This contains some other resources
http://www.austinvaluecapital.com/resources.html

In my opinion main hurdle in the price movement is valuations, This 70 PE multiples for 25-30% growth company is already at a premium rate, until and unless there is some sharp jump in the Top & bottom line there may not be much movement.

Does Cosmo have exposure to this entity if you know?

Thanks,
Abhishek

The $12 Million Dollar Stuffed Shark by Don Thompson (2008)

Damien Hirst – a contemporary artist – is arguably the most successful artist of all time (commercially speaking), with a net worth of $1B+ (as of 2023). The interesting bit is: Hirst – of his own admission – can neither draw nor paint, instead he employs other artists who bring his concepts to life.

Steve Cohen – an astute hedge fund manager – bought Hirst’s art installation titled ‘The Physical Impossibility of Death in the Mind of Someone Living’ (which was essentially a stuffed shark in a formaldehyde tank) for $12 million. Did he buy it for its aesthetic value, or as an investment, or as a positional good? Art buying at the most expensive end is often a game played by the super-rich, with publicity and cultural distinction as the prize.

It’s a well-researched book that gives a detailed view of the art market. Among other things the book examines: who are the key players (auction houses, dealers, collectors, museums, art fairs) and what are their motivations, why is contemporary market hot now, how do auction houses operate…and most pertinently (for this group) – “is art a good investment?”

Here are my notes on the bits I found interesting (there is a lot more in the book for those interested):

1/ Contemporary art market

• “Money itself has little meaning in the upper echelons of the art world – everyone has it. What impresses is ownership of a rare and treasured work such as Jasper Johns’ 1958 White Flag.”

• Contemporary art has evolved to be the hottest segment of the art market. It has achieved its current importance in resale markets in part because the best examples of other schools of art are disappearing from the market, and are never again likely to appear for sale.

• ‘Early contemporary’ is art produced between 1945 and 1970, and post-1970 art is ‘late contemporary’; ‘Modern art’ encompasses the twentieth century up to 1970, and includes Abstract Expressionism and Pop Art. ‘Old Masters’ is art of the nineteenth century and earlier.

• For centuries, the best of the work of the past appeared regularly at private sales or at auction. Today, when an important non-contemporary work appears at auction there is a price explosion (‘Salvator Mundi’ by Leonardo Da Vinci auctioned at Christie’s for $450 million [bought by MBS] in 2017; it was marketed as ‘The Last Leonardo’)

• Two things contribute to the shrinking supply of traditional art. The first is the worldwide expansion of museums. Second is the parallel expansion of private collections. Over the past fifteen years the number of wealthy collectors has multiplied twenty times.

• There is no longer a van Gogh syndrome, where it takes years to recognize a genius. Today there are so many dealers, curators, advisors and critics checking new art that artists whose work merits attention are quickly recognized. (Story goes that van Gogh managed to sell only one of his paintings during his lifetime)

• The highest price paid for a modern work went for Jackson Pollock’s No. 5, 1948, a 4 × 8ft drip painting. It sold in 2006 for $140 million in a private transaction.

• There are about 10,000 museums, art institutions and public collections worldwide, 1,500 auction houses and about 250 annual art fairs and shows. There are 17,000 commercial galleries worldwide, 70 per cent of which are in North America and western Europe.

• The estimated value of world contemporary art sales is around $18 billion per year.

• Contemporary art shows present a good illustration of economists’ concept of a negative price: ‘What would I pay not to have to look at that every day?’

• Art professionals talk about Impressionist art in terms of boldness, depth, use of light, transparency and colour. They talk about contemporary art in terms of innovation, investment value and the artist being ‘hot’.

• De Koons produces wonderful quotes: ‘Debasement is what gives the bourgeois freedom’ and ‘Abstraction and luxury are the guard dogs of the upper class.’

2/ Branding

• In the world of contemporary art, branding can substitute for critical judgement. You are nobody in contemporary art until you have been branded.

• Collectors patronize branded dealers, bid at branded auction houses, visit branded art fairs, and seek out branded artists.

• A branded artist is one who has already passed several gatekeepers. The artist has been accepted and shown by a mainstream dealer, and moved to representation by a superstar dealer. The artist’s work has been cleverly marketed, placed in branded collections and with branded art museums. The work has appeared in evening auctions at Christie’s or Sotheby’s. It is this process, not aesthetic judgement and certainly not critical acclaim, that defines the branded hot artist.

3/ Christie’s and Sotheby’s

• In contemporary art, the greatest value-adding component comes from the branded auction houses, Christie’s and Sotheby’s. They connote status, quality and celebrity bidders with impressive wealth.

• Christie’s and Sotheby’s form a duopoly with a combined share of 80 percent of the world auction market in high-value art, and an almost absolute monopoly on works selling for over $1 million.

• Both are very profitable, owing to the higher buyer’s premium and rising sales. In 2006 Christie’s auctioned $4.3 billion worth of art and Sotheby’s auctioned art worth $3.7 billion.

• English auction is really Roman in origin. The word auction has its root in the Latin auctio, meaning to ascend, or augere, to increase.

