of a Discontinued Operation. If the expenses from the Paris office had been distributed among the business divisions, as they were in fiscal 2011, earnings would have been reduced by an additional 512,000 EUR. The incorrect disclosure of earnings from discontinued operations violates IFRS 5.33 (a).

The previous year’s information from the condensed interim consolidated financial statement and cash flow for artnet AG for the first nine months of 2012 was corrected in the condensed interim consolidated financial statement for the first nine months of 2013 to reflect the DPR’s findings. The revised figures in the charts have been indicated as corrected. All information in this interim statement reflects the modified amounts.

Redline has declined to comment on this report.

In a separate development this week, German-listed Weng Fine Art AG, Redline’s acting-in-concert partner for the 2012 takeover bid, announced that it went over the 5% ownership threshold in artnet AG by acquiring shares from the California-based Artis investment fund. It reported a 5.33% ownership interest in artnet AG as a result of this transaction.

For more information about artnet and its nine months financial disclosure, please visit www.skatepress.com/?cat=56. For more information on Weng Fine Art AG, please visit www.skatepress.com/?cat=149.


Living Artists: A Week of Records Sees Strong Performance by Jeff Koons, Christopher Wool, and Gerhard Richter

November 15, 2013

This past week in New York has seen the three leading auction houses sell more than USD 1.1 billion worth of contemporary art. This week’s sales were particularly successful for a group of living artists who have proven their ability to compete on value with prominent artists tested by decades and even centuries of history.

Christie’s sale in New York on November 13 brought a total of USD 691.6 million—the highest result for a single sale in the history of the art market and nearly double the USD 380.6 million worth of art sold at Sotheby’s. Highlighting the sale was a group of new price records by living artists. While not competing with the duopoly of auction houses in terms of total value, Phillips managed to achieve USD 68 million in sales and also saw records for a number of living artists.

The three leading living artists this week were Jeff Koons, Christopher Wool and Gerhard Richter, with their works selling for eight-digit prices well above their pre-auction high estimates. Below are the Top 10 most valuable works by living artists sold during this past week…

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New Test for Investment Potential as Artist Pension Trust Prepares to Benefit from First Art Sales after a Decade of Existence

November 13, 2013

In an age when the concept of art investment has managed to obtain the same respect as other activities in the art market, questions of viability and practical implementation nevertheless remain. Practiced by numerous institutions and individuals for over 40 years, with a fluctuating degree of success as evidenced by the British Rail Pension Fund’s investments, no one has yet managed to make a successful art investment case on a long-term basis.

Yet this lack of success hardly serves as a hurdle for those who produce indices and other tools to track the art market and make it more transparent. Furthermore, key players continue to discover and experiment with alternative investment methods, attracting financial experts and art world representatives in the hopes of achieving a successful outcome. Artist Pension Trust (APT) has managed to go even further by attracting artists themselves. As APT prepares to celebrate its tenth anniversary next year, Skate’s has decided to analyze its achievements, limitations and the institution’s overall potential.

Since 2004, APT has managed both to grow and expand internationally, developing eight regional trusts in New York, Los Angeles, London, Berlin, Mexico City, Mumbai, Beijing and Dubai…

Please click here to download the full article with data.


Insights on Investment Results of Impressionist and Modern Art Sales in New York

November 7, 2013

New York’s extravaganza of November auctions has presented the first batch of sales results highlighting collectors’ current appetite for blue chip Impressionist and Modern works. In total, Christie’s and Sotheby’s sold 52 artworks priced above USD 2.2 million, the threshold for entry into Skate’s Top 5000. The overall value of these lots was USD 440.4 million.

The recent turbulence in Sotheby’s management has not affected sales results, with the auction house performing better than its competitor in terms of overall value. Sotheby’s sold 25 works above USD 2.2 million, and the overall value of these works totaled USD 251 million. Christie’s, which was the first to hold sales in the Impressionist and Modern Art segment two days prior, saw weaker performance this time. Even though the number of artworks sold above USD 2.2 million was bigger, the 27 works saw lower prices on average with overall sales totaling USD 189 million.

