Barron’s talked to Philip Hoffman of the Fine Art Fund and got his rundown on what the firm does right. Hoffman demurs slightly, calling his firm a “moderate success,” but did bother go detail some of the fund’s wins and even explain some of its losses. A full scorecard on the fund awaits the winding up. In the meantime,
Fine Art purchased Frank Auerbach’s Mornington Crescent in 2005 after Hoffman’s experts studied the figurative painter for a decade. Auerbach, who ran in the same “London School” circuit as Francis Bacon and Lucien Freud, kept a low profile. The reclusive artist’s works, which were then selling at $500,000-$800,000, about a tenth the price of Bacon’s. So when the right Auerbach came along, the firm bought it for $1.1 million and a year later, sold it for $2.3 million.
In 2007, Hoffman’s group also purchased for $1.1 million, Glenn Brown’s Dalí-Christ 1992, previously in the Saatchi Collection. The group sold it in mid-2010 for 60% more, setting an artist record at $1.76 million. The group did better with Peter Doig’s Iron Hill, which sold for $1.8 million in 2006, a 107% profit just one year after its purchase. Doig’s contemporary landscape evokes a sort of Hopper-like nostalgia tinged with a hint of despair.
With the group’s first fund set to mature in two to five years, it is impossible to get a clear picture of its total returns. Hoffman claims that for every work the firm has lost money on, 19 works have produced profits. They did take a hit on a work by a Chinese contemporary artist, for example; the firm bought it for $220,000 and sold it last year for $200,000. The loss, Hoffman says, was because the artist overproduced and saturated the market after the fund made its original purchase.
The Hedge Funds of the Art World (Barron’s)
