Make no mistake that this is a HIGH RISK - HIGH REWARD venture that is not for the faint of heart. If this worries you then we suggest you read no further.
But if you are still reading...
"The average return on a thoroughbred purchased as a one-year-old, or yearling, and sold as a two-year-old climbed to 47 percent in 2007 from 30 percent in 1999, according to TBH MarketWatch, an industry newsletter put out by the publishers of The Blood-Horse magazine, based in Lexington." (Source: Bloomberg wire story Dec. 28, 2007)
In their trading niche, a once-obscure art called ``pinhooking'' that's drawing investment like never before, average returns are beating those of hedge funds. Among the reasons: More oil money is flowing in from Dubai. If their buy-and-flip strategy works, Zito and LaPenta will never see their young acquisition bolt from a starting gate. Instead, they'll board and train the horse in Florida for half a year, then sell -- or pinhook -- him at an auction of two-year- olds, pocketing a tidy profit.
`High Risk, High Reward'
``It's a very volatile part of our market that's developing dramatically,'' says Geoffrey Russell, director of sales at Keeneland. Pinhooking isn't for the fainthearted, he says. ``You have to wear long pants to play in this industry. You need to understand that it's a high-risk, high-reward business. But it's a very fun aspect of the business.''
Auction Sprints
A yearling that arrives weighing 500 pounds (227 kilograms) can grow to 900 pounds by the time it goes for sale as a two- year-old some six months later. The auction season for two-year-olds kicks off in February at the Ocala Breeders' Sales Co. and runs until June, swinging through Miami and Lexington as well as Pomona, California; Timonium, Maryland; and Grand Prairie, Texas.
Cash Cow
Mention a big hit named War Pass, and Brennan says the horse has made the entire year for LaPenta. Then Brennan corrects himself: ``He's made a few years.''
The story is a pinhooker's dream... Zito picked out the yearling for LaPenta, who paid $180,000 in 2006, but had to hold him out of the 2007 auctions for two- year-olds because of injury. LaPenta sent the horse off for ankle surgery and turned him over to Zito to train and race -- their plan B when a pinhook prospect falters.
Under Zito's tutelage, War Pass went undefeated in four starts this year, including a 4 3/4-length romp in the $2 million Breeders' Cup Juvenile in October. That stamped him as the favorite to win the 2008 Kentucky Derby, scheduled for May 3.
Bill Oppenheim, a breeding and auction market columnist at the Thoroughbred Daily News, estimates War Pass's value at about $20 million. That's a return of more than 10,000 percent. Try making that trading stocks and bonds.
Now It's Our Turn!
Fantasy Lane Stable has been on the buying end, and very successfully we might add, for two-year-old's in training. We have added a very valuable asset in trainer Eddie Coletti, who has been one of the most successful pinhookers on the circuit. Together we bring years of invaluable experience in pinhooking yearlings at two-year-old sales.
And in today's "what can you do for me" environment, when selecting yearlings to pinhook, one needs to buy babies that have a nice pedigree, good conformation, and hope they're precocious very early on. This is the recipe for success in pinhooking. It makes no sense to buy a yearling who will be a project in that he/she will not be able to race until a three-year-old. This is not what one is looking for when flipping/pinhooking. If we were racing the individual, which we are not, that would be another story entirely.
FLS Management is surrounded with the very best experts in the business. Although there are no guarantees, because after all, we're dealing with a living breathing creatures, rest assured FLS will leave no stone unturned in procuring the best yearlings that fit our budget and project the highest return. We're looking for fast, precocious babies meaning they'll be ready early in their two-year-old year.
One thing worth noting is when pinhookers delve into the higher end of the pool, with yearlings costing greater than $150,000, there's very little margin for error. In fact, by doing so, the risk of failure is much higher should the horse not be ready on time. Even worse is if the horse doesn't turn out to be as good as hoped for. The market to sell these horses is for the "high-end buyers" only. As we said, there's very little margin for error under this scenario.
Statistics reveal the highest profits or ROI (Return On Investment) come from moderately purchased yearlings who sprout up like weeds in a matter of months. These precocious youngsters show well, work fast, and gallop out strong at the two-year-old in training undertack shows. Remember, when buying yearlings, they'll weigh about 500 pounds. Within a few months they almost double their weight to 900 pounds.
