For bloodstock agent Suman Hedge, working on both sides of the yearling market as buyer and seller does have its virtues, especially in what he describes as “sticky” trading conditions.
Hedge has purchased half a dozen horses on the Gold Coast this week, working with a few different clients including Trilogy Racing, while the long-time pinhooker is also offering a handful of horses he purchased as weanlings, a more complicated strategy in what is a falling market.
In that regard, he is also well placed to assess the market conditions, telling the Straight Talk podcast that the selective theme which proliferated at last year’s sales appears to have become more pronounced.
“I think the market's very selective. So where horses are popular and they've got like lots of people on them, they're still selling very well. But then if you're missing the mark for any reason, it's quite difficult,” Hedge said.
“There's no extras, there's no upside that there's been in the last couple of years. It's relatively strong, but then there's also patches within it.”
The overall comparative stats to the same stage of last year’s sale, reveal overall investment has dipped by $11 million, or 7 per cent, the average down 4 per cent, the median is 10 per cent lower, while the clearance rate has dropped from 85 per cent at this time of last year’s sale to 80 per cent after three days this year.
It is not disastrous, but it does point to the greater challenges breeders and those who sell yearlings are likely to have throughout 2024 under tightened economic circumstances.
“I'm probably fortunate in that regard because we buy and sell, so we're on both sides of the equation. And I can tell you as a seller, it's been very sticky,” Hedge said.
“Things like the vetting reports and that are not really being very reflective of what horses are making. In the past if you had solid vetting and X-rays and that you're very confident that you do well, that's not the case here.
“Similarly, as a buyer, there's horses that have slipped through the cracks and we would assume that they would make more, but they've actually been viable. So it's created more opportunities for buyers.”
Hedge’s comments from a selling perspective mirror those of Segenhoe Stud’s Peter O’Brien when he spoke to Straight Talk this week.
Segenhoe has been one of the most successful vendors at this sale for many years and while it has sold a couple of million-dollar lots this week, has averaged over $500,000 and passed in just one of its 22 lots offered to date, getting the deals done has been much harder than it has over recent years.
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“Obviously there's a lot of horses here. They're (buyers) very particular. Everything has to be, has to tick every box. And if they don't, they sort of move on,” O’Brien said.
“They're just tiny little things that people weren't happy with. I just think there's so many horses here that it's a buyer's market, so to speak. I just found the middle market a bit softer. But you just feel it in the sale. It's just not as easy as it was last year.”
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Hedge’s experience as a seller this year has had its highlights. A Too Darn Hot filly purchased from $150,000 as a weanling sold for $420,000 on Thursday through Riverstone Lodge. But those types of results are even more important in a selective market, where there is a greater risk of a pinhooker having to either accept a loss on a yearling, or be left holding it if it doesn’t sell.
“In general, pinhooking's been challenging for the last couple of years. You've really got to hit the mark,” he said.
“I think what I've learned is stallions are so important because I've always bought on type and type can take you so far, but in a sticky market, it's not enough.
“You've got to have other factors to be saleable because when we're here at the sales and we're doing our inspections, we have a level of enthusiasm for the types that we see. But then there's the reality of trainers or us having to sell those to the end users.”
“In a buoyant market, when there's plenty of money and things, you can still make that work. But the market being so selective at the moment, people just don't have the appetite to speculate on certain stallions.”
That demand for proven and/or high-profile stallions will impact Hedge’s pinhooking strategy when he heads to the weanling market in May and June.
“Some of it doesn't really make sense because some of the stallions are really successful and should be more commercial. But the market's just basically decided on those horses and therefore they become hard to sell,” he said.
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Neither O’Brien nor Hedge see the current situation as doom and gloom, just a change in mood from the bullishness which built a bit of a bloodstock bubble in the post-pandemic era.
“I think that in the best case, next year would probably be similar. We would hope that things will improve with interest rates and cost of living coming down. And we have to remember, too, that we've had a very, very good run,” Hedge said.
“We've been through all sorts of different issues, pandemics, and breeders have been very well paid for a number of years. So this is probably a correction that, in some respects, was required anyway just to bring things back to normality.
“And it's not a crash. It's just an adjustment.”
Tim Rowe
