Displaying items by tag: Stock Turmoil

As the stock market gyrated sharply in recent weeks, New York art dealer Asher Edelman began receiving calls from clients asking to sell works they owned by major 20th-century artists, including Pablo Picasso, Roy Lichtenstein and Robert Rauschenberg.

And the sellers -- collectors, investors and other dealers -- were willing to take about 20 percent less than they would have only a couple of weeks earlier, Edelman said.

“I think there’s a big fear factor out there,” said Edelman, a former Wall Street investor and the founder of art- financing company Art Assure Ltd. “People are afraid of what’s going on in the world and they want to take some cash out of their art.”

This month’s wild swings of the stock markets included the Dow Jones Industrial Average alternating between gains and losses of more than 400 points for four days in a row during the week ending Aug. 12, the longest such streak ever.

“Whenever you have stock price declines, you do get a lot of margin calls, and people look for any form of liquidity that they can find,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin.

Some art owners try to sell privately and avoid the risk of having the work flop at auction. Others are looking for a financial guarantee by a third-party before putting art on the auction block. Many are using their collections to obtain credit lines.

Thirst for Liquidity

“In the last three months, we’ve seen an increase in new clients who want to use art as collateral for loans,” said Suzanne Gyorgy, director of art advisory and finance services at Citibank’s private-banking unit. “They anticipate market volatility and want to have liquidity available for investment opportunities.”

Art Finance Partners, a private New York firm that also lends money using art as collateral, saw a sharp rise in inquiries this month, according to partner Meghan Carleton.

“People need to figure out where their sources of capital may be coming from in the next 30 to 60 days,” she said. “It’s about short-term liquidity.”

The art market’s top tier would likely benefit because it’s increasingly seen by collectors as an alternative to the volatile capital markets, dealers and analysts said.

“We expect a very strong auction season this fall as high- net-worth individuals globally reallocate more funds into top- quality art for value-preservation purposes,” said Sergey Skaterschikov, founder of Skate’s Art Market Research, in an e- mail.

A curvy red 1957 Ferrari became the most expensive car sold at auction, fetching $16.4 million at Gooding & Co. on Aug. 20 and topping a weekend of sales in which autos outshone equities.

The Ferrari 250 Testa Rossa prototype, which competed in the Le Mans 24-hour race, was on the block with hundreds of other collectible autos during auctions coinciding with Monterey Car Week in California, an annual gathering of collectors and other enthusiasts.

Despite the recent stock market turmoil, buyers competed aggressively for trophy autos, establishing records for cars and auction houses.

“The ultra-rich remain ultra-rich,” said Marcel Massini, a Swiss-based Ferrari historian, who attended several auctions last week. “The very, very best sells easy and incredibly high.”

Gooding’s two-day sale brought in more than $78 million, beating its 2010 tally of $64.6 million. Sales at RM Auctions totaled about $80 million, topping its previous high of $67 million last year.

“The stock market being volatile almost helped us,” said Max Girardo, managing director of RM Auctions in Europe. “It makes classic cars even more desirable” because they are seen as safe tangible assets.

RM Auctions set a record for a Mercedes-Benz with the $9.7 million sale of a silver 1937 540 K Spezial Roadster. It was consigned by Sam Mann, a collector from Englewood, New Jersey. The same model fetched $8.25 million four years ago, according to Girardo.

‘More Satisfaction’

“In an era when cash returns practically less than the rate of inflation, investing in tangible assets like automobiles brings you better returns,” said Dave Kinney, contributor to Automobile magazine. “And they give you more satisfaction.”

The top lot at Bonhams, a 1957 BMW 507 Roadster with its engine rebuilt by Motion Products Inc., sold for $1 million, reaching its presale high estimate.

One of the star lots, a 1925 Rolls-Royce New Phantom, custom-designed for the Bengal tiger hunting expeditions of India’s Maharajah of Kotah, failed to sell. It was expected to bring $750,000 to $1 million.

Also unsold was a 1963 Rolls-Royce Silver Cloud III Drophead Coupe owned by Sammy Davis Jr., which was expected to bring between $475,000 and $550,000.

At Gooding, a 1931 Duesenberg, which was expected to fetch as much as $7 million, sold for $10.34 million, topping the $4.5 million auction record for a “Duesy” and establishing a record for a U.S. car at auction