It seems Goldman Sachs is willing to do pretty much anything when it comes to maintaining SAC Capital (now Point72) Steve Cohen's liquidity. On the heels of last year's "stand by your man" moment in the midst of the insider-trading scandal, Goldman has kindly offered to provide Cohen another lifeline of liquidity - this time backed by his $1 billion art collection. As Bloomberg reports [9], Cohen pledged “certain items of fine art” under a security agreement which didn’t specify how much money was borrowed. As one art "investor" noted, this is not unusual, "hedge fund guys who manage their money wisely... look to put their art collections to work... If you can get liquidity out of your collection and pay only 250 basis points...it just makes sense." Sense, indeed!
Goldman Sachs, which stood by Steven A. Cohen last year as his SAC Capital Advisors LP bore the brunt of a massive insider trading probe, has come to the billionaire’s aid again.
The top prime broker to the former hedge-fund firm, Goldman Sachs is making a personal loan to Cohen for the first time, according to a regulatory filing, joining the list of banks that have provided SAC’s founder with credit lines backed by his $1 billion art collection.
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“Goldman is opportunistic about these things,” said Ian Peck, the head of Art Capital Group, a New York-based firm that provides loans secured by artwork.
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Goldman Sachs Bank USA, parent to the firm’s private bank for the very rich, filed a notice with the Connecticut Secretary of the State reporting that Cohen had pledged “certain items of fine art” under a security agreement dated Feb. 28, which didn’t specify how much money was borrowed.
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“A number of hedge fund guys who manage their money wisely, they look to put their art collections to work,” Plummer said in a telephone interview. “If you can get liquidity out of your collection and pay only 250 basis points,” Plummer said, “it just makes sense.”
But Why?
Goldman Sachs’s Cohn described SAC as a “great counterparty” last year on CNBC, after the hedge-fund firm was indicted by prosecutors.
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“In my experience, Goldman is not one of the usual sources for art loans,” said Thomas C. Danziger, a New York attorney lawyer who represents financial institutions that are making art loans. “It’s not their bread and butter.”
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“Its sort of the last non-transparent business and non-regulated business, which of course Goldman has thrived on in all these years,”
Because - art is not correlated right? not all prices can drop at the same time, right?
Of course, from Goldman's perspective they get his business - and are perhaps more than willing to accept only 250bp on the basis that central banks won't stop printing and super-wealthy assets will continue to rise... (or maybe they just want to be first in line when Cohen implodes?)