Filly Eight Belles: Exploitation Exploded Ankles

Three-year old filly Eight Belles with her bursting determination tried to catch the exceptional colt Big Brown in yesterday's 134th running of the Kentucky Derby. She didn't. She finished second. Probably both of her front ankles were already broken when she crossed the finish line. Within minutes she was euthanized on the track. Her spirit and determination were greater than her ankles could carry.

Her most sad end is reminiscent of the 1975 match race between the filly Ruffian and then Kentucky Derby winner Foolish Pleasure. Ruffian tried to catch the colt also, but shattered one of her ankles in the pursuit. She ran for 40 yards after her ankle was broken before the jockey could rein her in! Ruffian was also euthanized. The two fillies' spirit and determination were the margins that made them champions. Those qualities simply known as heart can overcome anatomical disadvantages.I'm sure the trainers of both fillies knew that they could "go to the bank" in the exploitation of the horses heart quotient.

I have been an equestrian for 37 years. I stopped watching horse racing shortly after buying my first horse. When you know horses intimaely you learn that racing is cruelty.

Buyer Beware: International Equine Acquisitions Holdings

A couple of Wall Street hedge fund managers want to apply their experience in security management to a business plan that invests solely in race horses. International Equine Acquisitions Holdings has raised $40 million since 2003. It wants to raise another $60 million and go public by this years end. I.E.A.H. 's current biggest asset is Big Brown. He's a colt with bad feet who is a good bet to do well in the upcoming Kentucky Derby. He may win.

Hedge funds by definition have postions on the "long" and "short" side of the market. That's so if the market swings either way the hedge fund can hopefully participate profitably with the net of the portfolio outperforming competitors and the market. So Big Brown is the major "long" in the portfolio. If he doesn't do well or his feet flare up again he may have a short career. In that event the "long' will be of no value. There will be no bid. In contrast Wall Street type hedge funds that deal in stocks, bond and commodities usually have deep liquid markets to recover some portion of an investment if things go wrong. Not so with race horses if they can't race anymore.

What is I.E.A.H.'s "short" to offset the market risks of its "long" postions in fragile and largely depreciating race horses? There are none. Maybe it will be the investors who will come up short. Horse racing can be a brutal sport. It's been called the "sport of kings" because it takes wealth to participate and it extends care for animals whether they win or lose. But in fast money investing such as I.E.A.H's business model, horses that don't earn their room and board become a liability. So the poor animal may suffer a miserable fate just because it couldn't make a return on investment.