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

Key Points
  • Billionaire J. Tomilson Hill has become one of the world's top art collectors.
  • Hill has a keen eye for art that has doubled, and even tripled, in value over time.
  • He shared some of his secrets for successful art investing with CNBC.
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.