Thursday, November 1, 2007

Communication & Partnerships

Well, I am now embroiled in a fiasco with a horse I am in partnership with in California. To be perfectly clear up front, things here in Minnesota with Star of the North and David Miller are excellent. However, the events led me to think about communication and how important it is when you are involved in horse ownership.

In this Cal group, they sell shares down to 1%. As I have mentioned before, I think this is a mistake and an accounting nightmare. The start of the entire mess was when I found out about a year ago that I did not own 5% of the two horses, but only 1.5%. No one could tell me where the rest of the money went, either. To be fair, the managing partner passed away and the guy that was trying to replace him walked into a financial mess. I eventually got my money back and part of those proceeds were used to purchase Somerset Sam (playing at the farm last weekend, above) and Somerset Wish. So THAT part really worked out.

As it turns out, after the first of the year, the two horses in thie California group got claimed away. This wasn't a bad thing as they had both won their share and one was actually claimed for over $30,000 more than we paid for him. Some of us thought, with the managing partner situation in flux, that maybe the group should celebrate it's 58% ROI and cash-out. We were assured that the new managing partner was not going to claim another horse until the financials were worked out.

You guessed it - that didn't happen. In fact, just a few weeks later we got a note stating that not only had we claimed another horse, but that we had been out shook (when more than one claim is placed on a horse in a race, the claimants have numbered beads in a jug and the winner is the bead that shakes out of the bottle, thus the term: the shake) several times in the past month and that while it was important to wait for the financials, a great opportunity couldn't be passed up. The communication here was not only terrible - but it was deceitful. Either we were going to wait until the financials were up to date or we weren't. But to tell us one thing, only to have us find out that all along you were trying to claim horses is blatant lying.

Two horses were claimed - one around $40,000 and one at $16,000. Both have been disasters. The $40K horse finally won a race and was claimed away from us at $16,000 and that leaves us with our current runner, for lack of a better term, that won a few starts back for us at the $4,000 level. He ran yesterday at the $10,000 level (why? I have no idea) and got smoked from gate to wire. By my estimates we now have a -55% ROI on this group, but with no update on the financial status of the group since April 2007, we are all in the dark left to our own best guesses. So much for the two great opportunities that couldn't be passed up.

Before entering into a racing partnership, talk to current partners (if there are any to talk to) and find out how much information is passed along and how often they get updates. I speak to David almost once a week, and our horses are turned out for the winter!! VIP Internet Stable, where I own a 10% interest a harness horse, sends out weekly updates via e-mail and updates their website several times per week. David and VIP are excellent communicators. This other group scares me and I would warn anyone away. Please contact me off-line if you are interested in the particulars - this is a cautionary tale, not a public bash session, so I left out the names, but should you be looking for a partnership to invest in, I want to make sure that this one isn't one you are looking at.

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