Edge and the Art Collector
In 1999, he bought Munch’s Madonna for $11 million. In 2004, he bought Hirst’s The Physical Impossibility of Death in the Mind of Someone Living for $8 million. In 2006, he bought a Pollock for $52 million. In 2006, he bought de Kooning’s Woman III for $137 million. In 2007, he bought Warhol’s Turquoise Marilyn for $80 million. In 2010, he bought a Johns Flag for $110 million. There have been works by Bacon and Richter and Picasso and Koons. Probably only he knows how much he has spent. Someone on the internet estimates it at $700 million.HT: Cassandra Does Tokyo
It was 1997, or maybe 1998, when I first heard of the Art Collector. I was working as a research analyst at a large New York investment bank. The broker at our firm whose responsibility was serving the Art Collector told a gathering of the bank’s research analysts that the Art Collector’s hedge fund was now one of the top payers of brokerage commissions to the bank. He may have said the top payer. It was an awakening: a hedge fund, five or six years old at the time, could now pay as much—or more—in commissions than the mutual fund giants that had always been our most important clients. The math, however, was straightforward. The mutual funds had a lot more money. The Art Collector traded many more times.
Even if I had heard of the Art Collector’s hedge fund before then, I still would have been surprised by the salesman’s purpose that day. The Art Collector’s firm, we were told, would happily continue to generate huge revenue for the bank. It was asking for only one thing in return. It was not for us to do better research on companies or their stocks, or to do the research more quickly, or in greater quantities. That would be too literal. Or figurative. The Art Collector wanted something more abstract: not better information, just early information. When we interpreted an event in the life of a company, we distributed a note to all of the bank’s clients. We also called the more important ones to provide context difficult to fire as bullet points. We had to call one client first. Why shouldn’t it be the one that paid us the most?
It was a startling request. The Art Collector wasn’t that interested in what we thought about companies or industries, competitive advantages or long-term growth. No, the Art Collector’s trading strategy was based on the thesis that one could make money trading stocks by anticipating whether Wall Street’s equity research analysts, collectively, were going to increase or decrease their estimates of how much a company was going to make the next quarter. The Art Collector didn’t invent the estimate revisions strategy. But the Art Collector had figured out that even if one worked tirelessly to discover the patterns of analysts’ opinions (or of the companies themselves), one still had no fundamental edge over other smart traders doing the same thing. What one could do—brazenly, unprecedentedly—was to pay the banks as much—more—than than any other client to get information first. This would potentially allow the Art Collector’s traders to hear some nuance from the analysts or the broker that would move a stock a sixteenth or two when the information was better propagated. This was not a restaurant’s biggest customer demanding a better table. This was a restaurant’s biggest customer demanding that other patrons get worse food....MUCH MORE
Previously:
The Physical Cliff
Let's get physical, physical...
From The Art Newspaper:
Taxing times mean there could be trouble ahead...
…but art dealers found a silver lining to the US fiscal cliffhanger as Art Basel Miami Beach opened to invited guests
As throngs of glamorous VIPs crowded into the Miami Beach Convention Center yesterday for the opening of Art Basel Miami Beach, the outside world was preoccupied by more practical concerns. The prospect of the so-called “fiscal cliff”—a raft of tax increases and budget cuts due to be implemented in the US in January (see box, p2)—is a prevailing uncertainty, and there are signs that the world inside the art fair is more aware of external economic events than usual.....MORE
HT: Marginal Revolution
See also DealBreaker:
Art World’s Reactions To Steve Cohen Woes Range From “I’m going to begging for change outside the Staples Center” To “NBD”
Slate:
Why the Art World Is So Loathsome
