So There Are Horse Hedge Funds

Several months ago I mentioned that I once had done a small bit of research into the feasibility of launching a hedge fund that traded horses, as in thoroughbreds. It wasn't so much about getting one off the ground, but to see if there were any known inefficiencies out there in the market for racehorses that might be explored. Not having spent a whole lot of time on the project, nothing was readily obvious.

But there are such funds, or so it seems. NYT reports on a fund with the fittingly boring name of International Equine Acquisitions Holdings (their website is here), which has invested in horses that it hopes will one day win the Kentucky Derby. Its structure is very much like a hedge fund, right down to the fees. Basically, it's a horse stable organized as a horse trading hedge fund (which, btw, was how I concieved of my imaginary fund... I also thought it might be funny to eschew horse naming, and just give them all functional names, like numbers, just to show that it was all about the $$$)

They already have some holdings and they're out raising $100 million. The article also states that they hope to take the fund company public before the end of the year, though I don't know what that means. Is IEAH really going to be a publicly traded stock.

Judging by the bios of the company's principals, it looks as though they've got a mix of horse and finance guys. One real standout though: Mike Jarvis, the former St. John's basketball coach, is their VP of public relations. How odd is that? Apparently he's a racing enthusiast.

It's not clear what their strategy is, other than "invest in good horses that win." I imagined a fund that coldly exploited inefficiencies, like a tendency of market participants to overpay for winners, but I don't know if they're doing anything along these lines.

Comments

[Davis Freeberg]

This looks interesting, but I still like your Boca Raton index idea better. Horse swapping seems too random to me whereas you know that you'll get paid off from shorting scam artists.