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Hedge Funds Betting on Buying the Dip in Hirst's Work.

Betting on a Damien Hirst Comeback

Efforts by powerful brokers to buy up artist Damien Hirst’s work offer a real-time glimpse into the maneuverings that influence art-market prices.

by: KELLY CROW

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Next month, British artist Damien Hirst—a former superstar whose prices plummeted during the recession—could pull off an unthinkable feat: By opening a free museum, called the Newport Street Gallery, in south London to display his private collection of other artists’ works, Mr. Hirst could salvage his own career.

Just as the new museum opens, an independent but powerful set of dealers, collectors and art advisers are quietly betting that a surge of interest in Mr. Hirst’s new endeavor could spill over into higher sales for his art. Some, like New York dealer Jose Mugrabi, are stockpiling Hirsts in hopes of reselling them for later profits, believing a fresh generation of art collectors will walk away wanting to buy their own Hirsts. Mr. Mugrabi, who helped mount successful comeback campaigns in the past for Andy Warhol, Jean-Michel Basquiat andRichard Prince, said he owns 120 pieces by Mr. Hirst, including $33 million of art he bought directly from the artist’s studio three months ago.

 

‘Beautiful, shattering, slashing, violent, pinky, hacking, sphincter painting,’ 1995.PHOTO: © DAMIEN HIRST AND SCIENCE LTD. ALL RIGHTS RESERVED /DACS, LONDON/ARS, NY 2015

Other dealers, such as Pilar Ordovas, are organizing gallery shows that place Mr. Hirst’s work alongside still-popular artists, angling for a beneficial comparison.

 

New York art adviser Kim Heirston, whose clients include Naples collector Massimo Lauro, said she has been scouring for Hirsts at fairs and auctions alike. “I’m telling anybody who will listen to buy him because Damien Hirst is here to stay,” Ms. Heirston said.

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Jose Mugrabi has bought $33 million of Hirst works since June. PHOTO: OWEN HOFFMANN/PMC

If successful, their efforts could offer a real-time glimpse into the market-timing moves of the art-world elite, where the tastes of a few can still sway the opinions of the masses. Few marketplaces are as changeable as contemporary art. This is a realm where price levels for an artist can be catapulted in a matter of minutes by a handful of collectors in an auction. Those same champions can then turn around the following season and dump their stakes in the same artist, dismissing him as a sellout. Like fashion, the roster of coveted artists is continually being reshuffled in subtle ways.

Most artists with lengthy careers have seasons of ebb and flow, and collectors who sync their buying and selling can profit accordingly, experts say. Before the recession, Mr. Hirst, age 50, was an art-world darling, the leader of London’s 1990s generation of so-called Young British Artists who explored ideas about life and death in provocative, outsize ways. He is best known for covering canvases in dead butterflies and polka dots whose rainbow hues he color-coded to match chemical compounds found in drugs.

During the market’s last peak, collectors paid as much as $19 million at auction for his artworks, and he staffed multiple studios throughout the U.K. with as many as 100 studio assistants to help produce his works. Mr. Hirst is reportedly worth an estimated $350 million, thanks to his art sales but also his skill as a businessman, amassing an empire of real estate holdings in the U.K. and elsewhere. He also co-founded a publishing company called Other Criteria in 2005 that publishes art books, artist-designed clothing and prints of his works, as well as other emerging artists.

But his star fell sharply after he committed an art-world taboo by bypassing conventional sales channels—selling works slowly through galleries—and auctioned off nearly $200 million of his work directly at Sotheby’s in 2008. While the sale was successful and proved his popularity, it became his undoing. He irked his galleries and some longtime collectors, who felt he had flooded his own marketplace for a singular payout. These days, it’s “much riskier” to trade a Hirst at auction than it was a decade ago, according to Michael Moses, co-founder of an auction tracking firm called Beautiful Asset Advisors. Collectors who bought and resold his works since 2005 have mainly suffered losses, Mr. Moses added.

“None of us intended to devalue his market,” said Oliver Barker, deputy chairman of Sotheby’s Europe who oversaw Mr. Hirst’s 2008 auction, “but suddenly after that sale the luster of Damien Hirst was gone.”

Before the sale, the former emir of Qatar paid Sotheby’s $19.2 million for Mr. Hirst’s medicine cabinet, “Lullaby Spring.” Last February, Christie’s sold a smaller companion cabinet, “Lullaby Winter,” for $4.6 million. A few months later, Sotheby’s sold one of his polka-dot “Spot” paintings from 1996, “Benzhydrol,” for $420,000, roughly half what the seller paid Christie’s for it nine years earlier.

