Billionaire collector shares his secret to buying great art that turns into even better investment

J. Tomilson Hill, the Blackstone Group

Michael Nagle | Bloomberg | Getty Images

Billionaire J. Tomilson Hill has built one of the world’s top collections of fine art, filled with Picassos and de Koonings and Bacon’s that have more than doubled or tripled in value since he bought them.

He has a keen eye for great art that’s also made for incredible investments. He bought one of Andy Warhol’s famous «soup-can» paintings in 1996 for $340,000. It’s now likely worth over $9 million.

Hill shared some of his personal rules for buying art after speaking at CNBC’s Net/Net Summit at the New York Stock Exchange last week. 

Buy what you love

«The first thing that goes through my mind is ‘does this give me goosebumps?'» he said. «Is it something I will want to look at every day and with the same enthusiasm a year from now, or two years from now. And how will it fare in comparison to other great artists next to it?»

Don’t buy art as an investment

He said that if you buy a piece of art because you think it will rise in price «then you’re going down a difficult path. You just have no idea.»

Buy the same artists

Hill also said he tries to collect at least four or five works by a select group of artists he focuses on, rather than buying «one of everything and just checking the boxes.»

But Hill’s most surprising secret to investing in art comes from his experience in financial markets. Hill is the chairman of Blackstone Group’s multibillion dollar hedge fund solutions group and has been a collector and top financial executive for decades. He said that with both stocks and art, you should always consider who the other buyers are.

Know your competition

«If you’re an equity manager today, and you own XYZ company, and you’ve done all the research and spoken with the management team, the first question you ask is ‘who else owns this stock?'» Hill explained. «Is it index funds or part of a company’s quant strategy? If you don’t know who owns the stock and if it’s part of a momentum play or index, the stock can go up and then go down just as quickly.»

Hill said buying art should be the same. New databases and research allows buyers to better determine who else owns an artist they want to collect. If the other buyers of the artist are speculators, short-term art traders or flippers, you should avoid them.

«You should ask ‘who else has collected that particular artist? What museums is that artist in? What curators like the art? Who are their dealers and who else is buying?'» he said. «A while ago there were all these people who went long on (Martin) Kippenberger, and then they tried to juice the market They loaded up and then tried to sell. That happens in the art world.»

And even if you can’t afford the multi-million-dollar pieces Hill buys, you can see them for free. Selections from his collection — which features the likes of Christopher Wool, Francis Bacon, Cy Tombly and Willem de Kooning — will be visible to the public when the Hill Art Foundation opens next month in New York.

Hill should know. He serves on the board of the Metropolitan Museum of Art, is chairman emeritus of the Hirshhorn Museum and Sculpture Garden in Washington, D.C. and serves on the investment committee of the Smithsonian Institution.

Highlights from the 3rd Annual Net/Net Summit

The CEO-CFO Partnership: Managing Change in Retail Health Care
Acquisitions. Buybacks. New competitors (Amazon!). Shifting consumer trends. The team at Walgreens Boots Alliance has had its hands full in recent years, keeping pace with rapid changes while delivering consistent growth. We’ll find out what makes their C-suite tick.

Leadership Lessons, from Battlefield to Boardroom
The legendary commander of the Joint Special Operations Command revolutionized the way we fight wars; he now applies the lessons he learned on the battlefields of Afghanistan and Iraq to management strategy, helping leaders adapt, innovate and initiate transformative change.

The Art of the Deal, Literally
His day job may be managing a $77 billion hedge fund, but with his keen aesthetic and deep pockets, he’s also been able to master a very different global market. Tom Hill views the art of art collecting much like he views business: Preparation and research are vital, and knowing who you are and why you’re investing is essential. We will learn about following one’s passion from one of the leading collectors in the world—and get a sneak preview of the upcoming opening of the Hill Art Foundation gallery.

