Big Brown, the winner of the Kentucky Derby, is owned by an outfit called IEAH Stables – that’s International Equine Acquisitions Holdings, Inc. Reportedly they paid $3 million for three-fourths of Big Brown.
IEAH is a New York-based partnership group and they did a good day’s work when they bought into this great colt. They have purchased all or parts of other high-class racehorses, so whoever is doing the picking is either smart or lucky as hell. And IEAH obviously has some mighty deep pockets.
I read that IEAH (an unwieldy name if there ever was one!) is going to combine their equine portfolio with a development of a chain of equine hospitals, and form a $100 million hedge fund—with units $1 million each. So they need to find one hundred super rich players. Big Brown will certainly help… Eight Belles and her tragic demise in the Derby gallop out will not help.
Inevitably, as the “grand old man of syndication”—the guy who started the group ownership concept almost four decades ago—I’m getting a lot of press inquiries about the feasibility of the IEAH concept. I know nothing of the details; barely understand what a hedge fund is, but this I do know: selecting racehorses and campaigning racehorses is a very inexact science. No human being ever lived who could succeed in either endeavor, with consistency. The horse business does not lend itself to the Wall Street approach. In the mid 80s—a “go-go” era in the racehorse business—Spendthrift Farm, Merrill Lynch, Legg Mason, Prudential Financial and others tried structured public offerings and they went over like a lead balloon.
Ours is a highly speculative business. I have always said Dogwood partnerships are a three-pronged proposition. One, the horse (or horses) might make big money—but don’t count on it. Two, there will be fine tax benefits if it doesn’t. Three, and most important, it will be a thrilling, colorful, interesting venture. The pleasure aspect is a vital one, believe me.
I think this is the way you need to look at any equine investment. There will be ups…and I’ll guarantee you there will be downs.
This is Cot Campbell and this is my view.