Alternative Investing Report - September 26, 2024

_{*as of 9/25}

The term “repeat sales” in the art world mean a piece of artwork has previously been sold at auction, as opposed to a private sale, and then sells again at auction. The mean return of such sales (where the original purchase was from after 1970) during the spring art auction season was effectively zero, the lowest result since 2000. The best performing category was Impressionist and Modern art, which saw an average 3.3% compound annual return on 656 sales, while ultra-contemporary art saw a -8.25% average loss on 31 sales. The spring season also saw low sell-through rates, as 33% of all works put up at auction did not end up selling, the highest rate since 2006.

➨ TAKEAWAY: The art market has been in a period of correction, and during that time it is not surprising that collectors have gravitated to the more blue-chip category of Impression and Modern art while offloading the riskier ultra-contemporary works. The recent Fed rate cut and future cuts may help the art market rebound in the long-term, it is unlikely to change its direction heading into the fall auction season, which starts tonight with Christie’s 20th/21st Century Evening Sale.

Women-led startups only receive around 2% of all venture capital funding, and while that number rises to around 7% of pre-seed and seed stage funding, it falls to around 1% of post-Series B rounds. Furthermore, the average size of women-led venture funds was just $41 million in 2023, compared to $244 million for all venture funds.

➨ TAKEAWAY: The downturn in venture funding has hit women-led funds harder than others as capital flows to more established firms, and a societal backlash to DEI measures has not helped matters. More funds such as the Artemis Fund, which just raised $36 million to invest in diverse founders, could help bridge the gap. For investors, a consistent underfunding of certain demographics means there are opportunities to capitalize on inefficiencies.

🏡 Refinancing applications surge: In the wake of the Fed rate cut, the refinancing activity rose by 20.3% to the highest level it has been since April 2022. Additionally, the home-purchase applications index rose by 1.4% to the highest level it has been since February.

🤖 OpenAI CTO leaving: Mira Murati announced that she is exiting the company, continuing the exodus of top executives, including three co-founders, a worrying sign as the AI startup eyes the biggest venture funding round of all-time.

🏢 CRE Fear and Greed: The Burns + CRE Daily Fear and Greed Index was stable at 53, indicating a balanced market, while over half of survey respondents believe the CRE market has already hit bottom or will by the end of the year.

⚾ Ohtani’s 50th HR: The Dodgers superstar’s historic home-run ball, when he became the first player in baseball history with 50 home runs and 50 stolen bases, will be up for auction at Goldin Auctions starting on Friday with a $500,000 starting bid and a $4.5 million buy it now price.

🏡 New home sales resilient: The number of newly-built single family home sales dropped by 4.7% in August, but is 9.8% higher year-over-year, while the median price fell by 4.6% year-over-year.

🪙 Crypto Congressional hearing: Congressman (and Smart Humans guest) Patrick McHenry admonished SEC chair Gary Gensler at an oversight meeting, calling the SEC a “rogue agency” for the way it has regulated the crypto industry via enforcement rather than rulemaking.

🚀 Longevity startups: Led by BioAge Labs, which raised a $170 million Series D in February and is now prepping for an IPO, a number of startups focused on extending lifespans have raised sizeable rounds this year.

James Cameron, the man behind the fictional apocalyptic AI Skynet in the “Terminator” franchise, has joined the board of Stability AI, the company that developed the Stable Diffusion text-to-image AI model. Cameron is well-known for being on the cutting-edge of film technology, particularly with the “Avatar” franchise, and his endorsement of an AI company is a big statement in an industry still reckoning with the effects the technology may have on filmmaking.