Sotheby’s presented the market with two price records. The highest price was achieved by the bronze Grande tête mince (Grande tête de Diego) by Alberto Giacometti, which just exceeded is high estimate of USD 50 million. Diego en chemise ecossaise by Giacometti was sold at Christie’s for USD 32.6 million, becoming the third best result of the sales taking place this week. Pablo Picasso’s works saw better outcomes at Sotheby’s, occupying the second and fourth place by value with Tête de femme selling for USD 40 million and Mousquetaire à la pipe selling for USD 30.1 million. Picasso Claude et Paloma generated significant bidding at Christie’s, selling for a final price of USD 28.2 million, more than doubling its pre-auction high estimate and placing it in fifth place in the rating of the most valuable works from this week’s sales…

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Upturn in U.S. Market Boosts Mallett’s Profits

September 12, 2013

Mallett, a publicly traded antiques and fine art dealer, recently published its results for the six months ended June 30. The London and New York based company posted a pretax profit of GBP 0.2 million, a figure that represents a GBP 0.1 million increase compared to the same period last year, although it is still below the GBP 0.3 million achieved in 2011.

Although Mallett’s total sales dropped slightly to GBP 6.6 million, from GBP 6.7 million in the first half of 2012, gross profit remained constant at approximately GBP 1 million.

The art dealer credits its positive financial results mainly to the improvement in the U.S. market. The turnover for Mallett’s U.S. operations almost doubled from the same period last year, from GBP 1.7 million in 2012 to GBP 3.4 million in 2013.

The upturn in the U.S. market has caused the company to revise its planned subletting of part of its New York showroom, a measure considered in line with its 2013 strategy to contain costs.

“The market in the U.S. has been dwindling for some years, and we thought we would be able to save a significant amount of money whilst keeping a presence in New York by letting out part of the showroom,” Mallet’s Finance Director, Michael Smyth-Osbourne, told Skate’s. “Then the economy picked up and the business started coming in, as a result of which we are revisiting the U.S. strategy,” he added.

In terms of further property management changes, the company announced that it has signed an agreement to sell its freehold Clapham property for GBP 2.65 million. The expected completion date of February 21, 2014 is to give enough time for Mallett’s restoration subsidiary Hatfields to relocate. Mallett’s board is looking into how best to manage the proceeds from the sale, including a possible return of cash to shareholders.

Despite the fact that the market in the UK has proved difficult during the reporting period, and although the company remains cautious as to its outlook, there are signs of improvement, Mr. Osbourne said. Masterpiece London Limited, of which Mallett owns over 23%, staged its fourth fair at the end of June, which saw a 20% increase in attendees to almost 34,000 over the eight days of the event. Mallet’s share of the profit is expected to be approximately GBP 85,000, compared with GBP 83,000 last year.

The art retailer reported modest sales in Brazil and China, in line with the company’s 2013 strategy to promote Mallett in these and other emerging markets.

Finally, the company announced its continued focus on turning the Mallett website into a competitive e-commerce platform. “Websites are becoming a key sales tool for any business, and we would like to use our website for both marketing and sales and additionally, turn it into an educative tool, with proper photos, history and background of the antiques,” Mr. Osbourne said.

During the reporting period, the company completed the sale of the business and certain assets of James Harvey British Art Limited.

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Skate’s Semiannual Report 2013

September 1, 2013

The global art market is currently in the midst of its traditional summer break, which provides an opportune time to focus on the results of auction sales from the first half of 2013. Despite a number of record-breaking sales, both anticipated and unexpected, the art market is clearly experiencing stagnation at the top level with its weakest performance over the last three years.

