Sotheby's: No Auction Flippers Please (BID)

Just when you think the rich are immune and just when you think the super-wealthy Chinese and Russians will pay anything for any super-luxury good, the reminder is coming home that immunity is a stretch.  Take a look at the stock price collapse today at Sotheby’s (NYSE:BID).

Apparently there are fears that the art auctions are going to see their own recession, even though the company has not made any indications of that as a trend.  A Vincent Van Gogh landscape titled "Wheat Fields" that was painted shortly before his death went unsold.  Also coming up light were works of Picasso and Gaugin.  This last auction fetched $270 million, far short of a pre-sale estimate of $355 million.  It is a reminder of the movie ‘Wall Street’:  "Even the rich  are bitching!"

Banc of America cut the shares to ‘Neutral’ from ‘Buy,’ and boutique JMP Securities cut the rating to ‘Market Perform’ from an ‘Outperform’ rating.  Shares are already up over $4.00 from intraday lows at $35.70, but shares reached $31.20 in early trading.  The 52-week trading range is $29.81 to $61.40. 

24/7 Wall St. has had Sotheby’s as a potential "private equity wish list stock," although because of a prior dual class and prior voting control under the Taubman’s, we never did much work other than have it on a watch list.  After a quick glance this morning it appears the only change in control procedures now would basically require enhanced management payouts (simplification), but that is only giving it a quick look and we wouldn’t want to make any bold takeover or anti-takeover notes with an in-depth look.  We may revisit this for our Special Situation Investing Newsletter now that this has come off so much.

Jon C. Ogg
November 8, 2007

Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.