Recently fined around $616 million in the largest-ever SEC settlement for insider trading allegations, SAC Capital, led by founder Steven Cohen, also has something to scream about. Last week in the Federal District Court of Manhattan, Judge Victor Marrero reserved judgment on approving the settlement, according to Dealbook, saying, “There is something counterintuitive and incongruous about settling for $600 million if it (SAC) truly did nothing wrong.”
A scream theme is not all that ties Sotheby’s (NYSE:BID) and SAC together. The recent Picasso-buying Cohen holds Sotheby’s as a fairly new acquisition of 1,688,821 BID shares, as of quarter ending Dec. 31, 2012. The current BID share price is $37.41, with a change from average up 20%. According to GuruFocus research BID is up 8% year to date.
Incorporated in 1983, Sotheby’s is an auctioneer of authenticated fine art, antiques and decorative art, jewelry and collectibles. Here’s Cohen’s BID holding history:
Sotheby’s reported 2012 total revenues of $768.5 million, an 8% decline from the prior year. The company said the decrease was largely attributable to an 11% drop in auction commission revenues. Sotheby’s also reported a record level of sales from single owner collections in 2011.
“Consolidated sales in 2012 were a robust $5.4 billion as healthy bidding continued around the world for great works of art,” said Sotheby’s Bill Ruprecht, Chairman, President and Chief Executive.
While best known for the auction side, Sotheby’s operations also include a dealer segment and a finance segment. Sotheby’s finance segment provides collectors and art dealers with financing, generally secured by works of art that it either has in its possession or permits borrowers to possess. The finance segment's loans are predominantly variable interest rate loans.
As a point of interest: In May 2012 Sotheby’s sold the Edvard Munch pastel “The Scream” for a record $120 million.
Munch's mystical description of the inner turmoil that led him to paint “The Scream” sounds like a high anxiety state, also known to hedge fund managers and insiders. The artist wrote:
"I was walking along a path with two friends - the sun was setting - suddenly the sky turned blood red - I paused, feeling exhausted, and leaned on the fence - there was blood and tongues of fire above the blue-black fjord and the city.
My friends walked on, and I stood there trembling with anxiety - and I sensed an infinite scream passing through nature."
[i][/i]As of March 27, 2013, SAC Capital Advisor’s portfolio shows 1585 stocks at a total value of $20.3 billion, with a quarter over quarter turnover of 42%.