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

Beautiful Asset Advisors/Mei Moses Fine Art Index has just published a new report with the results from the late May Post War and Contemporary art sales held in New York City.  The index keeps growing in data with an additional 715 repeat sales being added to the index.  The sales from a financial perspective on the combined returns from both day and evening sales were very positive, with the May sales showing a 10% compound annual return.  The reports state the annual compound return from the S&P 500 would have been 6.1%.

From the news and trade reports I dont think that strong returns surprised any appraisers.

BAA/Mei Moses reports

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 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