Talent Show: Competing for the Best and Brightest
There are more jobs that need to be filled than there are qualified workers to fill them, especially in digital roles, which are so vital to every company’s success. Coupled with that, the FANGs (Facebook, Amazon, Netflix and Google) have the money and cache to scoop up many of the best and the brightest. How can companies compete—and win?

Telling Your Story
Whether it is to your board, your investors, your CEO or your direct reports, it’s imperative that you be able to impart your vision effectively to succeed. That can be difficult when only the numbers can tell the true story. This presentation will provide novel approaches to help you communicate effectively and efficiently.

Reinvention and Innovation: A Conversation with Brian Moynihan
Bank of America, the nation’s second-largest bank by assets, is blazing its own unique path. Balancing high-tech with high-touch, investment banking with retail, shareholder demands with consumers’ is no mean feat in the hyper-competitive financial industry. B of A seems to have found its groove. How can they sustain this success?

The Capitol — Capital Connection
There are likely no two people better connected in Washington than billionaires David Rubenstein and Mark Ein. Need proof? Rubenstein actually owns the Declaration of Independence (well, a rare copy anyway)! Ein has a Key to the City, and his side hustle is as owner of the Washington City Paper! We’ll be talking trade, taxes, regulation and the midterms, as well as the business outlook for 2019 with two titans of the private markets.

Old Industries, New Leaders: Thriving in an Era of Change
While many companies struggle to adapt to the rapid changes in today’s dynamic economic, demographic and technological environment, there are others that are thriving, even in challenged industries. What do these companies have in common, and what role does technology play in their success?

CNBC’s Tyler Mathisen speaking at Net/Net at the New York Stock Exchange on Oct. 16th, 2018. 

CNBC

Net/Net: The Capitol — Capital connection

5:12 PM ET Wed, 17 Oct 2018

There are likely no two people better connected in Washington than billionaires David Rubenstein and Mark Ein. They both joined us at our Net/Net Summit, sharing what the right reasons are when it comes to rising interest rates.

Net/Net: The art of the deal, literally

5:11 PM ET Wed, 17 Oct 2018

His day job may be managing a $77 billion hedge fund, but he’s also been able to master a very different global market. Tom Hill talks about the business of art collection with “Secret Lives” host Robert Frank at Net/Net.

Billionaire art collector says Chinese museums are buying up the world’s art

One of the world’s top art collectors said the art market is unlikely to cool or crash anytime soon, due in part to soaring demand from new museums in China.

Bubbles and busts are nearly impossible to predict in any market, said J. Tomilson Hill, the vice chairman of Blackstone, who is about to open the Hill Art Foundation private museum in New York. But he said the art market will be fueled in part by China, and the thousands of new Chinese museums that are slated to open in the coming years.

«In 1949, when Mao took over China, there were 25 museums in China,» Hill told CNBC during its Net/Net Conference. «Do you know how many museums there are in the United States today? 35,000. There are under 7,000 museums in China but they’re growing at between 500-1,000 museums a year. So there is a massive demand for interesting things to either look at, to talk about.»

The push is part of China’s efforts to not only become the world’s economic super power, but also to become a cultural force on par with the U.S. and Europe. New museums in China have been willing to pay astronomic prices for trophy works.

Liu Yiqian, a former taxi driver turned billionaire in China, paid $170 million for a Modigliani painting at Christie’s in 2015. The painting was purchased for one of his two museums in Shanghai.

The Chinese government is also requiring many new real estate developments to build museums as a condition to get government approvals. That will create demand for art for years, as China’s building boom continues. Last month, Sotheby’s racked up sales of over $466 million at its Hong Kong sales, including a $65 million painting that broke a record for Hong Kong.

Hill also said that art remains an attractive asset for the global rich who want a store of value they can take offshore, or use to avoid taxes. The massive amounts of art piling up in duty-free warehouses in Singapore, Hong Kong and Switzerland are a sign that the rich are using art as a way to offshore their wealth, he said.

«If you’re looking to avoid taxes, the art market is a pretty good way to do that,» he said. «And it’s really hard to track.»