Guru Daniel Loeb (Trades, Portfolio) is a California native who grew up in Santa Monica. Loeb received his bachelor's at Columbia and spent the next 11 years working for various firms including Warburg Pincus, a private equity firm. He then landed a job working as director of corporate development at Island Records, a record label where he focused on securing debt financing.
After his time at Island Records, Loeb seized an opportunity to work as a risk arbitrage analyst at Lafer Equity Investors, and then from 1991 to 1994 he worked as senior vice president in the distressed debt department at Jefferies LLC. Loeb increased his knowledge and experience about bankruptcy analysis, trading bank loans and selling distressed securities. In 1995, Loeb founded Third Point Management LLC, which has grown to a total value of about $9.86 billion.
In the first quarter of 2016, Loeb added 10,925 shares of Sothebys (BID, Financial).
Sothebys in an innovating global art business that has been auctioning various artwork since 1744. The company offers clients the opportunity to purchase global artwork by providing sales galleries, worldwide selling exhibitions, financing and education on art. The company’s operations are organized into three business segments; Auction, Finance, and Dealer. The auction segment of the company functions principally as an agent by offering works of art for sale at auction. The finance segment of the company’s business provide loans that have predominantly variable interest rate loans. The company's Dealer segment activities include the activities of Noortman Master Paintings. As an art dealer, NMP sells works of art directly to private collectors and museums and occasionally acts as a broker in private purchases and sales of art.
Sothebys has a market cap of $1.63 billion, a P/E ratio of 43.77, an enterprise value of $1.94 billion, a P/B ratio of 2.13 and a quick ratio of 1.58.
In the first quarter of 2016, Royce Funds said the following about Sothebys.
"Slotted in Consumer Discretionary, Sotheby’s (NYSE:BID) auctions fine art, antiques, and collectibles, along with brokering luxury residential real estate. A company we have owned a number of times dating back to 1992, we like its market share in a highly specialized niche. Declining revenues and earnings kept investors from bidding up its shares in 2015, but we were content to hold a position at year-end."
Below is a Peter Lynch Chart for Sothebys.
Sothebys has a financial strength rating of 7/10 and a 6/10 profitability and growth rating according to GuruFocus. The company also has three severe warning signs according to GuruFocus. The gross margin has been in long-term decline at an average annual decline rate of 2.7%. Sothebys operating margin has been in decline over the previous five years at an average rate of 9.8%. The company’s asset growth is also faster than its revenue growth, which means that the company may be becoming less efficient.
Loeb and his wife are avid art collectors. They have both appeared on the Art News annual list of the 200 top art collectors in the world. Loeb’s passion for art may have been the primary reason in his decision to add 10,925 shares of Sothebys to his portfolio.
Cheers to your investment success.
Disclaimer: Author does not currently own any shares of this stock.