Several key changes in the investment performance of premium-segment artworks also became evident during the first half of 2013. The auction houses managed to find exceptional works to put up for sale, and many of these sales saw stellar prices and corresponding media headlines. Three records were set by Christie’s during the Post-War & Contemporary Evening Sale in May, when Number 19 by Jackson Pollock sold for USD 58.4 million, Woman with Flowered Hat by Roy Lichtenstein for USD 56.1 million and Dustheads by Jean-Michel Basquiat for USD 48.8 million. Together with these three breakthroughs, auctions in general during the first six months of 2013 produced 61 sales at price points above USD 10 million and 328 sales above USD 2.5 million. However, new entrants contributed only USD 2.4 billion to Skate’s Top 5000, which is USD 10 million less than the amount contributed by the 343 artworks sold in the first half of 2012 at prices or above the rating’s threshold. Unless the upcoming fall and winter season proves to be unexpectedly strong, the art market’s performance for the full year 2013 is bound to confirm a slowdown…

In this issue:

  • Leading Artists in 1H 2013 – Volume, Value and Investment Return
  • Investment Performance of Blue-Chip Artists
  • Dynamics of Skate’s Top 5000
  • Female Artists in Skate’s Top 5000
  • Lack of Liquidity in 1H 2013
  • Artworks Leaving Skate’s Top 5000

To download and read the full issue, please click here.


Amazon Diversifies into the Art Market: New Player Has Potential to Dominate the Online Art Trade

August 13, 2013

Amazon, a global online retailer that has become the leading consumer destination on the internet (most popular online retailer and eighth most popular website in terms of frequency of visitors*) will celebrate its 20th anniversary next year. Over the past two decades, it has offered nearly every product imaginable, but apart from a small section for art-related materials called “Arts, Crafts and Sewing” it has largely stayed away from the art market.

Skate’s has long anticipated that Amazon would move into the art trade due to the potential of its quality platform.[1]  Indeed, among all current players in the online trade Amazon clearly stands out due to its global reach and broad international audience, the accessibility of its user-friendly interface, and its long experience in marketing various types of products. All of these qualities give Amazon an opportunity to conquer the art market.

In August 2013, Amazon did finally make the decision to diversify into the art trade by partnering with more than 150 galleries and dealers. The company’s initial presentation to the art world contains around 40,000 artworks by approximately 4,500 artists.

This move, which has generated both positive and negative feedback from art market professionals, will test the art market in a new way. For the past several years, various market players have attempted to present a viable platform to serve buyers interested in collecting online. Yet, there is little proof that the existing ventures have managed to succeed. The vast majority of companies involved are keeping revenue and profitability secret, but those publicly traded companies that are obliged to announce their performance results, such as artnet and Artprice, serve as a source of encouragement to others looking for new ways to explore the online trading model.

Amazon has yet to justify its decision from a financial perspective, and it will be some time before we see the results of an established company diving into what remains a very challenging market with still uncharted waters. In the meantime, Skate’s has added Amazon to its e-commerce ratings, which measure the technical and artistic merit of online art traders. Regardless of how Amazon ultimately performs in this sector, it is safe to say that competition is about to intensify.

Exhibit 1 below presents the top 10 businesses listed by their distribution power as measured by the number and frequency of users visiting their websites. Exhibit 2 presents a customized approach developed by Skate’s to alternatively grade art industry firms for their artistic merit in terms of providing online trading service and functionality. This rating is based on four principal qualities: vetting for art offered (no counterfeits, accurate authentication, and limited counterparty risk), ease of use, transaction and shipment capabilities and, finally, transaction costs.

Please click here to download the full report with data.



Collectors Universe Declares Quarterly Cash Dividend of $0.325 Per Common Share

August 6, 2013

Collectors Universe, a leading provider of value-added authentication and grading services to dealers and collectors of high-value collectibles, as well as a constituent of Skate’s Art Stocks Index, announced on July 31 that it would pay a quarterly cash dividend of $0.325 per share of common stock for the first quarter of fiscal year 2014. The cash dividend will be paid on August 30, 2013 to stockholders of record on August 16, 2013.

Collectors Universe has kept its quarterly dividend of  $0.325 per share steady since November 2010. Shares in the company are up 3.08% since August 1.


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