Seven Hills Capitalizing On Investments

With the European Breeze Up season in full flow, the TDN's Daithi Harvey caught up with Eamonn O'Connor, who runs the investment scheme Seven Hills Bloodstock. The organisation has a number of interesting juveniles for sale this year, including at this week's Craven Sale, through Johnny Hassett's The Bloodstock Connection.

TDN: Can you tell us a little bit about Seven Hills Bloodstock and how long you have been in business?

EO'C: I founded Seven Hills Bloodstock five years ago. My motivation was twofold: a lifelong interest in the bloodstock sector and a belief that, contrary to popular opinion, it was possible to profit by investing in bloodstock. The business was founded at a time when many investors were looking at 'alternative' asset classes; yields on traditional investments were low and there was an appetite for risk, where it could be justified by considerable upside potential.

Our ability to manage the downside risk through EIS helped attract initial investors. Our early success allowed us to attract more. In practice, Seven Hills has developed into something of a 'lifestyle' investment for its participants. Our investors are fully engaged, attend sales where we are buying or selling, follow closely the progress of our stock during the winter, meet regularly for social events and take an annual trip to County Clare to see the horses work at Johnny Hassett's–as educating an experience as it is enjoyable.

I was lucky enough to be introduced to Jeremy Brummitt at the outset, and through him, Johnny Hassett. We have a great team and tremendous working relationship, which always helps. I manage the business, Jeremy buys the horses, Johnny handles the prep and training.

TDN: There have been a number of bloodstock Enterprise Investment Schemes set up in the past, particularly in the breeding side of the industry. Have you found it difficult to attract investment into the breeze up sector, which is considered one of the riskier sides of the business?

EO'C: Funnily enough, no. I also run a separate breeding business under the Seven Hills brand. Perhaps because our breeze-up business had a head start on the others and we've had plenty of success, this is the one that our investors have really bought into. It's certainly high-octane stuff compared to breeding; we buy in the autumn and know our fate in the spring. I guess it's like a five furlong sprint compared to a three mile chase and investors seem to like the pace and how quickly it all happens. They get the summer off to steady their nerves. I do, however, think this will change over time and that our breeding business will prove at least equally attractive. It is now well established and has demonstrated some early success and our investors, despite their predilection for the excitement of the breeze-ups, recognise the value of a diversified portfolio. In fact, most already have an interest in both businesses.

TDN: What is the general profile of your investors? Are they predominantly from within the bloodstock industry or are they from various walks of life?

EO'C: The mix is about 50/50. Half have had experience of the sector (mostly through owning racehorses), whilst the other half have had no previous involvement. Interestingly, all of our 'non-industry' investors have subsequently gone on to own racehorses in their own right as their experience, interest and enjoyment of the sport has increased. I think we are certainly doing our bit to widen the ownership base in the UK.

TDN: You work closely with Jeremy Brummitt and Johnny Hassett who both have proven track record in their respective fields. I presume this was a key selling point in attracting investors?

EO'C: Without doubt, Jeremy's and Johnny's involvement has been instrumental in growing our business and attracting new investors. As well as their experience and track records, they are very generous with their time, especially in outlining our approach to new and existing investors. We have a considerable amount of goodwill in the camp, which helps enormously when we have to deal with the inevitable setback.

TDN: You have an interesting draft going to the Craven Sale including a colt by Australia (GB) (lot 135) purchased for 190,000gns as a yearling. What are the vibes like from your team as their date with destiny approaches?

EO'C: We feel that this is our best group to date, though they may not be as forward as last year due to the extremely harsh recent weather. In the past we have had some fast horses by stallions who were unfashionable at the time and were maybe not given due credit. Jeremy invariably looks for horses with the scope to progress beyond their first season and this year they are all by sires who are capable of siring Group 1-winning 3-year-olds. Except for the Australia colt, but we feel that this is one stallion that will live up to his hype. Jeremy was very high on this colt from his first look and though he was very late in the sale we decided to keep our powder dry and wait for him. We really had to stretch, but tellingly a very well-respected breeze up consignor was underbidder. I hope the buyers see what we see this time round.

TDN: What is your exit strategy if a horse misses its breeze up sale slot due to a minor setback for example? Do you take the next step and put it into training?

EO'C: One of our most remarkable statistics to date is that we have never had a breezer miss a sale. Testimony to Johnny's prep, but we are not naive enough to believe it will never happen. We don't race horses under our EIS structure so every effort is made to sell in the spring. If a horse misses a sale through a minor problem or if a horse gets a minor problem on the day, we would aim to sell privately as our preferred exit strategy.

Breezers are judged on the day–fairly or unfairly. Often problems which are transitory will not be forgiven. For that reason of course the preferred–if not only–exit strategy for most consignors is to race them. The best example of a horse we liked failing to sell on the day was a colt subsequently named Gallic Chieftain (Fr) (Tamayuz {GB}), whom we couldn't sell at Arqana due to sore shins. We managed to form a syndicate to buy him. He raced in France earning €40,000 before being re-sold for a significant profit to Australia, where he is group-class and has earnings to date of over A$400,000.

TDN: How did you find the yearling market last autumn when reinvesting and do you envisage a similar situation later this year?

E'OC: The market in Europe seems to become more selective with each sale. That situation cannot change until the ownership base widens.

TDN: I presume you keep a close eye on your graduates and can you tell us how some have performed since hitting the tracks?

EO'C: Our statistics bear close scrutiny. From three years of sales to date, we've had eight winners from 14 runners, six of which have achieved a BHA rating of 80+. A number of our horses, such as Flying Empress (GB) (Holy Roman Emperor {Ire}) and the above mentioned Gallic Chieftain, have subsequently been re-sold by their purchasers for significant profit.

TDN: Give us a horse or two you have sold to look out for?

EO'C: I would mention a couple from last year's draft, both of whom won their maidens impressively at two; Raid (Ire), a colt by Havana Gold (Ire), in training with David Simcock and Pretty Baby (Ire), an Orpen filly in training with William Haggas. Additionally, we are keen to see how a Big Bad Bob (Ire) colt we sold at Goresbridge has fared over the winter. He is in training with Jessica Harrington and was thought worthy of an Irish 2000 Guineas entry. We liked him, even if he wasn't a profitable horse for us–he was a scopey, backward type in the mould that Jeremy likes to buy and was always going to be better at three.