When Todd Householder formed a group of five investors to buy a competitive racehorse, it wasn’t because it had been his lifelong dream. It was because of a conversation like the one that started TribeVest–one that many of us have had with friends or family about investing together in a venture. The one that involves a line or two like, We should do this now, you know? We’re not getting any younger.
That’s what Todd said to his high school friend, John Huber, in 2015. Always researching possible investments for his financial future, Todd had suggested to John that they buy a competitive racehorse. “Hubie” had experience with horses and competitive racing, and had contacts in the industry that might prove helpful. And they both had the desire to invest. After enough “we should” conversations over a few years, the two finally decided to dive in.
They determined out of the gate to form an investment group capped at five partners and reached out to another high school friend, then one of Todd’s co-workers, and then tapped an entire already-formed investment group from the TribeVest platform to hold the fifth partnership spot. Todd took the lead forming the limited liability company and arranging the business details, and John reached out to a trusted horse trainer contact for help researching the perfect Thoroughbred on the market. And the name of the investment group? Well, they had known that since high school. Their football coach would always yell “GATA!” which meant, get-after-their ass! Gata Stables was in business!
We asked Todd to share how they did it.
So you basically had a business plan going into this group investment, right?
I guess you could call it a loose one. I didn’t have a special love for horses but I knew John did, and knew he knew people in the industry. I thought that was a good place to start and so did he. John knew a trainer he trusted and who he had spoken to, and the trainer was interested in training the horse we bought but wasn’t interested in any ownership portion. We handpicked our other investment group members for that. I think knowing enough about what we wanted to invest in and making smart rules like limiting partners at the outset helped us make a good start.
Tell us about your horse!
The trainer helped us pick a winner–how big a winner we didn’t know yet, of course. He was a five-year-old chestnut-colored Thoroughbred with a race record who had decent results, but wasn’t the easiest horse to deal with in the barn. We wanted a horse with a track record, so we went for it. To our surprise, he won a race one month after we bought him that returned our entire initial investment in winnings! In the next five races he placed, winning one of them, and returning the initial investment again on four.
What happened then?
Our trainer suggested entering him in higher-stakes races, and as a group we agreed. We entered him in an upcoming race in New Orleans with a large purse. His odds were something like 20-1 to win, or higher maybe. And he won! It was truly amazing.
That IS amazing! Is he still racing for you today?
He is not. He ran for over a year, then got hurt. We let him rest for awhile, then he came back and ran one more race where he took 3rd place, but he got hurt again. A horse’s racing life can be very short. He’s eight years old now and out to pasture. Enjoying his retirement, hopefully.
As if that’s not interesting enough, what else stands out for you in the group experience of owning your racehorse?
Something pretty cool, actually. In the three Triple Crown races of 2018 combined, there were five jockeys who had ridden our horse in one of his previous winning races. Our horse never ran in a Triple Crown race, but it was fun to see some of his former jockeys competing in the biggest races in the sport!
So even without the big wins, are you a fan of group investing as a concept?
Absolutely. Group investing does what mutual funds do on a larger scale. Like the equity investment clubs back in the 80s that everyone jumped on, where you take a smaller sum of money and invest in a wide range of various investment ideas. Forming an LLC to do the same thing is a great concept. And a great American capitalistic method of building wealth.
What advice would you give to others wanting to group invest for the first time?
I think a platform like TribeVest is a sound concept to help get things set up when you have no idea where to start. You want to do it well but as inexpensively as possible–if you get the initial formation right, the rest is a combination of picking a good investment and, like with us, reaping the benefits of a bit of good luck.