Commonwealth Review: Investing in Racehorses

Commonwealth is such a fun idea: buy shares in racehorses.

Share prices are $50 across the board and each offering gets sold within a tight timeframe (I think it’s 24 hours now).

I wouldn’t classify it as a proper investment vehicle unless you are really into racehorses and know enough to drop real cash on these.

If you don’t know about the horse world, it takes beaucoup cash to actually be in it, so it tends to be reserved for a specific class of people. You’re either rich, you’re super into horses, or both.

This platform is probably targeted at the second group.

How It Works

  1. Once you’ve signed up for the app, wait for a horse to go to auction (there are waitlists)
  2. Once it’s available, buy shares and pay for it from your bank through Plaid
  3. When your horse wins, you get pa portion of those winnings

You can also track info about your horse through the app, check stats, etc.

Odd caveat: if the entire offering doesn’t sell out, then then you’ll get refunded for whatever shares you bought. It sounds like Kickstarter in that regard—it’s all or nothing.

Their first offering was a big deal. It was literally gone in 20 minutes. I watched the notifications go through on my phone.

The actual app is pretty simple, clean design. Not a ton to do and look at (probably more if you actually own horses and can see their history).

Typically, they’ve only got 1 or 2 horses listed at a time, so I’d view it more as opportunistic investing portal rather than a full-fledged platform.

It’s probably closer to bidding on real estate than anything else.

What you cannot do:

  • Trade, sell back, or give away your share
  • Vote on anything or otherwise have a say in the management of the horse

I don’t know what happens when they sell a horse, or it’s done racing and set out to stud. The platform is pretty young, so I assume those pieces will get decided once an actual need to address it arises.

What You Legally Own and Have Rights to

This is a share offering, not an outright sale of the horse. If you bought the entire stock of shares, you would be a minority owner in these horses.

To the best of my understanding, all the horses on Commonwealth are owned by them in partnership with another farm. The partnership leaves the majority ownership with the farm.

A share entitles you to a portion of the payout if your horse wins a race.

I looked up a few of Commonwealth’s horses on Equibase (database for horses) and found a few interesting things.

  • Their horses have multiple owners (Commonwealth plus 1–3 other farms)
  • Their horses do win races, and the average payout looks around $31,000
  • I don’t know the valuation of these horses, except yearlings can sell $100,000–200,000, and two-year -olds can go for around $350,000. One of their horses was bouhgt at auction at two years old for over half a million.

The most recent horse auction (who won his race the next day) was Swing Shift, netting a 6% return on the $550,000 he was bought for at auction. That doesn’t factor in future wins, costs of upkeep, pay to jockey and carers, income from setting out to stud after its done racing, etc.

But that’s the best estimation of actual return I could find.

If you want to dig further, find their horses and then look them up on on Equibase (two I looked at were We The People and Swing Shift).

Final Word

I haven’t bought any shares in any horses yet.

I don’t know enough about horses to put any real money down, but I do want to buy a $50 share just for fun.

However, every time I’ve tried, these guys sell out literally in minutes.

Maybe the next announcement I get, I’ll actually try and and get a share before it goes. I don’t know how many shares the other buyers are getting, but either way, it’s a good sign that this platform has a lot of promise for a small but incredibly committed niche of users.

The real treats are in perks of ownership, like seeing horses workout, stable tours, learning about the horse racing industry, etc. It would almost be a good investment for someone who bets a lot of races for fun and wants to do research—or a long-shot bet on a derby winner.

Disclaimer: I know the guy who started this, so I want it to succeed, but I still tried to give it a fair review.

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