Financial Results for London Sales

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Beautiful Asset Advisors just updated the Mei Moses art indexes after the recent impressionist and modern sales.  The London sales had 190 lots which had previous auction records. The results show the evening sales performing much better than the day sales.  As we know, the high profile, high dollar art is in the evening sale, while the day sale covers more of the lower segment of the top end of the market as well as the middle market.

The evening sales showed a compound annual return on 50 repeat sales of 8% while the day sales, with 140 repeat sales at only 2.5%.  The average returns at 3.9%, which is well below the average S&P 500 for the same period at 7.3%.

The press release from BAA/Mei Moses states

A TALE OF TWO MARKETS FROM A TRUE RETURNS PERSPECTIVE: IMPRESSIONIST AND MODERN (IMPMOD) NIGHT SALES OUTPERFORM WHILE DAY SALES LANGUISH AT MAJOR JUNE 2013 LONDON SALES

THE LONDON AUCTION ART MARKET RESPONDED TO CONTINUED GLOBAL ECONOMIC AND STOCK MARKET UNCERTAINTY WITH BIPOLAR RESULTS.  THE EVENING SALES PRODUCED SOLID RESULTS WITH AVERAGE COMPOUND ANNUAL RETURNS (CAR) OF 8.0% FOR THE 50 LOTS WITH PRIOR AUCTION PURCHASE PRICE DATA.  IN COMPARISON THE 140 IMPRESSIONIST AND MODERN (IMPMOD) DAY LOTS WITH PURCHASE PRICE DATA PRODUCED A VERY WEAK AVERAGE CAR OF 2.5%.

IN ADDITION THE PERFORMANCE OF THE ART RELATIVE TO EQUITIES DEPENDED ON WHETHER THEY WERE SOLD IN THE DAY OR NIGHT SESSION.  THESE RETURNS ASSUME THE EQUITY RETURNS WERE BASED ON INVESTING SIMILAR SUMS IN THE S&P 500 TOTAL RETURN INDEX FOR THE SAME HOLDING PERIOD AS EACH ART OBJECT. ©    

SUMMARY

There were five day and evening IMPMOD sales held in London in June.  This is the high point of the early summer auction season in London at the two auction houses we cover in our analysis; Sotheby’s and Christie’s.  The sales have been reported in the press as having results for total sales or percent sold that ranged from slightly above to well below average.  We found 190 lots that sold that had prior auction prices that we could find which allow us to compute a true return for each of these objects.  From a financial returns perspective of the holders of the art that sold the results were well below historical return results for this collecting category.  The average of the compound annual returns (CAR) of all of the 190 lots that sold was 3.9% which is about 50% lower than our historical values for these combined collecting categories. These returns were also well below the returns that would have been achieved if the value of the art purchases 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 7.3%.

Source: Beautiful Asset Advisors/Mei Moses Art Indexes