Yazzy's at williamverdult.com Eyeing the Boom in The Art Market
Saturday, September 29, 2007 at 09:29AM 
Summary: A boom in the international art market has lead to spectacular growth in auctioneer Sotheby's Holdings Inc. (BID) this year (shares are up over 200% from 2006), and it could still rise another 20%.
New wealthy collectors from Russia, China, and India, along with domestic hedge-fund managers and private-equity investors are driving the current art-market bull. Historically upturns in the art-market last six years -- meaning the present boom still has another three to go. Key figures: (1) Revenues are up 36% from last year. (2) Net income for '06 already exceeds '05, and the major art auctions have exceeded record sales. (3) Impressionist sales could more than double last year's ($380M vs. $180M). (4) At 17 P/E, it is still at a discount to other luxury-goods companies. (5) Last month it paid its first dividend ($0.10) in six years. (6) Profit margin: 31% vs. 2% in '01. (7) Cash flow: $210M up 45% from '05.
Sotheby's key competitor is privately-owned Christie's International; the two dominate the market, run more-or-less even in market share, and tend to play follow-the-leader in price increases.
Besides art BID collects licensing fees on their brand-name, Sotheby's International Realty, now owned by Realogy Corp. (H); Sotheby Diamonds, a retail-joint venture, will design and sell diamonds valued between $50,000 and $5M; it plans to expand its financial services through which it lends money to clients using art as collateral. On the downside, if Sotheby's is unable to match the torrid sales of recent auctions, year-to-year earnings comparisons could disappoint investors expecting never-ending growth.
Quick comment: For those who can't afford Cezanne or Chardin, Sotheby's is an opportunity for proxy investing in art.
Additionally, buying William Verdult art work or a stake in the Company that controls William Verdult artwork might be a the way to go.
Wealth Enterprises Corporation's parent company is a public and reporting company. Recently it has taken steps to update the Corporations SEC reporting and seeks its stock symbol with art; luxury real estate and digital media as the center piece of its new business direction.
To find out more about the reporting company or to get involved in its growth,
email mike@Verdultgallery.com.
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