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Art Investment: Short SAB Long Stern
August 28, 2009 [ Archived ]
When Sea Point delicatessen owner Leslie Milner brought home a £45 Irma Stern painting, Still life with Tiger Lilies and Melon, in 1952, his wife Dot was furious because their home didn't even have curtains.
If that painting auctions by Strauss & Co on October 8 for R1,4m, as expected, Milner's estate - he died in March - will have earned an 18,5% compound annual capital return on the £45 (then R90) investment over 57 years.
By comparison, SA Breweries (SAB) shares bought in 1965 for 45c and now worth R175 grew by an average 14,5%/year. A house in Bryanston bought for £5 700 (R11 400) in 1955, still in the same family and now valued at R4,5m, gained an average 11,5%.
Does that make art the best investment? Maybe not. Comparing single examples of asset classes isn't enough to prove the point. Besides, SAB and the house also provided investors with net dividend and rental income over the 50-odd years - SAB an average of about 3%/year after tax, the property 8% or so before tax.
But how do you value the pleasure Milner got from the paintings he collected as a passion rather than an investment, Strauss's Stephan Welz asks.
Other works in Milner 's collection include Maggie Laubser's Seascape with Boats, House and Seated Woman Holding a Baby, 1926 (estimated price R400 000-R600 000), Maud Sumner's Still Life with Flowers and Candle (R180 000-R200 000), and May Hillhouse's Still Life with Teapot and Flowers, 1954 (R60 000-R90 000).
Also among the collection are works by Maurice van Essche, Gerard Sekoto and Paul du Toit. Milner's motive for collecting is possibly reflected in the average estimate of the remaining 38 pieces of about R20 000. His passion was fired by a tenant in his Gardens factory - a sculptor and art dealer named Solly Disner, who sometimes got him to accept art and art advice in lieu of rent.
Milner was best known as the owner of Milly's delicatessen in Sea Point, but he ran a number of other successful businesses.