December 2013: November Art Market Report

Francis Bacon’s Triptych sold for a record $142.4 Million at Christie’s Post-war & Contemporary evening auction on November 13, 2013.  Image courtesy of Christie’s.

By Shireen Lohrasbe

NOVEMBER’S NEW YORK CONTEMPORARY AUCTIONS exceeded everyone’s expectations. Sotheby’s Contemporary Evening sale realized $380.6 Million, offering masterpieces by Warhol and Lichtenstein. Though impressive, rival Christie’s knocked it out of the park. Its equivalent PwC auction achieved $691.6 Million—the highest tally in history (98% lots sold by value, 91% by lot). The post-release read “The sale established 10 new world auction records, selling 11 lots for over $20 million, 3 works for over $50 million, 16 for over $10 million and 56 for over $1 million.” Judd Tully at BLOUINARTINFO described: “only four of the 70 lots offered failed to find buyers for a near-perfect buy-in rate by lot and value of six percent… dozen artist records were set, led by the ravishing cover lot, Jackson Pollock’s small but mighty ‘Number 19, 1948.”
          The top lot was a Francis Bacon triptych titled “Three Studies of Lucian Freud,” purchased for an astounding $142.4 Million. Kelly Crow at The Wall Street Journal elaborated on the piece: “a three-panel portrait of the artist's friend-turned-artistic-foil Lucian Freud sitting, cross-legged, in a wicker chair against a taxicab-yellow background… painted the triptych in 1969 and was irritated to learn that each one had been sold separately because he wanted them kept together. Years later, the panels were reunited by a Roman collector, mineral-water magnate Francesco De Simone Niquesa, whose quest which may have added to its appeal. (Mr. De Simone Niquesa later sold the work to the anonymous U.S.-based seller who put it up for auction now.)”

NOVEMBER’S NY LATIN AMERICAN AUCTIONS fared well. Sotheby’s Latam sale totaled $21.2 Million (including buyer’s premium) led by artist Sergio Camargo. Christie’s corresponding auction realized $18.2 Million (85% sold by value, 76% by lot). “The top lot of the sale was Mexican artist Rufino Tamayo’s Women Reaching for the Moon, which was sold on behalf of the Cleveland Museum of Art, realizing $1,445,000.”

PINTA—THE MODERN & CONTEMPORARY LATIN AMERICAN Art Show—opened for its second NY edition to coincide with the auctions. Partnering with Artsy, the fair presented 60 galleries from 20 countries showcasing over 160 artists from Central and South America. Founded by Diego Costa Peuser in 2007, PINTA has been pivotal in placing Latin America on the global art market map.

NOVEMBER’S NY IMPRESSIONIST AND MODERN AUCTIONS scored an average 3.24% effective rate of return. According to Skate’s Art Market Research, “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 investment performance of Impressionist and Modern artworks showed positive trends. The best results were achieved by Jacques Lipchitz, whose Femme au Serpent was sold at auction seven years ago and found a buyer this week for USD 2.6 million, thus yielding an annualized effective rate of return (ERR) of 19.27%.”
          Sotheby’s Imp-Mod auction totaled $291 Million (81.2% sold by lot; 92.3% by value). The top lot was a bronze by Alberto Giacometti titled “Grande tête mince (Grande tête de Diego)," purchased for $50M. “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 [after buyer’s premium].” Conversely, Christie’s Imp-Mod sale presented too many overestimated lots. The auction fetched the third highest sale of the week with “Diego en chemise ecossaise” by Giacometti for $32.6M. “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.”

BILLIONAIRE INVESTOR DANIEL LOEB has waged a war against Sotheby’s. Loeb takes issue with the auction house’s managerial decisions, subpar capital allocation (and poor margins) relative to its rival Christie’s, a privately held company. Even though Sotheby’s (BID) currently outperforms the S&P index, Loeb (who owns 9.3% stake in the company) is making demands, specifically targeting its genteel CEO Bill Ruprecht. In a scathing review Michael Wolff at The Guardian wrote: “Art collector is a new term for vulgarian. The hedge funder Dan Loeb, billionaire and competitive collector, has now turned his activist investor attention to Sotheby's, buying nearly 10% of the company and seeking to oust its CEO. [Steve Cohen the head of SAC Capital] before him, made a grab for Sotheby's too, as have various other financial arrivistes.”
          Luckily, Sotheby's situation is improving. Agustino Fontevecchia at Forbes explained: “Under siege by activist investors including Dan Loeb and Marcato Capital Management [who own together ~18%], Sotheby’s posted third quarter earnings… amid allegations of expensive lunches on shareholders’ tab and inefficient usage of capital, chief executive Bill Ruprecht spoke of aggressive cost cutting expected for next year, while boasting of a dramatic jump in private sales and auction commissions… Sotheby’s saw a 57.6% surge in revenue to $107.9 million… some success in the third quarter, with private sales commissions surging 77% and auction commissions increasing 16%. Net auction sales rose 5% year-to-date to $2.4 billion, while private sales jumped 37% to nearly $1 billion.”

AT REUTERS GLOBAL INVESTMENT OUTLOOK SUMMIT, short seller Jim Chanos stated “sharp rises in the share price of Sotheby's, the auction house, has historically occurred at around the same time froth in the markets peak. ‘Every time we see some sort of excess in the marketplace Sotheby's stock moves from about $10 to $50, then ‘collapses.’”