The fat years were very fat for the artists who catered to the hedge fund set.

Damien Hirst, famed for the $17 million pickled shark and the $100 million diamond-encrusted skull, was able to unload $200 million worth of works, even as the world economy came crashing down in October. Jeff Koons, creator of the stainless-steel, one-ton Balloon Dog and a $5.6 million porcelain statue of Michael Jackson, had waiting lists that grew as his prices swelled. But few of the half-dozen art-world darlings who profited from the reflected gleam of hedge fund riches could top Richard Prince.

Famous for “re-photography”—photographing existing photos and selling them as his own—Prince, in the early part of the decade, was a well-established, if sometimes controversial, artist. His work sold in the five-figure to low-six-figure range, and he was represented by New York’s Gladstone Gallery, a top-tier venue. To the larger public, he was mainly known as the guy who re-photographed Marlboro Man ads and sold them as art, or as the artist who re-photographed a famous nude photo taken of actress Brooke Shields when she was a little girl. (The original photographer sold the image for $300; a Prince re-photograph of the image brought $151,000 at Christie’s.)

Yet once Prince was discovered by collectors in the hedge fund set, including Adam Sender, Daniel Loeb, and David Ganek, he became not just a bad boy but a bad boy with some very motivated patrons. Prince’s outlaw status appealed to the hedge funders, as did the potential gains to be had by flipping his paintings. Starting in 2005, his prices rose so quickly that some in the art world suspected hedge fund managers of bidding up the works as a game—seeing how high prices could soar before cashing out. ( View a slidehow detailing how some art has fallen sharply in value.)

And soar they did. In 2005, one of the images in Prince’s Cowboy series became the first work of photography to command more than $1 million at auction. Pieces with estimates of $250,000 went for $1 million. The Guggenheim Museum in New York, where David Ganek is a trustee, gave the 59-year-old Prince a retrospective in 2007, which jacked up prices even more. Last summer, one of his famous Nurse paintings (he scans covers of pulp-fiction novels and transfers the images onto canvas) sold for $8.4 million, almost 28 times as much as a work from the same series brought at a Christie’s auction in 2005.

But with his finance-world collectors in free fall, where does that leave Prince? Not in an ideal place. The prices of some of his works are down as much as 50 percent, and some unexpected pieces are showing up on the block. The president of the Guggenheim Museum’s board of trustees, Jennifer Stockman, sold two at auction in November, and indicted lawyer Marc Dreier recently unloaded the coveted 1980 photograph Untitled (Four Women With Hats). A group of Prince works is at the center of a dispute between one of his longtime collectors, CNET founder Halsey Minor, and Christie’s auction house. (Minor contends that the works plummeted in value after being consigned to Christie’s for a private sale that never materialized.) Prince has also been slapped with a lawsuit by French photographer ​Patrick Cariou, who charged the artist with copyright infringement.

So has Prince’s bubble burst? He declined to be interviewed for this story, though he did send an email from

St. Barts, where he was vacationing. “I don’t have any real thoughts about the market,” he wrote. “It’s another way of ‘judging’ art. That’s what people do.” He added, “I never planned to have one of my paintings sell for over $8 million.” In a follow-up email, Prince denied a rumor that he is trying to stop collectors from putting his works up for auction. “I can’t stop it if a collector wants to sell something of mine, and I can’t help it if a collector wants to bid on something of mine,” he wrote. “It’s flattering when a ‘nurse’ or a ‘cowboy’ or a ‘joke’ painting realizes a big price, but I’m not interested in consigning any of my work directly to an auction house.”

Of course, other hedge fund favorites are in a similar boat. Japanese artist Takashi Murakami, known mostly for his cartoonlike, anime-influenced paintings, used to sell pieces from his Flower Ball series for more than

$1 million, but at a recent Christie’s auction, Flower Ball (Brown) made less than $600,000. Jeff Koons’ work has been selling for about half what it once auctioned for—when it is bid on at all—and Damien Hirst has laid off staff in the wake of his big auction last fall. Art sales in general are down; Christie’s reported an 11 percent drop in sales volume in 2008. A share of Sotheby’s stock, which peaked at nearly $60 in late 2007, traded at just above $6 in March.

Prince’s misfortune is that he embodies the market’s downturn more than his contemporaries. While smaller Prince works are still selling at auction, and privately through his new dealer, Larry Gagosian, some of the bigger-ticket items are hurting. When Christie’s put Lake Resort Nurse on the block in November, it took in $3.3 million, well below both the low estimate and the auction house’s guarantee of $5 million. Another Nurse work—The Taming of Nurse Conway—garnered no bids at all. Neither did a Prince painting from his Joke series at a Phillips de Pury auction in London in October. Prince, via email, said he’s sanguine. “I drive a beat-up Volvo. I keep time with a $15 watch. I wear dungarees and T-shirts. I eat Cheetos and watch the Playboy channel.” In his free time, he added, “I’m learning to fly my own plane.”