Don’t buy a horse on hope: How pinhookers use data for profit

Cover image courtesy of Magic Millions

Buying a weanling at value and turning a profit on the same horse when selling as a yearling is an art that takes skill. In this game where everything is a risk, there is more than simply judging whether a horse is a good type.

“You can’t rock up at a sale and buy the first nice type. It’s a lot of research,” said Lime Country Thoroughbreds’ Jo Griffin.

Type, and hype, are still the market kings

In the business of selling yearlings, having a nice type of horse makes the whole game easier.

“Type is what matters the most. At the end of the day, you are catering to a market that buys horses on type and on hype. And that's what I want to feed the market,” said Avesta Bloodstock’s Jimmy Unwala.

“Everything has a place. Pedigree has its importance. Data has its importance. Type is important, but you could have a very well-bred horse and you could have all the data with you, but if it's not a good type, you struggle to get people to buy a horse.

“A lot of people go to a weanling sale to find a really backward horse that they can improve. It lacks a bit of scope, lacks a bit of size and they think it will improve. The reality is that it probably won't. My policy is a bit different. I try and find a ready-made horse that I like just at the right price.

“I don't want to take the stress and have sleepless nights worrying if the horse will grow. It’s too much risk. I would rather buy a good looking, ready-made horse that is just undervalued at the market at the given time and hopefully he makes a bit more.”

Newgate Farm’s Jim Carey has built a strong reputation for pinhooking weanlings into yearlings, and he pointed to recent juvenile winner Obambulate (Tiger Of Malay), bought as a $75,000 weanling and resold for $140,000 as a yearling, as an example of the type-first, end-user-led thinking behind their pinhooking model.

“It’s the physical attributes that we are looking for, more than data, but obviously we always do a lot of pedigree work. We select the sires that we want to buy,” said Carey.

“I was taught by Jimmy Murphy, who is a famous pinhooker in Ireland and a very good judge, that when you buy a foal, you have to have an end user in mind. That’s the biggest thing.

“We know what types of horses that trainers like, or Guy Mulcaster and other big yearling buyers. We know what attributes they like and what they will live with. I’ll allow some flaws if I think they can improve as they grow, which end users won’t do. They want a product that is sound right now.

“I’ll ring all the trainers who have the two and 3-year-olds out of the mares and find out what they think of them to see if there is something about to come along and give you an edge.

“But at the end of the day, the most important thing is the physical type. If the horse can come back to Newgate and looks like part of the team horses that we've chosen to bring through to the yearling sale stage, that’s the most important thing.”

For Lime Country, it’s not just the individual in front of you. It’s also how all the progeny of a sire look and how they stack up against the progeny of other stallions. This year, they sold an Anamoe filly from Eawase (Sebring) at the Magic Millions Gold Coast Yearling Sale to Sheamus Mills Bloodstock (FBAA) for $800,000. They had purchased her for $340,000 from Alma Vale Thoroughbreds’ Inglis Australian Weanling Sale draft.

“Trust your own homework. This is great game of rumours, but you have to trust your own research. Get out on the farms, call the big farms and go to look at weanlings before they go to sale, especially the first season sires so you can see how they stack up across the board, not just looking at the ones who go to sale. Stud masters are always happy to show you a group of good foals,” said Griffin.

“All of that is work, and that’s the work the people who succeed are doing all the time. People who invest need to be mindful of this, and get in touch with people who do it.”

The farm you buy from matters

This year, Unwala sold a Zoustar colt from Lomandra (Not A Single Doubt) through Grenville Stud’s Inglis Australian Easter Yearling Sale draft for $900,000 to Mathland. He’d purchased him for $220,000 at the Magic Millions National Weanling Sale and described the sale on his socials as his best result ever.

“What I do is go over the last four or five years of the weanling sales. And I make a list of every breeder and vendor who is selling a weaning. And then I compare the data over that time to see who are shrewd sellers and who are not,” said Unwala.

When asked to define shrewd, it basically came down to profitability.

“If I see that historically, a certain vendor has sold weanlings and when they are reoffered as yearlings, they barely make any profit. That tells me a lot. There are different reasons why it could work that way. It could be that certain vendors are just very good preparers of horses, so their horses always make a bit more in the ring. And there are other vendors that you can easily make money off because their whole model is to sell everything as weanlings, like Fairhill Farm.

“I prefer to buy off people whose business model is to sell weanlings because at the end of the day, there’s no blueprint price for a weanling. You gauge the market, see where you think it’s going and you buy a horse. But when you have that profitability data, it helps you.”

Hedge does the same thing, coming back to breeders who have a good production record.

“First and foremost, I have my own database of information on all of the farms in regards to their performance over the last 10 years. What they’ve presented, how they’ve sold, and how those horses have performed subsequently,” said Hedge.

“Performance, both through the sales and on the track, because obviously some of them perform quite well through the sales, but then you don't necessarily see that on the racetrack, and that affects the way that you rate the farm. This is important in a general sense for any horse being sold.

“Paul Willetts was, I think, the first guy I knew who kept a database of the farms. He’s been doing it for years and he's succeeded in buying cheap horses that have done really well. Now everyone has Arion and publications like yours that provide all the information. It’s there, you should use it.”

Data is no longer the edge, interpretation is

Interestingly, none of the four pinhookers talked about looking at a stallion’s performance data in terms of stakes winners to runners, and perhaps that’s because that information is so available that it’s assumed everyone utilises it. Or there's an assumption that end users in the yearling market aren't looking at that data.

