Finance capitalism and the avant-garde

[Louis Proyect <lnp3@xxxxxxxxx>]

Back in the late 80s, when I worked for Goldman-Sachs, I always got a 
chuckle over how the powerful investment bank had decided to festoon the 
walls with 'avant-garde' art. This was especially glaring in the cafeteria, 
which served as a mini-gallery for some "daring" neon signs created by 
Barbara Kruger with slogans like "You think you can escape commodification 
--- You can't". Standing on line behind some bond salesmen in $1200 suits, 
I couldn't imagine them being disturbed by her postmodernist ironies.

I was reminded of this today when I saw an article  in the NY Times today 
about some hedge fund billionaire buying huge quantities of modern art, 
including a work by Damien Hirst that is shown alongside the article. 
Purchased for $8 million, it is an actual 14-foot tiger shark submerged in 
a tank of formaldehyde. It is titled "The Physical Impossibility of Death 
in the Mind of Someone Living." If you google "Damien Hirst" and 
"subversive," you'll get 664 hits.

Right after Sept. 11, 2001 Hirst told the BBC that the attacks were 
"visually stunning" artworks and that the perpetrators "need 
congratulating." He said, "You've got to hand it to them on some level 
because they've achieved something which nobody would have thought 
possible." After getting mauled by the bourgeois press, Hirst issued an 
apology stating, "I value human life."

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NY Times, March 3, 2005
A New Prince of Wall Street Buys Up Art
By LANDON THOMAS Jr. and CAROL VOGEL

For more than a century, successive generations of Wall Street titans have 
lavished their riches on art, hoping that a Monet or a Cézanne might add a 
bit of polish to the rough edges of their deal making. Now, young, 
little-known billionaires who manage hedge funds are roiling the art 
market, using the vast pools of capital they have accumulated to snatch up 
some of the world's most recognizable images.

Leading the way has been Steven A. Cohen, a publicity-shy hedge fund 
magnate living in Greenwich, Conn., who took home $350 million in 2003 and 
even more last year, according to people close to him.

Over the last five years, Mr. Cohen, 48, has spent more than $300 million - 
amassing a collection that includes one of Jackson Pollock's iconic drip 
paintings, a Manet self-portrait, a Monet waterlilies painting and other 
trophy works including a Degas sculpture of a young dancer and well-known 
Pop works like Andy Warhol's "Superman" and Roy Lichtenstein's "Popeye."

And most recently, in what may be a wink at his reputation for being one of 
Wall Street's predatory traders, he paid $8 million for the British artist 
Damien Hirst's 14-foot tiger shark, submerged in a tank of formaldehyde.

"He is a significant collector," said Donald B. Marron, the chairman of 
Lightyear Capital and former chief executive of PaineWebber, who is also a 
trustee at the Museum of Modern Art and has seen Mr. Cohen's collection. 
"It's a very personal collection, too. He is emotionally involved, has a 
good eye and knows the works in their context. Those are the ingredients 
that make a good collector."

Along with just a few other collectors, Mr. Cohen is willing to pay top 
dollar - often what some specialists say is too much - to get what he 
wants. Each time word circulates that Mr. Cohen has bought a Pollock for 
$52 million or a Warhol for $25 million, dealers and collectors from Los 
Angeles to São Paulo cannot stop talking about the prices being paid.

Mr. Cohen, keeping with past practice, declined to be interviewed for this 
article.

"Psychologically, his purchases inform a whole subcategory of collectors 
that there is significant, substantial money being spent," said Perry 
Rubenstein, a Manhattan art dealer. "It adds value - stimulates discourse 
not just in the artists he is buying but in the value of other artists."

Indeed, in the art world, tracking Mr. Cohen's purchases have become 
something of a sport. The air of the unknown about him only heightens the 
rumors and the exaggeration over his purchases, as indeed it does about his 
trades on Wall Street. Still, dealers who have worked with Mr. Cohen gave 
the prices for the purchases cited in this article.

The rapid emergence of Mr. Cohen in the collecting world reflects a shift 
of power on Wall Street. Just as the collections of J. Pierpont Morgan in 
the early 1900's and Saul P. Steinberg and Henry R. Kravis in the 1980's 
tracked the booms in their businesses - for Mr. Morgan, underwriting 
American industrialization; for Mr. Kravis and Mr. Steinberg, leveraged 
buyouts and takeovers - Mr. Cohen's splurge is a vivid illustration that 
the real fortunes being made these days are in the hedge fund world.

But unlike, say, Andrew Mellon, who gave art and money to institutions 
throughout his life, or the cosmetics heir Ronald S. Lauder, the driving 
force behind the Neue Galerie in Manhattan and one of the Museum of Modern 
Art's biggest benefactors as well as a passionate collector, Mr. Cohen 
tends to buy what some call trophy art - recognized examples of world-class 
names.

Indeed, while few will publicly assess Mr. Cohen's buying patterns, some 
say that he tends to buy with his ears rather than his eyes.

Still, he is one of a small circle that includes Mr. Lauder; Stephen A. 
Wynn, the Las Vegas hotel and casino owner; S. I. Newhouse Jr., the 
publisher; and the financiers Leon D. Black and Mr. Kravis who might be 
willing to spend more than $10 million on a painting. So Mr. Cohen is 
relentlessly courted by dealers and auction-house officials trying to sell 
him something.

A short, unimposing man, Mr. Cohen - known as Stevie - has a net worth that 
Forbes magazine estimates at $2 billion, and he cultivates an aura of 
quirky mystery. Despite his position as one of Wall Street's most 
influential investors, he has a policy of not sitting for photographs. 
Meticulous about security, he requires that all his employees sign 
confidentiality agreements, and he keeps the temperature on the 
trading-room floor chilly enough so that his traders wear fleece while he 
opts for his trademark sweater.

