Mr. Cohen gives up the damaged Le Reve and keeps his pocket change:
http://www.newyorker.com/talk/content/articles/061023ta_talk_paumgarten
http://www.newyorker.com/talk/content/articles/061023ta_talk_paumgarten
Steve Cohen saves $139 million...
- Thread starter pkpos
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good question? So the relevance of this article is how chance intercedes in life? Or to talk about Steve Cohen who runs and art buying hedge-fund? or Steve Wynn who runs a casino (makes $ off people's bad bets and wound up doing it himself in a sense? I will admit the article is entertaining.
It's just a human interest story. Steven Cohen is a billionaire art collector and the founder and manager of SAC Capital Partners, one of the most profitable hedge funds. He had contracted to purchase Picasso's Le Reve from casino mogul Steve Wynn for $139 million--until Wynn accidentally pushed his elbow through the canvas, thus voiding the contract. It would have been the highest price ever paid for an art piece, and yet the cost was less than five percent of Cohen's net worth.
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pkpos said:
As long as he is liquid (can get more $ and purchase more artwork or doesnt have investors that want to cash out immediately) he can do this ad infinitum. He does not have to buy another art work and can just sell something to someone at a higher price than he bought it (i.e. he can wait) . Notice how I said he is liquid and not the art work. Art pieces are illiquid I believe. This seems like a bubble that should burst at some point unless there are people to support the higher valuations of the art work.
The other way to look at an art hedge fund is that he buys the art work and leases it out to display at museums. It is not that poor of an investment yet I do not like the inability to get out should one need to. I have a preference towards more liquid investments.
Mike, my guess is that Steven Cohen collects artwork for his own private benefit, not as an investment for his hedge fund, although it would be difficult to say this with certainty because he and his firm are highly secretive. I suppose if I garnered average annual returns of nearly 40%, I would be pretty secretive too. 
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My apologies, I was under the impression that he ran a hedge fund that invested in art.
