Osblog 45 – Valuations
11th Dec 2013
The December Sale presented a mini case study in valuation when we saw three half sisters all benefit from a Gr.1 update on the eve of the sale. One made 360,000 another made 130,000 while the third made 40,000. The pedigrees were not identical as they were sired by Street Sense, Empire Maker and Dynaformer, they varied in shape and were carrying foals by High Chaparral, Sepoy and Zamindar. The lower priced one was the one who had already produced a runner and the scanty evidence this delivered probably influenced her relative rejection.
We saw the effect of the black type performance on the values of the fillies on offer. Other factors seem to move the value dial in the negative direction. Age alone is not always a negative, but underperformance by the first couple or three foals seems condemnatory. Some statisticians say that a mare’s second foal is her best. This modest statistical out-performance seems to have a disproportionate effect on price. While not many mares produce a New Approach in their twenties, it seems unfair to apportion so much weight to such little evidence, considering how many factors determine the outcome for any individual foal. It’s not all mum’s fault.
The combination of beauty, performance, pedigree and earning potential leads to different conclusions for investors, nearly all of whom are constrained by the other factor – price. Everyone makes compromises in the blend, although the priority of influence varies. Beauty (or conformation) always commands a premium, but the deep pages are magnetic and seem to draw a veil over any perceived flaws in the physical. Sire fashion is just as prevalent in the breeding stock sales and race ratings are becoming more and more relevant in sorting the order of merit.
As soon as the formula is defined, along come the saviours of all markets – the exceptions. For every Park Express there is a Jude, rated about 80 pounds lower. For every Amazonian dam there is a crooked counterpoint and for every Immortal Verse we all hope to have unearthed a market-defying diamond. And some one among us will be right.
Your hopes and dreams start here …. http://www.youtube.com/watch?v=u3-qvJ38XVo