It is against this bleak backdrop that Mr. Hirst plans to open his $38 million, 37,000 square-foot museum, a self-funded endeavor carved from a block-long row of renovated Victorian-era painting studios in Lambeth, an industrial London district wedged between the River Thames and the Vauxhall district. Rather than open with a show of his art, Mr. Hirst is hanging around 40 abstracts by John Hoyland, a British postwar painter of colorful geometric designs who remains little known outside the U.K. Mr. Hirst declined to be interviewed but his spokeswoman said Mr. Hirst “considers him to be one of the most important abstract painters to have emerged from Britain.” Mr. Hirst owns every work he’s exhibiting.

 

‘We've Got Style (The Vessel Collection - Pink).’ PHOTO: © DAMIEN HIRST AND SCIENCE LTD. ALL RIGHTS RESERVED /DACS, LONDON/ARS, NY 2015

Jude Tyrrell, a director of his studio, Science Ltd., said Mr. Hirst merely wants to organize shows featuring some of the more than 3,000 pieces he owns, like Francis Bacon, Jeff Koons and Bansky as well as his peers like Mat Collishow, Tracey Emin and Sarah Lucas. He also plans to show his eclectic natural-history specimens and taxidermied creatures. Newport Street Gallery will open Oct. 8 as the art world descends on London for the Frieze Art Fair.

Contemporary art museums may be popping up world-wide, but Mr. Hirst’s decision to locate his in the market hub of London is significant, particularly since the city hasn’t had a major museum debut since the Saatchi Gallery relocated to the Duke of York’s home in 2008. Encouraged by the buzz leading up to the museum’s launch, Mr. Mugrabi said he thinks it’s time to capitalize on the moment and give Mr. Hirst’s art a second look. Over the past few months, Mr. Mugrabi has been buying works by the artist at a steady clip, often buying from dealers and collectors.

 

Some consider ‘The Physical Impossibility of Death in the Mind of Someone Living’ to be a masterpiece. PHOTO: REGINA KUEHNE/KEYSTONE/AP

“Damien Hirst is in the same situation as Warhol was in the 1990s,” he said. “I love Damien at $10,000, and I love him at $10 million. The price is secondary because I know people love him, and in the end they will pay for him.”

Of course, the effort to resuscitate Mr. Hirst’s art values could backfire, spectacularly. Collectors have attempted to showcase at auction works by Arman, a French artist who was popular in the 1960s, in hopes of seeing a bump in his prices. But the moves didn’t pay off and Arman never reached the heights of his peers like Yves Klein. Collectors have also tried to bid up prices for Julian Schnabel, a New York painter coveted in the 1980s for his expressive canvases dotted with smashed plates who hit a fallow period afterward and reinvented himself as a filmmaker. Lately, collectors who own his paintings have tried selling them in high-profile auctions at Sotheby’s and Christie’s in hopes new bidders will be willing to pay higher prices for the artist, an effort that has met with mixed success.

Ms. Ordovas, a former Christie’s executive who is best known for brokering million-dollar sales of artworks by Bacon and Lucian Freud, believes Mr. Hirst’s work has staying power. “He really shaped a time and a generation,” she says. The artist remains the undeniable leader of the Young British Artists, a movement which famously shocked the art scene in the late 1980s and early 1990s with pieces that dripped, oozed and reeked at a time when fine art was typically shiny and pristine. Ms. Emin won prizes for displaying her bed, messy sheets and all. Marc Quinn made a mold of his head using his own frozen blood. But even then, Mr. Hirst was widely considered to be the ringleader, the artist who put rotting cows’ heads on displays and let flies feast upon it while audiences walked by.

Hirst is in the same situation as Warhol was in the 1990s. 

—dealer Jose Mugrabi

Iwona Blazwick, director of London’s Whitechapel Gallery, said future historians likely won’t be able to recount the art-history trends of the past half-century without devoting pages to this group—and Mr. Hirst. “He’s central,” she said. That’s the reason Ms. Ordovas said she recently invited Mr. Hirst to collaborate on an exhibition at her eponymous London gallery. Opening Sept. 25, it explores artists’ relationships to the ocean and includes one of Mr. Hirst’s signature shark tanks.

In Chicago, major collectors Stefan Edlis and his wife Gael Neeson have encouraged U.S. museums to seek more of Mr. Hirst’s works for their permanent collections. Recently, the couple agreed to donate a Hirst surgical instrument cabinet from 1995 called “Still” to the Art Institute of Chicago after the museum’s curators cherry-picked the piece, among others, from their broader collection.

