By Nicole Sauer
Buying yearlings by young stallions is always a high-risk investment. Young stallions are largely unproven as sires, which means that the market is less accurate in its valuation of their progeny. In this small study, we tracked yearling averages and earnings per starter for four stallions—A.P. Indy, Awesome Again, Pulpit, and Speightstown—over their first five yearling crops to determine the optimum time to purchase a young sire's yearlings.
The chart above shows the ratio of yearling average to earnings per starter throughout the sires' first five crops. A ratio of 1.00 represents the point at which yearling average equals overall earnings per starter for that crop. Ratios greater than 1.00 indicate crops when yearling average exceeded earnings per starter (greater market valuation of yearlings), and less than 1.00 indicates average earnings outperformed yearling average (better return on investment). The ratio decrease in each sire's trend suggests that better values were realized with the sires' fourth-crop yearlings.
A.P. Indy was always a very commercial sire, but his fourth-crop yearlings saw a drop in average due to many of his best yearlings being retained. Overall, his fourth crop—typically a weaker crop because it's the final crop bred before the first crop races—outperformed his third and fifth crops by earnings per starter. This crop included grade I winners Aptitude and Secret Status and top sire Malibu Moon, but the fact that none of these were offered at auction reminds us that buyers must always be selective.
Awesome Again displays an inconsistent career. His initial market reception was modest, but his yearlings’ value plummeted in the second and fourth crops. Yet his earnings per starter outperformed yearling average in three of his first five crops, and his fourth crop produced multi-millionaires Ginger Punch and Awesome Gem, the latter a $150K Keeneland September yearling.
Pulpit's yearlings have always commanded a high market valuation, but his earnings per starter never approached a breakeven point compared to yearling average. Of course, Pulpit covered high quality books of mares, so much of this disparity can be accounted for as residual bloodstock value. While still selling at a premium, Pulpit's best ROI was earned by his fourth crop.
Speightstown has a more equitable version of Pulpit’s trend. His fourth and fifth crops will prove to be more profitable yet, as his yearlings from those crops are only 4- and 3-year-olds, respectively. His fourth crop includes recent Ballerina Stakes (gr. I) winner Dance to Bristol and 2012 Travers Stakes (gr. I) winner Golden Ticket.
There are 322 yearlings by fourth-crop yearling sires cataloged in the 2013 Keeneland September sale and, as of Sept. 14, 278 have yet to enter the ring. These sires include Street Sense, Hard Spun, Discreet Cat, Scat Daddy, English Channel, and Flashy Bull—all of whom rank highly on this year's earnings list. If the trend follows for these sires, this could be the best opportunity at a high ROI for yearling buyers who are buying to race.