Manager Update - Q2 2013


Dear Friends,

In the second quarter of 2013, the contemporary art market continued to move from strength to strength. Perhaps the most significant manifestation of this was the new $ 495 million all time record for a single auction, set by the Christie’s Contemporary evening sale on May 15 in New-York. Again, numerous artist records were broken. May also featured the first edition of Art Basel Hong Kong, which by all accounts was a huge commercial success, re-affirming the rise of Hong Kong, and more broadly speaking China, as the major growth area of the contemporary art market. Christie’s announced their license for mainland expansion into China with a first auction scheduled for September in Shanghai. Sotheby’s have also entered into a joint-venture in China to conduct auctions in the mainland.

However, our focus of attention in the second quarter continued to be on broadening our Latin American portfolio, in anticipation of our ambitious project to showcase the collection at a major venue in the UK.  Following my visit to Columbia in January, we finalized acquisitions of major works by rising contemporary artists Mateo Lopez and Nicolas Paris. In April, I visited Mexico city during the Zona Maco art fair and subsequently acquired works by Gabriel Kuri, Damian Ortega, Pedro Reyes (an installation of musical instruments - see spotlight) and a video by Edgardo Aragon. In June in London, it was at the Pinta Projects section of the Latin American art fair, curated by Kiki Mazzucchelli and Catherine Petitgas, that we acquired works by Rodrigo Matheus from Brazil and Jorge Pedro Nunez, our first artist from Venezuela. We also added a work by Leandro Erlich from Argentina. 

Pedro Reyes
Cuernófono, 2013 ; Mateo López Parra, Caja Negra, 2012 ; Damien Ortega, Estructuras de la casualidad V, 2009

 Connecting on from Mexico, in April I also spent a week with friends visiting the stunning new Crystal Bridges museum in Arkansas and the fascinating Chinati Foundation in Marfa, Texas. In May I attended the opening ceremonies of the Venice Biennale and in June visited Art Basel, where we acquired an edition of Vik Muniz’s portfolio of 7 iconic works from the Garbage series, featured in his famous “Wasteland” movie.

Vik Muniz, Pictures of Garbage Series, 2008-2011

During the quarter we also took advantage of bullish market sentiment to sell 2 important works. In order to fund our new South American acquisitions, we sold our Adriana Varejao privately, at a substantial premium to its cost at auction in November 2011. In June we also sold at auction our El Anatsui work, “Energy Spill” at Christie’s London, which we had acquired in January 2011 and recently replaced with a new work by El Anatsui “Earth developing more roots”. The sale was timed during the Summer Exhibition of the Royal Academy of Arts in London where the artist was commissioned to cover the façade, in parallel to his major solo show ongoing at the Brooklyn Museum, and immediately after another work by the artist set a new record for his work at Christies New-York in May. The work hammered down at 580’000 GBP, versus a reserve of 450’000 GBP. Including auction house premium the work sold for 697’875 GBP, the second time his work has crossed the $ 1 million mark and also the second highest price ever achieved at auction for his work.

El Anatsui,  Energy Spill, 2010 ; Adriana Varejão, Pele (skin), 1996

We also had good press exposure this quarter with an article published in the May edition of The Art Newspaper, the definitive art world publication. In June, I was invited to give a lecture on Contemporary Art in Developing Markets at Artstation gallery in Israel, as part of the ongoing lecture series organized by ArtFi - Fine Art & Finance Conference.

At the fund level, the track record of realized sales now amounts to 12 works with sales amounting to over $ 2.26 million, or circa 15.04% of current NAV, a meaningful sample. Proceeds are mostly used for re-investment in new works. Some useful statistics about the realized sales:
* Average holding period: 493 days.
* Average gross return: 61.6% (Range +25% to +210%)
* Average realized price to book value: + 26.7% (Range -9.4% to +90.9%)
* Total price realized to book value (money weighted): +20.5%

We remain bullish on the long term outlook for contemporary art in developing markets, but we expect greater volatility in financial markets for the remainder of the year. Our recent sales position us conservatively as we come into the third quarter, with a small cash position and debt reduced to zero.

We welcome you to browse our website, where we added some funky new features, including maps and slideshows. We will shortly be upgrading further, adding multiple images for works and embedded videos. We would appreciate any feedback you may have.
As always, please feel free to get in touch if you have any questions. In the mean time, I wish you and your families a lovely summer season.  

Serge Tiroche, co-founder
Art Vantage PCC Limited