So far, Mr. Cohen has not used his collection as other Wall Street magnates 
have, as a lever to gain entree into Manhattan social circles or a seat on 
the board of the Metropolitan Museum of Art. He has, however, joined the 
painting and sculpture acquisition committee at the Museum of Modern Art, a 
first step to becoming a member of its board.

As a trader, he is known to be single-minded and relentless, leaping from 
one position to the next and seeing opportunities in the markets that many 
others do not.

"Steve has attacked the art world in the same fashion that he attacks his 
business," said David Ganek, a former partner at Mr. Cohen's hedge fund, 
SAC Capital, who now runs his own hedge fund and is himself a significant 
art collector. "It's a passion that has taken on a life of its own."

In the art world, Mr. Cohen maintains limited visibility, sitting in sky 
boxes at Sotheby's and Christie's the night of big auctions, as other major 
collectors do, and letting dealers like Larry Gagosian and William 
Acquavella bid for him. Dealers say he makes a point of attending most 
major art events. Last week, he took in the New York Art Show. Two years 
ago, he was at the European Fine Art Fair in the Dutch city of Maastricht 
with a family member in tow, perusing booths filled with fine French 
furniture and antiquities along with modern and old master paintings.

Mr. Cohen's love of art appears to be recently acquired. He began his 
serious collecting five years ago, starting with Manet and Monet before 
moving quickly into the contemporary realm, scooping up paintings and 
photographs by Richard Prince, whose market value has taken off 
considerably in the last year.

"When he buys something like Damien Hirst's shark for that much money," Mr. 
Rubenstein, the dealer, said, "it causes a pause even among the 
cognoscenti. They think if Steve Cohen thinks this is a great work, then 
what's my Hirst worth? It substantiates and validates prices."

While art may be an acquired taste for Mr. Cohen, his passion for trading 
stocks dates to his childhood in Great Neck, N.Y., when he tracked the ups 
and downs of the market in newspaper financial pages. He hung out at 
neighborhood brokerage firms as a teenager and traded stocks while at the 
Wharton School of the University of Pennsylvania.

In advancing his art history education, he has been very much of an 
autodidact. He has bought a 4,000-volume reference library and supplements 
it by buying hundreds of books on each new artist who attracts his fancy.

He has also drawn the attention of the world's leading dealers: Mr. 
Gagosian and Mr. Acquavella, who have become his closest advisers. Both 
men, not surprisingly, are eager to sing his praises.

"I'd put him on an equal footing with Geffen and Broad," said Mr. 
Acquavella, referring to the Hollywood figure David Geffen and the 
financier Eli Broad, widely recognized as two of the world's top collectors 
of modern art. "They may have more but not better. He is a passionate 
collector who loves to learn. He is not just decorating his house."

In the last two years his collecting has accelerated. About a year ago he 
bought a rare drip painting by Pollock from Mr. Geffen for $52 million. He 
followed that with a Warhol Superman he bought for $25 million from Mr. 
Gagosian, and then spent $25 million on a 1938 Picasso, "Portrait of a 
Seated Woman," which he bought from Giraud, Pissarro, Ségalot, dealers with 
offices in Manhattan and Paris. Other big buys include "Palisades" by 
Willem de Kooning and a painting of a pope by Francis Bacon for $16.5 million.

And while his dealers say that he has a stock trader's ability to act 
quickly and buy what he likes, they also say he is just as willing to pull 
back if there is a buying frenzy for a particular piece. They cite his 
decision to get out of the bidding at $80 million during last year's heated 
auction for "Boy With a Pipe," a Picasso painting that was eventually sold 
for $104 million.

Still, it is his continued aggressiveness as a buyer that makes him 
susceptible to paying amounts that may sometimes exceed what is considered 
a fair market price, dealers who have worked with Mr. Cohen say.

Mr. Cohen is not the only young hedge fund investor making a splash in the 
art market. Kenneth Griffin, 36, the founder of the $8 billion Citadel 
Investment Group in Chicago, recently bought a Cézanne still life that sold 
for $60 million at a 1999 auction at Sotheby's. Also active in the art 
market are Eric Mindich, 36, a former Goldman, Sachs partner who runs Eton 
Park Capital, and Daniel C. Benton of Andor Capital, both of whom have 
recently joined the board of the Whitney Museum of American Art.

"These hedge fund guys are having more of an impact on the market than the 
Saul Steinbergs did," said Richard Feigen, an art dealer who helped Mr. 
Steinberg put together his collection of old masters.

Mr. Cohen's case is particularly unusual in that a large stake of the $6 
billion in his funds consists of his own money; he has been closed to new 
investors since 1998.

His prowess as a trader has become the stuff of legend on Wall Street, 
where his active trading strategy makes him one of the largest generators 
of commissions. His yearly returns have ranged as high as 60 percent to a 
low of 13 percent, and last year his funds gained 23 percent. His 
confidence in his trading abilities is such that SAC takes home up to 50 
percent of the profits that the funds generate each year, an arrangement 
that far outpaces the standard hedge fund fee of 20 percent.

Part of what makes Mr. Cohen such an accomplished trader is his equanimity. 
He rarely shouts or yells, just processes information and marshals his 
order flow to the 70 portfolio managers who work with him. People who have 
seen him trade say it is impossible to tell whether he is having the best 
or the worst day of his life at any given moment in the course of a day.

"Steve is so good because he does not have his ego tied up in each trade," 
said George Fox, a longtime investor in Mr. Cohen's funds. "He is an 
anomaly in this business because he hasn't had three good years, he has had 
23 good years."

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