You Can Securitize Anything! — Art as an Asset Class with Nigel Glenday of Masterworks
Run the Numbers
The Power of Securitization: Transforming Assets into Financial Products
This chapter delves into the process of securitization, illustrating how diverse assets can be transformed into financial products. By sharing personal insights from the finance industry, it highlights the potential of unconventional assets like aircraft and art to generate cash flow and their implications in the financial landscape.
In this episode, CJ interviews Nigel Glenday, CFO, COO, and board member at Masterworks, a company that allows investors to buy shares in high-value artworks. He sheds light on the art market and Masterworks’s business model. They discuss the intricacies of art as an asset class, its historical significance, and its potential as an investment. Nigel explains the process of securitizing art, comparing it to other unique asset classes like racehorses and athlete contracts. He highlights the importance of data in valuing art and the company's approach to managing a large portfolio of art investments, before discussing the evolution of Masterworks' business model. The episode provides insights into the unique aspects of this asset class and the innovative ways Masterworks is scaling its business.
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TIMESTAMPS:
(00:00) Preview and Intro
(02:23) Sponsor – Vanta | Tropic
(04:53) Overcoming the Thomas Crown Affair
(06:22) Finance Within the Art World
(07:34) The Most Expensive Piece of Art Ever Purchased
(09:15) The History of Art as an Asset Class
(10:51) The Data-Rich Nature of Trading Art
(12:46) The Performance of the Art Market Compared to Other Markets
(15:37) Emotional Dividends in Art Investing
(17:13) Sponsor – RightRev | Planful | Brex
(20:55) Securitizing Anything with a Cash Flow
(24:45) Securitizing Art
(27:28) Determining When to Sell
(30:03) Museums: Owned Versus Loaned
(30:55) Masterworks’ Revenue Streams
(34:21) How Masterworks Services Their Investors
(36:06) Data and How It Informs What Masterworks Buys and Sells
(41:55) Evaluating the Value of the Art
(43:04) The Trading Market
(44:59) The Scaling and Evolution of Masterworks
(49:24) Long-Ass Lightning Round: Auto-Renewal Contract Mistakes
(50:43) Advice to Younger Self: No Style Points
(53:52) Finance Software Stack
(57:31) Craziest Expense Story: Defend Your Spend
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