The horses we intend to purchase are constantly evaluated during their training in the fall and “targeted” to specific Two-Year-Old In Training Sales across the country. We believe this will provide our investors with best chance for turning a profit. The two-year-old market continues to demand a good physical-fast horse. Not that this hasn't been the case, but each year it appears buyer’s are more selective. We need to be cognizant of this fact, and be more selective in our buying as well. We believe everyone will be pleased with our purchases.
So without further adieu, below for your review, is the Fantasy Lane Stable 2008 Yearling Business Plan should you wish to enroll.
We think it'll be fun, exciting, and hopefully, a profitable business venture. We always have a smile on our face when a pinhooker who invests $25,000 is standing backstage at the auction as the bidding on their horse surpasses $100,000, $150,000, $250,000, and higher.They always appear as if they hit the the lottery, and are about to faint. Now it's our turn! And, you can be there with us at the two-year-old in training auctions as the FLS partners reap the rewards. Any questions, please feel free to call 732-241-6606. We look forward to hearing from you.
FLS YEARLING BUSINESS PLAN Below is a general description of the Fantasy Lane Stable Yearling Program Partnership and how it will work. In this way, we hope to explain from the the acquisition of the yearlings, as well as the progression of the yearling from breaking, to training, to finally becoming a two-year-old, as well as other useful information. It all happens so fast. Acquisition - September 2008 At the premier Keeneland September Yearling Sale, FLS will scout for prospects for this partnership. As we've always done, FLS will select many potential prospects based on conformation, pedigree expert, and veterinarian analysis. We plan to take the necessary measurements to secure sound, speedy yearlings, regardless of sex, that should show well in the upcoming two-year-old in training sales. It will usually take a couple of inspections through the barn area before we narrow our "short list" down to the precocious 2 or 3 yearlings we're looking to acquire for our partnership. After we submit the winning bid at auction, the yearling(s) will be shipped to our boarding farm, Sunrise Stable South (SSS) in Ocala, under the watchful eye of trainer Eddie Coletti who has been involved in pinhooking and consigning for many years. We plan to insure these babies against mortality to protect the investment as best we can. Initial Training - September to December After arriving at SSS, our yearlings will begin their initial training. This is when the horse is broken. This means having a rider placed on its back for the very first time. Then we begin basic training to teach the yearling about the racetrack. Most of this training is light, as the yearling simply wants to be broken so it can be ridden. This training is accelerated from a normal cycle for a racing partnership or operation, as the horses need to be ready for the upcoming two-year-old in training sales. Race and Workout Training at SSS - January to March 2009 Around the first of the year, when the yearlings universally celebrate their two-year-old birthdays, FLS Management will select the best Two-Year-Old in Training Sales as to where to enter our horses. These sales are from February to May. Depending on the progress of the horse, and when it will be ready to show best, we will select the sale that we deem the best fit. It's important to note, that like everything else in life, acceptance into specific sales is politically driven. FLS is well-versed and liked. This is important as politically we're in good standing and acquainted with all the sales companies for many years. Progress As the horse is being given its basic race and workout training at the farm's racetrack, it can go quickly or slowly. The differences can be attributed to physical and mental maturity, injury and soreness, quickness, and pedigree to name a few. If everything goes smoothly along a normal progression, about 2 to 3 months is the required time of workout training to get the horse ready. The horse will be sharpened so that it will be able to work a distance at the sale's preview (undertack) show that best fits his or her ability in the best possible manner. While the time of the workout is important, the way in which the horse works and gallops out is much more important. Distributions After receiving the sale proceeds from the sales company and paying any final bills associated with the horse, all proceeds will be distributed to partners and the partnership dissolved. Usually this can be accomplished within 30 days of sale. However, the sales companies can take as long as 60 days to pay the consignor. Obviously, not all of our horses will be sold at the same sale so this process can take as long as 60 days after our last horse is sold. |
ESTIMATED COST PROJECTIONS* - FLS YEARLING PINHOOKING PARTNERSHIP
| Description | Cost Projection |
| Purchase Price (average per horse) | $50,000 |
| Sales Commission | $ 5,000 |
| Sales Costs (travel, research) | $ 2,000 |
| Board (prior to training) | $ 2,000 |
| Training | $11,500 |
| Veterinarian | $ 1,500 |
| Blacksmith | $ 500 |
| Hauling/Van/Transportation | $ 1,000 |
| Sales Entry | $ 1,000 |
| Sales Materials (tack, etc.) | $ 500 |
| Registration Fees, etc. | $1,200 |
| Insurance (mortality) | $1,875 |
| TOTAL | $78, 075 |
| * Estimates based on 9 months |