• The terminology used by auction houses is interesting. The percentage fee that is charged a seller of art is called a commission, the term reflecting the auction house’s fiduciary duty to the seller. The fee that is charged the buyer is called a premium, the term implying that the auction house has no duty to the buyer.

• Paintings achieve status both by where they are hung, and what is hung beside them – auction houses argue that the inclusion of great pictures in their auction increases the value of less great ones.

• The guarantee offered by auction houses ensures that the auction house will pay out to the consignor (seller), even if the bidding does not reach the guarantee price. Normally the auction house asks for a fee of from 10 to 50 per cent of any price realized above the guarantee, most commonly 25 per cent.

• Most consignments from individuals reach the auction room through one or more of the four Ds: death, divorce, debt and discretion. The last of these refers to a change in collecting focus, redecorating, or profit-taking.

4/ Auction Psychology

• “Auctions are a bizarre combination of slave market, trading floor, theatre and brothel. They are rarefied entertainments where speculation, spin and trophy hunting merge as an insular caste enacts a highly structured ritual in which the codes of consumption and peerage are manipulated in plain sight.”

• A ‘chandelier bid’ is a phantom bid, acknowledged by an auctioneer who often pretends to see someone raise a paddle in the back of the room, pushing up the price in an effort to stimulate interest in a lot.

• The most common mistake of inexperienced auction bidders is that they bid and declare their interest too soon. For a desirable painting, serious bidders do not raise their paddles early on, especially before the reserve price is met.

• Each bidder starts with a top price in mind. When he becomes the high bidder, there is an ‘endowment effect’. He will pay more not to give up the painting, not to lose.

• “The loss of something one has almost owned outweighs the relief of not having overspent.”

• ‘Heaven is two Russian oligarchs bidding against each other.’ In 2006, the successful bidder for Picasso’s Dora Maar simply raised his paddle and kept waving it until everyone else quit at $95.2 million

• In the primary-art market, price creates value and buyer satisfaction rather than reflecting it. This is what economists call the Veblen effect: the satisfaction derived by the buyer comes from the art, but also from the list price or conspicuous price paid for it.

5/ Charles Saatchi

• Charles Saatchi is a central figure in contemporary art. He is the prototype of the modern branded collector. His purchases are publicized and create an instant reputation for an artist.

• The reputation and brand of the owner is as important in the market as the work being sold. A collector such as Saatchi can increase the value of an individual work, or of work by the artist, just by adding that work to his collection – or even by expressing interest in it.

6/ Fakes

• Art fakes are rife throughout the art market, but are particularly problematic for modern art. A well-known example involved Paul Gauguin’s 1885 Vase de fleurs (Lilas) which showed up for autction at both Christie’s and Sotheby’s in May 2000.

• ~40 per cent of the high-end art market is made up of forged art. There were at one time 600 Rembrandts hung in major museums around the world and another 350 in private collections when the master only created 320 paintings.

7/ Contemporary art as an investment

• Art advisors like to cite the example of Picasso’s Garçon à la pipe, purchased by John Hay Whitney in 1950 for $30,000 and sold at Sotheby’s in 2004 for $104 million (that’s CAGR of just 16%).

• In the overwhelming majority of cases, art is neither a good investment nor an efficient investment vehicle. Eighty per cent of the art will never resell for as much as the original purchase price.

• Additionally, there are high transaction costs, including dealer markups, auction house commissions, insurance and storage costs, value added tax, and capital gains tax when work is sold.

• All art markets are cyclical. In the 1980s, the Impressionist and modern art market seemed unstoppable. Japanese paper mogul Ryoei Saito came to symbolize the boom when he paid a record auction price of $82.5 million for van Gogh’s ‘Portrait of Dr Gachet’

• Mei/Moses Index measures price trends for art. The Index has a few flaws, the main one being that it measures only paintings which have sold at least twice at auction (talk about cherry picking!).

• In the late 1990s, UBS, Citigroup and Deutsche Bank set up departments to advise high net worth clients on art investment.

• There have been a number of art-fund disasters that no one discusses. Chase Manhattan Bank with a $300 million art fund, and the Japanese Itoman Mortgage Corporation, which invested $500 million in Western paintings, each lost much of its investment. Each said that its model would have worked with a holding period of twenty to twenty-five years, but no investor was willing to commit funds for that long.

• During the art market crash of 90s one-third of auction buyers were from Japan, and the Japanese yakuza (mafia) were buying with money borrowed against highly leveraged property. When the Nikkei share index collapsed and Tokyo property values tumbled, warehouses full of western art emptied onto a market that was not buying.

8/ Misc.

• “Modern art is merely the means by which we terrorize ourselves.”

• Artnet is a website where you can check on previous auction prices.

• The most dramatic art trend in mid-2007 was the expanding role and popularity of Chinese art, much of it a commentary on that country’s huge social changes.

• Foreign buyers entering the western art market are also buying artists with their ears rather than their eyes, and overpaying if others have.

• Deutsche Bank corporate collection with 50,000 works is the largest in the world.

• “Art tells you things you don’t know you need to know until you know them.”

I think aavas is in radar from Marcelleus for possible dump for same disbursement slowness. Another quarter fumble will get them kicked out of the PMS entirely