“I'm very conscious of what the market wants. I always tell my friends ‘don't worry about what we like. Worry about what the market will want in twelve months time’. There could be a stallion that I don't like, but I'll pinhook a couple of weanlings because I know that's what the market is gearing towards,” said Unwala.

“The market doesn't always go for what reads well on paper. Horses like Dundeel and So You Think, they’re so much better performed than many other stallions. But it can be hard work pinhooking horses by them to sell as yearlings because they are not really what the big colt syndicates buy or those end users who want 2-year-olds will buy.”

The vibe of a stallion matters to Hedge too with the way a stallion is perceived in the market more important than his actual performance. Recent results matter more than overall results.

“If the sire is an established stallion, then we want to see what is in the pipeline coming through in terms of numbers. Are there enough numbers coming through to keep that horse relevant so that things are still looking relatively positive. With a stallion timing is really important because it could be a good stallion, but they've had some sort of a mishap. For example, Maurice missed a season, The Autumn Sun too,” said Hedge.

“Look at The Autumn Sun now and he has an upward trajectory in terms of the market perception on him, but he’s missed a season, so you have to anticipate that when you're selling, there may be a period where he'll go a little bit quiet. You want to make sure that when you're selling, that there's still some positive feeling about the stallion, because ultimately we're trying to make a profit. What is relevant today may not be relevant in six months time.”

Picking a young stallion on the rise can provide a big opportunity but how do you do that when there is no exposed data on his progeny on the track?

“We’ve been successful with second seasons sires when buying weanlings, if we’ve really liked the first crop as yearlings. We did really well with Extreme Choice. I had a very mediocre opinion of him when he went to stud because I didn’t like him as a type,” said Hedge.

“He’s not very imposing. But then we shortlisted six of his first crop yearlings at the sales and there weren't many available. He had a limited crop and we still ended up with that many on our shortlist. So we went looking for his weanlings and we bought five of them privately (from his second crop) and we did really well out of that.

“We also sent six mares to him that year and five got in foal, so we had two years of great outcomes from him. All based around the first crop. But he was an extreme version because he had so few stock available. Sometimes you can shortlist a lot of yearlings by a sire, but if he has a lot of foals, it’s less relevant. Extreme Choice had so few and we loved so many. We felt it was a good bet.”

How a stallion’s progeny develop is part of the equation too, not just how they run on the track, and this intangible factor comes back to physical type.

“Data-wise, for every stallion, we go through their background, how many mares of what calibre, how early will they run, what stables bought them, what has been their broodmare opportunity,” said Griffin.

“If you haven’t had a lot of a stallion’s progeny through your hands, you can go through photos, and see what types sold well, and see how does this type (the weanling you want to buy) compares to those.

“If you’ve had a number of horses at your farm, you get to know how they develop. Is it a line that look average early then develop as yearlings? Some stallions have great looking weanlings that don’t crack on, and others weren’t the hottest weanlings but are much better yearlings, and you don’t know until it’s happened. If you are taking a punt, you need to do the work on what’s ahead of them.”

The pedigree page and if it matters

While Jim Carey is ringing trainers to see what the young stock from a mare are doing in training or are about to do on the track, Jimmy Unwala is ignoring the potential on the page.

“There used to be a time, when I cared a lot about what the previous foals had made out of the mare, and worrying about what the current foals might do. Is the half-brother going to win a stakes race in the next 12 months? But I’ve moved away from it because I don't want to buy a horse on a hope,” said Unwala.

“I want to buy a horse for exactly what I can see on the pedigree. And if the pedigree doesn't improve for me, I'm very happy with it. If it does, then I get a pedigree update and that's icing on the cake.”

For everyone else, trying to find a horse who has potential upside matters because that’s where the biggest profitability lies.

“For us, being more risk adverse than others, I’d prefer to pinhook a filly than a colt. We would be looking for a well-related filly with potential upside, not just for the yearling sales but longer term, in case they don’t make a yearling sale due to x-ray or scope,” said Griffin.

“We like to see a high percentage of winners to runners in the first and second dams, and we look at what races they have won, how many (from the family) have gone to Hong Kong and how many won better than average races, how many run time. If you are buying from any farm, is it a farm you’ve had a good experience with x-rays before previously. Are they raising the stock right because no x-ray, no sale. And on that, is it a family and a sire who scopes well?

“What was the dam’s broodmare opportunity, which stallions has she been to, and where will they end up by the time you end up selling? If they don’t make it to Magic Millions Gold Coast (developmentally), is it a big enough page to hold up for Inglis Premier or Inglis Easter?”

The idea of a pipeline to improvement matters for Hedge too.

“Is there something active in the family to provide an enhancement? Does she have other progeny who have trialled or about to race? Are you just buying the individual that's in front of you and putting all your faith in that?” asked Hedge.

“This is a confidence industry. Everything is about people's level of confidence. The more you've got that can keep those confidence levels high, the more horses around yours who are going to support the family and that will enhance the particular stallion, they're all things that can help you when you're selling a yearling down the track.

“That's all data driven. Data means I can be more professional in the way we go about it and react more to actuals rather than feel. Historically in our industry, we did everything by gut feel, and it can serve you well to a degree, but you need to bring reality to the game too.”