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business newsSotheby's Shares Bid Up Big
By
Justin Sharon
Mar 30, 2011 4:55 pm
The auction house is riding a wave of success, and shares are certainly not going, going for a song.
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On the same devilish day Lehman Brothers went bankrupt, a single department at Sotheby’s (BID) sold $200 million worth of work by one artist alone, Britain’s Damien Hurst. So in an improving economy, it’s no surprise to see the auctioneer end up another 1.70% at a fresh 52-week peak today. Hirst’s fame, or infamy, is attributable in large measure to his £50 million diamond skulls. But it 's skulduggery that plays a big part of this industry’s cloak-and-dagger appeal; the remarkably precipitous timing of a hedge fund heavyweight who just put his $20 million Andy Warhol painting of the late Liz Taylor up for sale being but the most recent example.
That Warhol will go under the hammer at Phillips, certainly much more blue blood than eBay (EBAY), but a perennial number three to Christie’s and Sotheby’s when it comes to selling everything from fine wine to fancy art. The latter is unique among the trio in that it trades publicly and has rewarded investors far more than any recent treasury auction -- admittedly not hard with bonds having now sold off for nine straight sessions -- with a surge of almost 60% in the past year. Today’s increase is attributable to positive comments from Wedbush, which took its 12-month price objective up to $57 from $55. This still allows for ample upside even from current levels and the analyst cited positive trends from recent auctions at the firm, founded in 1744 and headquartered in the heart of Manhattan’s old money Upper East Side. Wedbush especially highlighted booming sales of Asian art, where bidding wars have frequently broken out among a newly moneyed Chinese and Indian jet set. Indeed even as much of the world is on food stamps, high rollers from China think nothing of paying millions for monkey stamps.
For a supposedly stuffy outfit, Sotheby’s was early and aggressive in establishing an Internet presence -- in fact it sold that fabled copy of the Declaration of Independence, found for $4 at a flea market, for $8.1 million online. Such electronic avenues still represent good growth opportunities, and an upcoming April 7 wristwatch auction in Hong Kong should see vibrant sales of Patek Philippe. Red flags? Shares are certainly not going, going for a song at current levels. And a retrenchment from Pacific Rim buyers following the recent disaster in Japan could quickly derail any best laid plans.
Please see Christie’s to Auction First-Ever Apple Computer, and The Top-Performing Alternative Investments: Fine Art.
Oxford Industries Inc.
For those who find Sotheby’s too intimidating, there’s always Oxford. Not the university -- Oxford Industries Inc (OXM), a clothing company whose shares jumped 33.67% today. That ensured the maker of Tommy Bahama and Lilly Pulitzer won the prize for today’s top NYSE stock. Its biggest single session gain in three years followed better than expected fourth quarter earnings at the Atlanta apparel outfit founded in 1942. Oxford earned $53.4 million, or $3.22 per share, in the three month period, well ahead of year-ago levels of only $3.9 million and $0.24 respectively. Revenue, though somewhat shy of forecasts, still rose a tidy 10% to $157.7 million. A Hawaii Five-0 revival helped Tommy Bahama again outperfom with a 15% sales surge to $108.9 million. (Not surprising, as its island offerings feature Jimmy Buffett elegance at Warren Buffett prices.) Indeed KeyBanc Capital analyst Edward Yruma, in raising his target price by $4, credits the company with “taking the right steps to reposition the brand via exiting more mid-tier department stores and by elevating the positioning of the brand.” As such, an announcement of plans to open an upscale Fifth Avenue outpost came as no surprise. Oxford also increased its dividend, and allied to strong full-year forecasts from the firm its outlook appears rosy. However higher cotton costs are a concern, especially on a stock now trading at a nosebleed valuation.
Jos. A Bank Clothiers Inc.
Well, at least there’s one bank stock which isn’t losing investors their shirts, even if it is another apparel company. Jos. A Bank Clothiers Inc. (JOSB), a stylish provider of suits and sport coats among other wardrobe essentials, gained 3.76% today to a fresh 52-week peak after record results. Q4 net income rose 15%, overall earnings of $40.9 million coming in considerably better than the $35.5 million posted 12 months ago. The EPS of $1.47 beat Street estimates by $0.03, and revenue was also up by an above-forecast 14%, to $318.3 million. The 106-year old Maryland firm performed particularly well over Black Friday, a critical period for any retailer. Last year it entered the lucrative $1.2 billion tuxedo-rental business, where they play second fiddle to industry leader Men’s Warehouse (WM.) Promotional activity helped bolster the bottom line at Bank, but a stock up almost 50% in 52 weeks is certainly not 50% off at the moment, even if some of its offerings are.
Sealy Corp.
Was it good for you? Unfortunately for Sealy Corp. (ZZ), which produced that unforgettable Super Bowl ad, the answer is no. A happy afterglow was in short supply at the bedding firm this afternoon, shares slumping 3.60% on an otherwise up day. I forgot to mention Tommy Bahama also does a fine line in bedding but it’s highly unlikely they will want to be associated with the mattress maker at the moment. Sealy announced an unexpected loss and, adding insult to injury, was cut to Neutral at Piper Jaffray in time for its morning wake-up call. The stock is now down 26.58% in the past year. Analyst Bradley Thomas at KeyBanc wrote in a note that poor transitioning of its Posturepedic product was among the factors to negatively impact results. A loss of $0.01 per share disappointed Wall Street, which was predicting a $0.03 profit. The Stearns & Foster manufacturer was also hit by discontinued operations in both Brazil and Europe. Some sleepless nights await investors.
Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
No positions in stocks mentioned.
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