New York Magazine’s story about the board battle involving Sotheby’s is oddly off. Not only does it come out the week that New Yorkers are recovering from an art hangover of monstrous proportions but it misses the central fact that on the key issue of the Contemporary art market last week saw Sotheby’s manhandle the competition. Although the sales around the Armory Show are hardly big-money affairs, they do take place at the heart of active collecting.
Last week Sotheby’s not only raised their total year over year by a third but they sold as much as Phillips and Christie’s combined. The low double-digit million-dollar sales won’t close the gap between Sotheby’s and Christie’s in Contemporary but to ignore the stride is unfair.
More to the point, the story gets some simple things wrong. Here’s New York’s take on the activists’ stock gains:
Sotheby’s has adopted a “poison pill” takeover defense, preventing Loeb from amassing more than the roughly 10 percent of shares he currently holds, but last week Marcato, which owns 6.6 percent of the company, announced it would be supporting Loeb’s nominations. Sotheby’s stock has remained fairly flat since the activists disclosed their positions over the summer, so they have every incentive to make some noise.
But the chart above shows that the big gains in the stock came after Marcato’s 13-D filing in June and there were still substantial gains after late September when the Summer ended. Since Patrick McClymont’s announcement of a buyback and the quarterly earnings, the stock has pulled back to where it was at Summer’s end. If Loeb and McGuire did not take any of their gains, they’ve got to do more than make noise. They need a meaningful strategy that can substantially improve profits at the auction house and convince other shareholders that it can.
The other part of the story that doesn’t ring true is its explanation for Tobias Meyer’s departure. From the series of events, it would appear that Meyer was hustled out of the company because he was perceived to be sympathetic to Loeb. Remember that Loeb’s famous letter had the hedgie talking to several employees about morale and strategy. Loeb even went as far as to say that he’d identified a viable CEO to replace Ruprecht from within the firm.
Instead we get this:
Meyer’s overnight disappearance offers another potential area of intrigue. The timing of his resignation led some to conclude that he and his salary were offered up as a sacrifice to Sotheby’s angry shareholders. Though his compensation was never disclosed, it is believed to have been enormous.
Meyer did make enough money that his contractual severance put a dent in the fourth quarter’s earnings. But the savings on his salary will not move the needle lower on the firm’s robust 25 price/earnings ratio. The story goes on to edge closer to what might have happened but treats the subject so gingerly as to make it oblique:
A source familiar with Meyer’s thinking says he had become frustrated with the public company’s bureaucracy and was attempting to negotiate a more influential place in the hierarchy, something like a creative-director role. But Ruprecht wasn’t interested in giving Meyer the power he wanted. Since leaving, Meyer is said to have expressed a desire to become “invisible,” and he recently put his Manhattan condo on the market, for $17 million. His mental map of the world’s art treasures should serve him well as a private dealer. There are, however, those who think that if Loeb were calling the shots at Sotheby’s, Meyer might return in some sort of rainmaking role.
Why Daniel Loeb Is Targeting Sotheby’s (New York Magazine)
