One of the great non-issues of the art market has been the assumption that hedge fund buyers would change the market by bringing their hot-money habits into art buying. In the end, the hedgies have been mostly buy-and-hold types often eclipsed by more aggressive collector-dealers in the trading category. ArtInfo asks and answers its own question in this story that raises the non-issue and then dismisses it:
“You can’t generalize about [hedge fund managers] as a class of collector,” says the New York art dealer Asher Edelman, adding that some “are probably out of the market not because their hedge funds are doing badly but because the hype has lost a lot of its interest.”
Is their withdrawal contributing to the market’s decline? Edelman doesn’t believe so. “The premise that the hedge-fund guys have been very important in the past year or two is wrong,” he says. “Four years ago they were.” Brett Gorvy, the Christie’s co-head of contemporary art, attributes lower sales totals to fewer buyers from Russia and the Middle East rather than to an absence of U.S. financial-industry types. Still the latter have not been as aggressive as in the past. “One major hedge-fund manager told me he bought most of his art when he was making money; he’s not buying art again until he makes money,” says Gorvy.
Hedged Out (ArtInfo)
(Extra credit question after the jump.)
Sarah Douglas closes her story with this thought: “When the hedge-fund guys do restart their spending, perhaps they’ll put even more energy into a field with a softer market. Jumping at such an opportunity would be a signature hedge move.”
But a classic hedge fund move is not to buy low when something is priced cheap. That’s a value investor’s signature move. Hedgies thrive on complicated transactions that involve relationships between the prices of several assets that do not seem obviously linked. What other asset classes will be a harbinger of price stability or appreciation in art?