Ten Percent
“We made 10 percent on the deal,” he said, declining to name the artist or reveal the price. “We never paid for the work. We just netted the profit.”
Hoffman, who started the company in 2001, said he consigned several works to dealers at Art Basel, selling almost $5 million worth of art and averaging compound gains of 10 percent to 20 percent.
Most of the art the fund acquires is valued at $1 million to $10 million, Hoffman said. He looks to buy works by artists whose prices are on the rise.
Christopher Wool was in that category five years ago, Hoffman said. In 2007, the fund bought a Wool painting for clients for $800,000. In November, the artist’s text-based painting sold for $26.5 million at auction. But like the financial markets, there are ups and downs in art investing.
In 2009, Hoffman told his clients that the value of the work dropped 50 percent to $400,000.
“If I had to sell it then, it would have been a major loss,” he said. The fund held on until last year, when it sold the work for $2 million.
“Now these investors are happy people,” he said.