The art market is usually reserved for the mega-rich. But the market of creativity and color also offers insight about how important having tangible assets in your investment portfolio can be in helping you through difficult financial circumstances. A recent article published by Bloomberg explained how billionaire Peter Brant, chairman and CEO of White Birch Paper Co., has used his extensive art collection as collateral as he tries to revive his paper business.
While the vast majority of us do not own high-value artworks such, as an Andy Warhol piece estimated to be worth $35 million, diversifying your wealth into assets such as art, gold or real estate always has been one of the best ways for those with capital to protect their net worth. Brant in particular has put up 56 different pieces as collateral with Sotheby’s and in separate filings to Deutsche Bank AG. These works ranged from artists like Warhol to Jeff Koons and Lichtenstein.
White Birch, which was co-founded by Murray Brant, Peter’s father, filed for bankruptcy in 2010. The filing coincided with the declines in the newspaper industry. With Brant raising capital through his art collection, he is looking to purchase White Birch back from its creditors. White Birch is one of the top newsprint producers in North America.
Art is regularly used as collateral for business loans. According to Citi Private Bank, there has been a “real uptick” in art financing. While this type of leverage would generally considered to be a last ditch effort to fund a business venture and gain access to cash quick, it show how important having alternative assets can be in your portfolio. Brant had even said in a recent article that his art collection was worth more than his family’s net worth.
Most of us probably feel that the art market is something of an enigma. We are more comfortable with our wealth stored in stocks, bonds, cash or other investment vehicles which are liquid and transparent. Art valuations can be highly subjective and the works themselves may be hard to sell. But increasingly, some pieces have started to be considered as investments rather than just a painting or sculpture.
In a special report written by investment guru Mark Skousen, the editor of Forecasts & Strategies, he highlighted the importance of art as a way of diversification to protect your money. “I personally have invested in art collectibles for potential profits and my family’s enjoyment,” Skousen wrote. “Such collectables can offer monetary and aesthetic returns.”