Wednesday, September 5, 2012

Bloodstock Investors Bob and Weave

If you or I are buying shares in a company we have a fair idea what's happening with it. The economy might be flat, but we can gauge where sales may be and are going. We can look at the CEO and management team, price to earnings ratios, competitors, forward sales, book value.

The CTHS yearling sale just completed and the numbers were poor, but not a disaster. A good estimation would be about a 25% hit from last year. When you look at those numbers, you wonder to yourself, how did the buyers ever set a price for the Ontario breds with all the uncertainty?

I think they bobbed and weaved just fine, for a number of reasons.

One, Woodbine seems more secure - or has a chance to be more secure - than anywhere else in the country. There are rumblings that they may get a chance at holding on to slots in some way, they control betting (pretty much) nationwide, and the handle on thoroughbred racing is good.

Two, we've heard rumblings that the stakes program, and overnights, will probably be Ontario sired, or Canadian bred focused. If you have a good horse, you should be able to make money.

Three, transitional funding will likely go into sustaining a breeding industry, so local farms' stock should be worth something.

Last, you are still buying a horse. If the horse has a decent sire and a good dam, he or she can race anywhere for purses. It's not like you are buying a horse who'll turn into a hunter jumper if he or she crosses the border.

The next month for the harness business is more precarious, but some of the ideals above still apply. Money will be stuffed - best that it can be - to the Ontario sired races. The wildly popular OSS program has money in it for 2013, and does not get all its funding from slots. While small sires will take a huge hit, the top sires - like Kadabra, Mach Three, Badlands Hanover and Angus Hall - still have pull as racehorses.

We all had hoped there would be more clarity for buyers in the here and now. There isn't, but the risk takers who buy horses each year at the yearling sales can muddy through the bog, and set a price; just like they always do.

1 comment:

Christine said...

Sales results always amaze me at Thoroughbred yearling sales I attend... some reserve prices seem ludicrous and then others unexpectedly go for amazing prices!

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