Mei Moses/BAA Looks at NY Post War and Contemporary Sales

Our friends at Mei Moses/Beautiful Asset Advisors have published a new financial analysis of the New York contemporary and post war day and evening sales at Sotheby's and Christie's.  Unlike the earlier Impressionist and Modern sales, the financial results and the average compound annual returns at 10% were strong at the contemporary sales.  If the same investment had been made in the S&P 500 index for the same holding periods the returns would have been 6.1%.

BAA gold level subscribers have access to the full in-depth report, while others can view the summary of the sales by following the Recent Press Releases link on the BAA home page.

The summary report states

The two May evening sales have been reported in the press as having very strong results. Christie’s evening sale set an all time total revenue record and the combined total including Sotheby’s was an impressive $650 million. There were about 116 lots put up for sale and 102 sold yielding a well above average success rate of 88.9%. We had prior purchase price data on 23 of those lots and 17 sold yielding a success rate of 74%. 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 17 lots that sold was a very strong 13.4% with an average holding period of 13.3 years. These strong returns easily 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 6.1%.

Clearly much of the press buzz has been about the $ 87 million achieved by the Rothko and the $ 45 million achieved by the Bacon. Unfortunately neither had a prior auction sale so we could not include them 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 an earlier time period. As an example by the early 1970’s major Rothko paintings were selling at auction for about $50,000. Using this price the CAR from 1971 until 2012 would have been about 20%. Including the 20% number in our analysis would have only changed our average CAR for these sales by .15 of a percent.

The day sales for each auction house also produced very similar results. From a financial returns perspective of the holders of the art that sold the results were within a percentage point of each other. In addition the mean CAR for the day sales was also close to the overall mean return of our entire repeat sale database for this collecting category. The average CAR for the 54 day pairs was 9% with an average holding period of 8.5 years. The average CAR for investment in the S&P 500 TR index for the same holding periods as the 54 day art pairs was a weaker 6%.

Source: Beautiful Asset Advisors/Mei Moses Fine Art Index