As some of you know, I lost probably my closest friend, Cary Fotias, to cancer nearly three years ago. Back in May of 2013 we watched Orb splash through the mud from far behind to win that year’s Kentucky Derby. I think we both knew that was going to be Cary’s last Derby. He passed away less than three months later.
Cary was a brilliant, brilliant guy and a wonderful friend but not much of a businessman. Still, he got better and better as a gambler over time. He wrote one of the most widely read books on betting horses, Blinkers Off, in which he explained the speed rating system he invented. I think he partially inspired me to develop Hillside’s HARP and HOCS rating methodologies.
Anyway, Cary never got the chance to write his second book, which he wanted to call Losing My Way to Profits. Brilliant as he was, making money was not natural to him—his mind went too fast in too many directions. Over time, though, he developed a steadier approach and generally made money in one of the world’s most difficult markets.
You learn from your mistakes, and you do your best not to make the same ones too often. Some things are particularly hard to shake. Whatever skill I have as a convertible trader I learned mostly during my first full year, 1994, during which it was nearly impossible to make money and all you could do was try to minimize your losses. The good thing was that 1994 set the stage for a great year in 1995—if you knew value and stuck with it you did very, very well.
If you think losing can lead to winning, consider Mohaymen for Saturday’s big race. All winter he was the favorite, not just to win the Kentucky Derby, but to have a legitimate shot at making it back-to-back Triple Crowns after a 37-year gap. He was undefeated and just seemed to glide to his victories. Then last year’s champion 2-year-old, Nyquist, shipped from California to Florida and crushed him. It was unusual to see the two top contenders meet before the Kentucky Derby, and Mohaymen never seemed comfortable. He was lucky to finish fourth.
But Mohaymen has looked energetic and happy in his workouts since arriving in Kentucky. Until his loss, you couldn’t find a single knock on him. Great breeding, the ability to win from anywhere in the race, and an effortless stride. It will be a competitive race, and Nyquist has never done anything wrong. But Mohaymen was going to be 2-1 or less in Kentucky if he’d won the Florida Derby. Now he’ll probably be closer to 8-1. He may not win, but I think he will be the kind of bet you have to make.
If there’s a horse to take a stand against, it’s probably Exaggerator. He looked fantastic winning the Santa Anita Derby, but everything went his way, including the muddy track (yes, in Southern California) he loves. He’ll probably be the second favorite after Nyquist, and while he can certainly win, his odds are unlikely to reflect his true chances.
Good luck to all the horses and jockeys, and good luck to all of you. By the way, this week’s issue features Kathy Schick’s comments on Anacor and Dennis Dowden’s high-yield updates, along with some interesting developments in our regular statistical features.
(This is the cover letter for the subscription-based weekly Hillside's Hybrid Vigor newsletter. For a complete copy, please contact John Anderson at + 1 (646) 712-9289 x 107).