Thursday, March 31, 2016

Why is a Billionaire Koch Brother Liquidating His Assets and What is He Doing with All the Money?

In February 2016, I wrote this:
 Bill Koch, a much less politically active billionaire Koch brother than his brothers Charles and David, appears to be liquidating assets.

In 2015, he sold several high-profile pieces of art, including, for $67.5 million, Pablo Picasso’s “The Nightclub Singer",  reports WSJ.

Now he wants to sell an Aspen, Colorado property so bad that he has cut the price from $100 million to $80 million.
Now, Bill Koch is putting up for auction a large part of his wine collection.

Bloomberg reports:
On May 19, 20,000 bottles of wine from William Koch’s cellar will go to auction at Sotheby’s. The blockbuster sale, spread across three days (May 19–21), represents close to half of the billionaire’s total collection and was acquired over the course of nearly 40 years....
Koch’s wine, which will be broken up into about 2,700 lots, is estimated to go for $10.5 million to $15 million. More than 120 lots are from the coveted Château Latour, including one that consists of six 1961 magnums, which carries an estimate of $42,000 to $60,000. There are also more than 80 lots of Château Mouton Rothschild; one, composed of 10 bottles of Mouton’s 1945 vintage, is expected to sell for $80,000 to $120,000. “That’s one of the most legendary wines,” said Kriegel. “It’s the wartime vintage, and it’s one of the greatest wines they’ve ever made. To see it on such a scale is pretty spectacular.
The cover story is that he has more than wine than he will ever be able to drink:
 Koch simply had too much of a good thing. “He realized he could never get through all of this wine,” said [Connor Kriegel, head of auction sales for Sotheby’s Wine]. In a statement announcing the sale, Koch echoed that sentiment: “With around 43,000 bottles, I could not possibly consume everything in my cellar so I am delighted to offer this selection to allow collectors all over the world to enjoy the glorious moments that come with these wines,” he wrote.
But didn't he know this when he was spending millions of dollars on the wine?

Maybe a billionaire  might get bored with his paintings, or his multi-million dollar spectacular Aspen ranch, or his wine collection. but all three?

This looks to me like a massive asset liquidation. The question becomes why. He is not politically active the way his brothers, Charles and David, are, but he surely understands the precarious nature of the economy. Does he think the end is near for the economy? Does he think society is about to collapse? What is he doing with the money? Is he buying gold? Has he built a Galt's gulch?



  1. Are these assets not hedges against inflation? He must have a better alternative to them. They are in oil. Wonder if he has found a honey hole?

    1. The problem with collector items is the number of collectors bidding and what they'll bid. Inflation does odd things in collector markets. Suddenly people just don't have the money for it and start bidding lower. For other things it may skyrocket depending on who's getting the new money. It's worth what someone will pay and he probably thinks this is the top for awhile.

      PS: If society were to collapse I would be buying wine and hard liquor. Not the collector kind either. The value of good pre-collapse booze would be very good in a barter system. Better than gold and silver IMO because of its wider market, especially initially.

  2. Years ago when I worked in the Big 8 in the wealth management (tax structuring) side of the house, the type of client I always loved working with were those that were active in the management of their assets and didn't just blindly do what us professionals told them. The two things these types of clients had in common was an uncanny ability to time the market rather well and the courage of conviction to act on their beliefs without having us do tons of analysis to support what they wanted to do. My guess is Bill is one of these types of people. I probably should mention one other trait these types have and that is not to share with the public (even their advisors) their belief or the real reason for their actions.

  3. Wine all tastes pretty much the same to me. I think it's all a scam.

  4. Bill was somewhat active during the early 90s in Kansas, funding the Koch Crime Commission and advocating sentence reform. He then sort of disappeared from the scene. He does not feel any urge to explain himself to anyone.

  5. I've heard about how lots of really expensive wine collections are actually full of fake bottles, but the owners don't want to report about it as it makes them look like they were fooled, and they want to unload their fake wine onto other rich fools. It's very difficult to prove, and some people would rather just sell off and have plausible deniability that they have 'forged' wine. Maybe he just heard this story and wants to dump all his expensive possibly fake wine as he thinks prices will drop.

  6. The eyebrows raise and the suspicions are aroused when billionaires and any big entity start looking to liquidate. What kind of dirty finances could these guys be trying to get rid of so desperately? We'll never know!