Like Bacon and Willem de Kooning, Mr. Hirst has produced works that are instantly recognizable—and his impresario persona makes him difficult to forget, collectors say. Aspen collector Nancy Magoon said she once admired Mr. Hirst so much that she named her black Labrador puppy after the artist. That’s why she was so upset when Mr. Hirst took his art directly to Sotheby’s. To her, the move “felt like a fire sale,” she said, cheapening the value of the oval orange “Butterfly” painting that hung above her fireplace as well as an instrument cabinet she bought years before. She refused to bid in the auction, but she has no intention of shedding him from her collection, either. “The truth is I’m not bored by them,” she said. “I still love them.”

(The same can be said for her dog, Damien Hirst, now 8 years old.)

 

Damien Hirst, ‘Lullaby Winter,’ 2002. PHOTO: © DAMIEN HIRST AND SCIENCE LTD. ALL RIGHTS RESERVED /DACS, LONDON/ARS, NY 2015

Those seeking to rebound his market will face a number of hurdles, though. Mr. Hirst’s creative output—the tally of paintings, sculptures, installations and prints he’s made over the course of his career—remains elusive. The market tends to reward artists whose supply is widely known because it’s easier to judge which examples remain commonplace and which are rare or unique. Being prolific doesn’t matter to the market: Mark Rothko did over 800 rectangular abstracts, but his output is definable so collectors gauge their relative rarity and bid the best versions into the tens of millions. The same can be said of Warhol, who made roughly 8,000 paintings.

A spokeswoman for Mr. Hirst said this week that the artist has so far made about 6,000 paintings and sculptures, plus an additional 2,000 drawings. Francesco Bonami, a curator who helped organize a show of Mr. Hirst’s in Qatar a few years ago, said he can winnow Mr. Hirst’s seminal works to an even smaller tally of around 1,800 works.

After Mr. Hirst’s prices started free-falling in 2008, he did pledge to stop making additional versions of his “Spot” and “Spin” paintings, although his spokeswoman said he might change his mind one day and make more “Spots.” She said the artist has also started working with a German publisher, Steidl, to produce his catalogue raisonné, or final tally, and plans to publish books that show every work in each of his series—but the effort remains in the early stages. “It has never been Damien’s intention to be elusive,” the spokeswoman said.

Mr. Bonami said Mr. Hirst’s masterpieces include “The Physical Impossibility of Death in the Mind of Someone Living,” a 14-foot tiger shark suspended in formaldehyde. Hedge-fund manager Steven Cohen owns the 1991 work. Other milestone works include a diamond-encrusted skull, “For the Love of God,” and “A Thousand Years,” a 1990 vitrine in which maggots are born and feast on a rotting cow’s head in one section, only to filter into an adjoining section dominated by a bug zapper. The work encapsulates a life cycle. The skull and “Thousand Years” are owned in part or outright by the artist.

For now, art adviser Beverly Schreiber tells clients to focus on Mr. Hirst’s earlier works—especially “Spot” works made between 1988 and 1994—and to shy away from anything he created later. Mr. Barker said he’s more likely to include Mr. Hirst’s polka-dot Spots and rainbow-swirl “Spin” paintings in his auctions than he would any installations involving flies or tanks of formaldehyde. Ms. Schreiber agreed. “Too many condition issues,” she added, saying she has heard stories of his fly works smelling and his tanks leaking.

Mr. Hirst’s biggest challenge may be to win back the affections of those who have grown suspicious of his personal wealth and varied business dealings. Constanze Kubern, an art adviser based in London and Hong Kong, said Mr. Hirst’s reputation for buying and selling at auction makes her wonder whether he’s launching his museum with a show of Mr. Hoyland’s art “because he wants to push up the value of an artist who’s not as well known,” she said. Mr. Hirst does own Mr. Hoyland’s priciest work at auction, a red-burgundy striated abstract, “17.7.69,” that previously sold for $303,386 at the auction house Lyon & Turnbull seven years ago. The artist’s spokeswoman said Mr. Hirst later bought the work privately and isn’t showing it now to reap any potential profit. “Newport Street is not about making money,” she said.

Mr. Hirst does maintain a rock-star lifestyle in sync with many of his billionaire buyers. He owns a $57 million London home as well as a 19th-century manor with 300 rooms in Gloucestershire, and he often wears knobby skull rings on his fingers. His museum serves as another case of I-made-it defiance because it’s a feat few other living artists have ever attempted. Collectors open private museums, not artists—at least not in their lifetimes. (Dali is one notable exception.)

But friends of Mr. Hirst say a museum has long been part of his plan. In 2002, Larry Gagosian, one of his longtime dealers, said he personally was intending to buy a set of Victorian painting studios in London to retool as another gallery when Mr. Hirst stepped in and told him he wanted the property as well. Mr. Gagosian said he backed away from the deal. Mr. Hirst bought it.

by joeythate
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