Timing when to invest in Sotheby's shares

Sotheby's (Public, NYSE:BID) stock in one year has ranged from $61 to $23.  Last Friday shares tanked 8% and yesterday we flirted with a new 52-week low.  But today shares are up 5% and trading around $25, so now what? 

Investing in this company is all about timing.  Only the rich and famous like Robin Leach and Little Jon can afford high priced items that Sotheby's auctions. If you don't know much about the company, they are basically the eBay for rich people, no Star Wars figures are sold at their auction house.

Sotheby's just posted a first quarter loss as well as a decline in revenue. They are the world's largest publicly traded art and collectibles auctioneer, and their revenue fell 12 percent to $129.3 million, while overall costs increased 9.7 percent to $147.7 million. The net loss was $12.4 million, 19 cents a share.

Analysts polled by Thomson Financial, on average, estimated earnings of 10 cents per share on sales of $141.4 million.

Total expenses rose 10.0%, to $147.7 million, which includes a 12.0% increase in salaries and related costs and a 20.0% increase in general and administrative expenses owing to increased professional fees and travel and entertainment expenses.

Though the quarter was disappointing, recent sales point to better times ahead. On May 7, Sotheby's sold Edvard Munch's "Girls on a Bridge" for $30.8 million and a work by Fernand Leger for $39.2 million. Seven lots sold for in excess of $10.0 million, and the average lot value of the day's sale was $5.7 million, versus $5.1 million the previous spring and $4.8 million last November.

"The market continues to be strong, and the demand for great works of art remains high as we have seen throughout the spring," said Bill Ruprecht, chief executive of Sotheby's. The company head said that it is looking forward to profitable sales in mid-May that will include Francis Bacon's masterpiece "Triptych -1976," which is supposed to go for about $70.0 million.

That's all fine and dandy, but when is the stock going to recover?

Masters, it's a tough call, but the Power's that Be won't let shares much lower.  The bad news is out so the stock can't do much worse unless we get a major pullback in the DOW or some other type of shake-up that moves the whole stock market.

It's probably best to see if today's rally actually holds up, because the Masters are waiting until June to enter this stock.  But if the crowd comes early and we see movement, we won't wait long to jump on the Sotheby's train.

Disclaimer: No positions in BID.