Ariel Capital Management sold their 12.3 per cent stake in the auction house last month, but the share price of Sotheby’s Holdings Inc has remained above $29 a share on the New York Stock Exchange at the time of going to press.
A recent article in the Financial Times suggested that the share value was inflated, but Sotheby’s chief financial officer, Bill Sheridan, told ATG: “Ariel owned Sotheby’s stock for over five years and were long-term investors. Their average purchase price was in the range of $10 per share, and selling in the range of $25-30 dollars was clearly a good investment decision... Ariel enjoyed an excellent return on that investment.”
Mr Sheridan said that the market remained strong as Sotheby’s year-to-date auction sales results showed. “The figures are up significantly on 2005 which was an outstanding year, so we continue to see strong growth.” Sotheby’s registered a record turnover for 2005 of $513m.
However, there have been mutterings that prices for Contemporary art in particular have become too speculative, a factor that precipitated the last major art market crash – then for Impressionist art – seen in the early 1990s.
Sotheby’s chief executive Bill Ruprecht recently assured stockmarket information provider Bloomberg that this is not a bubble about to burst.
“The current art market doesn’t feel as if it is shuddering or anywhere near a situation where it is about to collapse,” he said. “A lot of capital is interested in enjoying art, and as long as that continues, we are likely to see a vigorous art market.”
With the former controlling shareholders Taubman Interests also cutting back on their holdings in Sotheby’s but retaining a 4.95 per cent stake, the largest shareholder in the company is now the investment management company US Trust, with a 7.03 per cent stake. There are now more than 11,000 shareholders in Sotheby’s, but no one else has an individual stake of more than five per cent.
Mr Sheridan said that Ariel had sold their shares to new investors rather than existing shareholders. One of the key changes in making the company more attractive to new investors has been its capital restructure, giving equal voting rights to all shares. Previously, the two classes of share, ordinary A shares and voting B shares, allowed Taubman to control the company’s voting rights without having an overall majority shareholding.
By Alex Capon
Sotheby’s hit back over share price claims
SOTHEBY’s have hit back at claims that investors are losing confidence in the art market despite the company’s biggest shareholder selling their entire stake.
