THE NEW YORK HEDGE FUND ROUNDTABLE - “ALTERNATIVE” ALTERNATIVES
Arthena’s Founder and CEO, Madelaine D’Angelo, was invited to speak as a panelist at the The New York Hedge Fund Roundtable talk, “Alternative” Alternatives. Other panelists include Karen Boyer - President of Elements in Play, and Zack Henry - CEO of Baltoro Group.
Elements in Play is an art advisory firm specializing in HNWI clients. Boyer discussed ways to approach art collecting: To begin collecting, she advised to educate clients as much as possible, and in order to have a strong collection, a client should buy art that they love. To safeguard a collection, she advises hiring a professional art advisor like herself to deal with any transactions or to determine if the artwork is a legitimate piece of work by the artist. She compares an art collection to hedge fund participation: To have a strong collection with an investment point of view, the collector must look at his portfolio as a whole, and must diversify by acquiring art from different art market sectors, ie. emerging, contemporary, and modern art.
As President of Baltoro Group, Zack Henry deals primarily with venture building in advisory, capital, and soccer. Henry is also the president of a team from the National Premier League. He discussed his experience in building a soccer team - starting from his love for Brazilian soccer. He saw the issues with many Brazilian teams - many are solely interested in short term goals, like winning, which causes a lack of development of players (asset). As a result, he sought to build a Brazilian team with strong foundations, developing each asset by investing time and money. To provide international experience for the Brazilian players, Henry created a sister club, Elm City Express based in Connecticut, USA. Henry aims to develop a team as successful as Manchester United.
D’Angelo discussed how Arthena came to be. She saw a missing piece in buying art with an investment point of view - quantitative data. She urged the market to be more transparent, as there are still many inconsistencies in art market data from the primary market, ie. galleries. By acquiring large sets of data, D’Angelo saw the opportunity to sell art funds to family offices, wealth managers and retail investors, which has ultimately seen positive results since the company’s inception.
The panelists were asked about what they’ve learned and what they see as the worse case scenario for their companies.
Boyer sees difficulty in the illiquid art market. She mentioned how the emerging art market used to be easier to flip at auction just a few years ago. However, the market is now oversaturated with talent. Ultimately, it is important for the collector to enjoy the art that they purchase.
Henry sees the importance in finding the right people for the management team, and taking time to position the team as they see fit. Similar to art, assets (players) are very illiquid and volatile as players can easily quit and get injured. As such, having an oversupply of assets is necessary to “keep the machine running.” Furthermore, to create a competitive edge amongst other soccer teams, Henry pays his players on time and maintains transparent in contracts.
Lastly, D’Angelo sees the biggest risk to the art market is authenticity. She identified that most fraudulent art are from works under $5000 or over $5,000,000. She also identified the risk in art investments as prices can change and are very volatile. As such, looking at the liquidity and sharpe ratio of an artwork is important.
Overall, the panelists provided an eye-opening insight into the up and coming opportunities in alternative investments - a head start on what is to come in the investment marketplace in the next few years.