Hedge fund manager Steve Cohen has used artworks from his $1 billion collection to back a personal loan from Morgan Stanley’s Private Bank.
Such loans are not unusual for wealthy buyers who seek to capitalize on the increased value of their artworks amid the global boom, without having to part with it. In such transactions, the borrower often even gets to keep the art on their wall. Banks typically lend about half of a work’s appraised value.
Along with providing a scan of the December 30 filing statement under the Uniform Commercial Code (UCC) that documents evidence of ownership or an ownership interest, The New York Times, which has the story, has extensive information about Cohen’s past borrowing activity, as well as some unsuccessful attempts. Here are a couple of excerpts:
In the past, Mr. Cohen, 59, has used similar personal loans from Deutsche Bank and other Wall Street banks to finance and defray the cost of some of his big art purchases, which have included works by Jeff Koons, Damien Hirst, Alberto Giacometti and Pablo Picasso.
Two years ago, Goldman Sachs provided Mr. Cohen with a line of credit after Deutsche Bank decided not to continue a personal loan it made to him in 2009. Officials at Deutsche Bank pulled back on its business and personal ties to Mr. Cohen after his former hedge fund, SAC Capital Advisors, agreed to plead guilty to insider trading charges [and] pay $1.8 billion in penalties to the federal government.”
In contrast, Cohen’s business prospects look brighter now, given that his new firm, Point72 Asset Management, has $11 billion under management. On January 19, the firm announced it would open a London office and employ up to 70 people.
The UCC statement does not specify the size of the loan or specific works, noting that the financing statement covers all of Cohen’s “right, title, and interest in…all Artwork Collateral Pieces.”
Andy Warhol, Mao (1972).
Courtesy of Sotheby’s.
This past November, Cohen sold an Andy Warhol portrait of Mao Zedong for more than $47 million, or nearly three times the $17 million he paid for it in 2007.
It looks like Cohen may be rising in the art world once again.