Works of art auctioned off by Sotheby's Holdings (BID) often fetch record sums. And Sotheby's own stock, discussed in this column on Apr. 21, 1997, at 15 a share, is up a nifty 25% this year, to 23. Ron Baron, president of Baron Capital Management, which oversees more than $8 billion, believes the stock is still undervalued. When investor Perry Bass unloaded his large position in Sotheby's shares last month, Baron snapped it up, raising his stake from 22% to 30%.
Baron likes the glamour of the art world. And guess where he sees the next splash for Sotheby's: "The Internet presents lots of opportunities, and Sotheby's is looking at all of them." The Internet could expand Sotheby's markets fast, adds Baron, who has an impressive track record in picking winners. Since its start in 1987, his flagship $5.8 billion Baron Asset Fund has posted an average yearly gain of 19.1%, vs. 14.8% for the Standard & Poor's 500-stock index.
Baron reckons Sotheby's may team up with Net mainstays such as America Online, Time Warner, or Walt Disney. Executive Vice-President David Redden, Sotheby's Internet point man, acknowledges that Sotheby's is in talks with several major players but won't say which ones.
"We are very excited," says Redden. "The Internet could bring in new customers, broaden the range of properties we offer, and augment the services we provide our traditional customers." In May, Sotheby's launched a Web site detailing the more than 500 auctions in 80 collecting categories that Sotheby's holds every year.
The Web site offers the catalog of all Sotheby's sales--in Britain, Switzerland, Hong Kong, and the U.S. On July 21, Sotheby's closed its first Internet auction (books and manuscripts), comprising 121 lots of American and English works, including a first edition of Edgar Rice Burroughs' Tarzan of the Apes. The sale brought in $80,000.
Baron figures that, excluding the Net factor, Sotheby's stock could double in three years. But the Internet, he says, could speed the stock's advance.