Oh dear, was our first thought. But maybe not. Loweth began collecting art eight years ago, educating himself with trips to ArtBasel, and now has a collection of some 80 works. He compares the premium priced artworks of, say, Pablo Picasso or Gerhard Richter with the Nifty Fifty, a reference to 50 hot large-cap stocks in the 1960s that investors were encouraged to buy regardless of price. They may be liquid investments, he explains, but they are also overvalued. Similar to how the Nifty Fifty fell out of favor in the 1970s and 1980s, Loweth predicts a crash in such high-priced artworks. That's not an entirely novel idea, of course. Concerns that an asset bubble exists at the high end of the art market have been discussed repeatedly in the pages of Penta. Check out, for example, our art wrap “Beware the Bubble” (Dec. 3, 2012).
So Loweth, perhaps not unwisely, is instead buying art in the “mid-cap space,” which he defines as the $30,000-to-$75,000 price range. Loweth figures there are 50,000 artists in New York City, with only 500 or so selling pieces above $30,000. If you diversify across 25 artists, he says, and buy what you love, “one of those artists will likely be a star, and you will at least be able to get your money back.”
If his Wall Street career is any indication, Loweth may know something about good entry and exit points. In 2010, he left Diamondback Capital Partners, a hedge fund he co-founded. A few months later, Diamondback was investigated in an insider-trading probe. Neither Loweth nor his two partners were ever implicated in any wrongdoing, but the hedge fund shuttered in January, unable to stay in business after it was fined by the Securities and Exchange Commission for insider trading.
Loweth has since launched his new passion with flare. A couple of weeks ago, he hosted a glamorous art party at his Southampton, N.Y., home. There, amid thumping house music and cocktails, Loweth showcased three emerging artists: Spanish painter Domingo Zapata, with his reinvented cave paintings; plate-glass sculptor Henry Richardson, from Massachusetts; and Richard Dupont, from New York City, a producer of what is called in the biz “post-digital” art, works that have been influenced by modern technology.
Penta and other media were invited to attend the soiree, which was said to draw inspiration from the French art salons of the 18th century. Those served as platforms for judging art and exposing works to the general public. That night, Loweth told us he was trying to reinvent the salons for the 21st century. “If I could throw a party where my friends would get together, see great art, and meet the artists, it would be a great opportunity for them to learn,” he said. Of course, it was also an opportunity for Loweth to increase the value of his own collection. Loweth’s Southampton estate was filled with a continuous stream of Mercedes and BMWs lining his vast lawn, before being scattered throughout the grass by valets. Beneath a tented roof, glasses brimming with wine, the varied works of Zapata, Richardson, and Dupont were showcased.
Loweth not only owns works by the artists he showcased, but he also set an example by purchasing additional pieces at the party. With a portfolio of these “mid-caps” bought early and cheaply, he is talking up his artists and making a market for their works—partly through such buzz-creating lawn parties. Front and center on the grass was, for example, Richardson’s enormous glass orb, colored a gentle turquoise, light gleaming through the glass. Its edges were textured and ridged by a chisel; the tiers of glass cascaded like steps.
Zapata’s The Writing on the Wall—displayed across the tent’s canvas interior—was a series of recreated cave paintings from over 35,000 years ago, made modern by overlaid collages, graffiti, and poetry, the works attempting to capture timeless emotions like love. We know this is so because Zapata held forth on how “life continues on with the same feelings, even as humans themselves change.”
Meanwhile, Dupont’s sculpted polyurethane heads and spotted paintings seemed rather wan and wanting of emotion next to the pieces by Richardson and Zapata, but he clearly has a feel for contrasting mediums and textures, such as casting and painting. If any of these works become large-caps, count on Loweth to keep throwing such parties. That’s because today’s collectors are increasingly coming to the conclusion that promotion is an integral part of building a valuable collection.
Many artists and art commentators (including this one) often argue that the aesthetic value of art and the financial value of art have no connection to each other. Others go even further and suggest that artists who interest themselves in the art market are tainted by that association. So it was interesting to speak with one artist and one collector about an event where artists and potential art buyers happily co-mingled.Retired hedge fund manager Chad Loweth organized what he called a contemporary salon at his Hamptons home last weekend. He invited Henry Richardson, Richard Dupont and Domingo Zapata, three artists that he has known and collected for some time, and some art professionals, among them Scott Howe, the deputy director of the Parrish Art Museum, and Lisa Dennison, co-chair of Sotheby’s.
Loweth also asked along lots of his friends, predominantly contacts from the worlds of finance and real estate. “A lot of people tell me they find contemporary art hard to understand. You can look at a piece that is $2.5 million or $25,000 and to the average person, they sometimes look the same,” says Loweth. “How can you spend any of those sums on something that you can’t wrap your arms around?”He points out that the more would-be collectors know about artists, and the more they understand their whole body of work, the more comfortable they are about buying. “I thought it would be great to invite busy, workaholic people who don’t have much time for an evening in the Hamptons where they could interact with the artists themselves and it worked,” he says. “People kept telling me they were having a great time.”Glass artist Henry Richardson also enjoyed the chance to mingle. In fact, he says that Loweth, who has come to him with ideas over the few years he has known him, has influenced the evolution of his work.
“I think a lot of artists are very ego-centric. It’s very important as an artist to draw inspiration from many sources and the creativity of other people. I’ll take any good idea that I can get.”He also sold three out of four large sculptures he brought to the event. “That was a pretty good evening for me. There were also maybe five couples who want me to come to their homes to talk about making a monumental piece for them.”For his part, Loweth thinks that buying art can be a good investment. “Anyone who wants to put a lot of money to work in the art market that has the safety of liquidity is going into the same 50 artists such as Picasso and De Kooning, but the average person is not going to spend $50 million on an art work.”Meanwhile, he thinks there are maybe 500 artists that are worth $30,000 to $70,000 for one piece. “If you can buy a few of these artists, you have a shot that one of these will become a star and you’ll get your money back and maybe make some money too. In the meantime, you’ve got this great piece in your home.”
Richardson’s final take on the evening was that he had some surprising discussions about his art with finance and real estate professionals and not for the first time. He mentions a previous meeting he had with one of Loweth’s real estate contacts. “This guy said, ‘I take care of my body, I like to study, but art is really feeding my soul’. I just thought that was such an unusual statement. He didn’t even think about it, he just felt it in that moment.” Forbes.