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Tottenwood

Tottenwood Pinhooking Partnerships

 

Pinhooking involves an affordable partnership opportunity in a young horse to be purchased for the sole purpose of reselling at a later date.  Please check back for more news regarding Tottenwood Thoroughbred's plans for a 2008 pinhooking partnership.  For some general information, please read on. 

By definition, "pinhooking" is a term used to describe the activities of an individual who hangs around the entrance of a livestock yard with the intention of buying livestock from incoming farmers.  The purpose was to buy animals from the farmer for less money than they could get from the auction inside.  This was a very common practice and still exists at smaller livestock yards in rural areas.  The IRS has curtailed this practice at large livestock auctions; however, the practice still exists to some extent.  Sometimes, the "pinhookers" would make money, sometimes they would lose.  Generally, the transaction was not recorded, and therefore, the IRS did not get their share of any profits.  The term was coined to describe the attempt to "hook" you on the price of the animal, if possible.  In most cases, that is exactly what happened.

Pinhooking, as it relates to thoroughbred racehorses, means purchasing the horse for the specific purpose of a later resale.  In this instance, our intention is to purchase a weanling privately or at one of the three major sales between November and January.  The horse will be maintained and conditioned at Tottenwood Thoroughbreds, Inc., then resold the following year in the late summer or early fall at one of the major yearling sales.

What can I expect from my investment?

The appropriate answer is “almost anything.” Where thoroughbred race horses are concerned, the market can do virtually anything at any given time. There are no guarantees with pinhooking. This type of partnership can be a gamble that can result in enormous profits, substantial losses, or anything in between. We try to buy horses that we feel are undervalued in order to enhance any potential profit. Sometimes we spend days combing the sales to buy the weanling we feel provides the upside potential we want at a price that we feel is a value. Once purchased, you should bear in mind that these magnificent animals can get injured or sick just like humans. On the plus side, significant injuries and sickness are not common occurrences. We also insure the horse for the initial purchase price in the event of death. Insurance is included as part of the partnership expenses. The only guarantee we can offer is an honest effort. We invest in each of our offerings and in many cases represent the majority interest. We believe in our chances for success and do everything in our power to make a profit for the partnership.

What are the management fees?

There are no regular costs associated with the management of the horse.  Tottenwood Thoroughbreds, Inc. receives a 5% bloodstock commission based on the ultimate selling price of the horse as a yearling.

What is the minimum and maximum amount I can invest?

The minimum investment is based on the purchase price of the horse plus anticipated expenses.  Normally, we buy weanlings in the $20,000 to $50,000 range.  Expenses to prepare the horse for sale total $10,000, which will be included in the initial capitalization of the partnership.  If our estimated expenses should exceed the projected amounts, they will be deducted from the final sale proceeds.  Consequently, the minimum investment is between $3,000 and $6,000 for a 10% interest in the horse.  However, with pinhooking partnerships you may purchase any proportional interest you desire.

How can I track the progress of the horse?

When we have an active pinhooking partnership, we regularly update our website to provide current information about the on-track performances of any relatives.  This can have a tremendous impact on the desirability of the horse.  If the horse has half or full siblings who are doing well on the track, the possibility of enhancing the sell price increases.  Of course, we will regularly send you photos via e-mail, as well.  Also, many of the partners stop by the farm when they can to check on their horse's progress, as well as accompany us to the sales throughout the year.  Our partners are given the opportunity to participate as much or as little as they choose.