An Authentic Mint Julep

In the next 5-15 days (if not sooner), MyRacehorse is holding an IPO on Authentic, a Kentucky Derby entry. Authentic struck an auction price of $350K as a yearling but has a current valuation of $15.1 million. MyRacehorse picked up a 12.5% stake in Authentic. The financials…

• Market Cap: $1,894,218.75
• Price Per Share: $206 for 0.001% ownership
• Total Shares: 12,500
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The Background

• Bob Baffert… Trained by the Hall of Fame legend Bob Baffert, MyRacehorse has acquired a stake in their first Kentucky Derby entry: Authentic. As of June 15th Authentic sits at 15/2 to win the derby- 3rd best odds out of the projected field. Authentic has been aided by injuries suffered by multiple Derby contenders including two trained by Baffert- Nadal and Charlatan. While unfortunate, this creates an opportunity for Authentic investors who can now rest assured that Baffert’s’ undivided attention will be on Authentic- his top Kentucky Derby contender.

• Experience… Authentic rolled through his first three races, winning all of them with ease and posting an outstanding 113 speed figure in his second start at Santa Anita. Only one horse in the projected Derby field has posted a faster speed figure- Tiz the Law, who hit 117 in his Grade 3 win at Gulfstream Park in February. Even in his lone loss, Authentic hit a figure of 101 to demonstrate his impressive consistency. Authentic will return to the racetrack on July 18th when he hits the dirt for the Grade 1 Haskell at Monmouth Park.

• Concerns… Breaking his unblemished record was a flat-footed start on June 6th at the Santa Anita Derby. Starting from the seven post, Authentic looked unsteady in the gate and broke tardily. He clipped the side of the gate while breaking out which caused him to duck towards the outer rail, nearly 4 paths away from the field. After correcting himself he showed off his impressive speed by battling back to take the lead in a crowded field. Another Derby contender, Honor A.P confronted Authentic as they turned into the homestretch and the missteps at the gate cost Authentic dearly- he showed limited response allowing Honor A.P to run away uncontested.  This was the second straight start Authentic showed difficulties breaking from the gate; He had a delayed start in his previous race at the San Felipe Stakes but was able to use his speed to compensate and break away from the field. In his first win of 2020 at Sham Stakes, Authentic dominated but fought his rider throughout the stretch run. Baffert called Authentic his least mature Derby candidate earlier this spring and the reason for that critique has been on display throughout the season thus far.

 • But… Authentic has undeniable talent and can match speed with any horse in the world right now. If you believe in Baffert (you should), confidence should be high that his team will have Authentic looking comfortable on the track at Churchill. Kentucky Derby-winning jockey Mike Smith will ride Authentic at Haskell so the race at Oceanport looks to be a tune-up for the Run for the Roses. There is no substitute for speed and Authentic has plenty of it. He attacks the track with an aggressiveness similar to American Pharaoh and shows tenacity as a frontrunner who isn’t afraid to pull away from the field. The issue of fighting his jockey looks to have been resolved as Baffert used earplugs at San Felipe and Authentic showed no adverse reaction towards the crowd or rider. With a thinned-out field and increased attention, Authentic has every reason to challenge for placement on September 5th.

The Takeaway

• Kentucky Derby Contender… MyRacehorse is making a major splash with this acquisition while giving investors a once-in-a-lifetime opportunity to own a Kentucky Derby contender. High risk/high reward offering but the stallion rights held by Spendthrift Farm is intriguing. Authentic’s sire is Into Mischief, one of the hottest stallions on the market with a stud fee of $175K. This bodes well for Authentic when he transitions to life after racing and could lead to consistent dividend payouts for investors. Having the chance to watch a horse you own run in the most celebrated race in the sport should create enough buzz around the offering to sell out quickly- even with 12500 shares on the table. Kudos to MyRacehorse for acquiring a stake in a proven world-class winner and making it available to the public. Win or lose it’s a strong marketing piece and will help in developing their brand.  

Disclaimer: The author is not affiliated with Altan Insights, MyRacehorse, Spendthrift Farm, or any other entity involved in this offering. Betting odds provided by US Racing. You understand that by reading Altan Insights, you are not receiving financial advice. No content published here constitutes a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person. You further understand that the author(s) are not advising you personally concerning the nature, potential, value or suitability of any particular security, transaction, or investment strategy. You alone are solely responsible for determining whether an investment, security or strategy, or any other product or service, is appropriate or suitable for you based on your investment objectives and personal financial situation. Please speak with a financial advisor to understand if the risks inherent in trading are appropriate for you. Trade at your own risk.