48 Hours: Pinhooking

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Editors Note-We have been running into quite a few old friends recently, including this derelict who also happens to be one of the finest gaming analysts to ever haunt the buy-side. Two decades spent hanging out at the intersection of Wall and Broad can leave you a little warped...we assure you that Railbird is all of that and more.

We have half a dozen writers loaded into the starting gate...and are chomping at the bit to hit the lever...
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So you think the deal to buy Harrah’s Entertainment (HET-NYSE) at roughly 10x EBITDA and leveraging it up the wazoo takes a little chutzpah?

Try this one on for size: Pinhooking

A 19th-century livestock auctioneering term, in its current incarnation it refers to the practice of speculating on prime thoroughbred horse flesh. Normally the domain of oil-soaked Sheiks, European bon vivants and well-connected Kentucky blood agents, it is attracting attention from, you guessed it, hedge funds.

Typically, it involves taking a short-term lease interest of less than a year in promising weanlings and yearlings and then liquidating the position in public auctions and private sales. Taking the horse to the track is definitely not in the equation. It’s analogous to a ground-floor venture capitalist, who pukes his stake after the first or second round of mezzanine financing. Some syndicate operators are boasting of 30%-40% annual returns, all neatly uncorrelated with the public equity and bond markets.

Racy stuff, eh?

We’ll be your eyes and ears as the speculative frenzy swirls around the rolling meadows and white split-rail fences of Bluegrass country.  This spring we might even attend a few auctions and drop a few bob at Keeneland…

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The content contained in this blog represents the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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