As we wrap up our coverage of the art stocks’ annual results for 2009, we’ve been looking to see what others have been writing about the companies we cover.
In his recent post, “The Ultimate Bubble Stock Is Going Nuts Again,” Joe Weisenthal says that Sotheby’s is “the ultimate bubble stock, moving violently up and down throughout its history, always making super-sharp peaks right before the economy becomes unglued.”
Mapped against an underperforming and lackluster DOW over the past decade, yes, Sotheby’s appears to be a bubble. But what Weisenthal and other skeptics ignore are the solid fundamentals behind the share price surge.
- Greater geographic diversity of clients and products – Sotheby’s has seen enormous expansion into Asia in recent years, where real economic growth is well underway. Regional auctions (i.e., Hong Kong) are now some of the company’s most exciting and the region’s buyers some of its most important.
- Credible cost control in place – Sotheby’s learned its lesson in the wake of the sharp downturn in the art market following the global financial crisis. In Q4 2009, expenses were cut 28%. See Sotheby’s announcement for a full overview.
- Scarcity value – anyone who wants investment exposure to the art market without investing in actual art has little choice but to invest in Sotheby’s. Of the eleven art stocks tracked by Skate’s, Sotheby’s is by far the largest and most dynamic.
- Spring auction excitement – A big part of the reason behind the current stock surge is that Sotheby’s, put quite simply, is going to make a lot of money this spring on its major sales of Impressionist, Modern and Contemporary art. Catalogues featuring exciting lots are being released as we write.