Imp Mod Sales Returns

Mei Moses has released their financial analysis of the recent Impressionist and Modern sales held in New York at Christie's and Sotheby's. We know the sales totals were very strong, especially with the sale and pre auction hype for The Scream which set a new art at auction sales record.

Beyond the hype of the sales and totals sold, the questions remains, how were the financial returns on the art sold when compared to financial indexes such at the S&P 500.

Mei Moses reports the financial or investment returns when calculated based on repeat sales was only 5% at the combined day and evening sales.  The returns over the same period of time for the S&P 500 was 6.6%.  Interesting, the IMPMOD sales held in London this past February showed returns of over 12%, so the May sales show a rather drastic reduction based upon repeat sales.

Mei Moses reports (click the link at the end of the post for the free summary report, or visit the BAA site at http://www.artasanasset.com/main/ and click on the Recent Press Releases button)

The two May evening sales have been reported in the press as having mixed results. Sotheby’s total revenue almost tripled Christies. There were about 107 lots put up for sale and 89 sold yielding an above average success rate of 83%. We had prior purchase price data on 42 of those lots and 34 sold yielding a success rate of 81%. From a financial returns perspective of the holders of the art that sold the results were similar at both auction houses. The average of the compound annual returns (CAR) of the 34 lots that sold was a weak 6.1% with an average holding period of 14.3 years. These weak returns still beat the returns that would have been achieved if the art purchasers had been invested instead in the S&P 500 Total Return index (where dividends are reinvested tax free) for the identical holding periods as the art.

The average CAR for the S&P investments would have been only 5.1%.Clearly the press buzz has all been about the $120 million achieved by the “Scream”. Unfortunately there was no prior auction sale so we could not include it in our analysis and database. But would it have changed our findings if it had a prior sale? There has been no report that we could find of a private sale price as well. So we are left to speculate on what the price might have been given what other important works were selling for in the late 1890’s. As an example it is well know that at that time you could go to Monet’s studio and purchase one of his now classic wheat stack or cathedral paintings for the substantial sum at the time of $1,000-$2,000. If the Scream had sold for say the low end of that range the CAR from 1900 until 2012 would have been about 11%. If you assume Munch was only 1/10 as famous as Monet at the time and use a $100 purchase price the CAR would have been about 13%. Including the 13% number in our analysis would have only changed our average CAR for these sales by less than 1/10 of a percent.

Source:  Beautiful Asset Advisors