Patience, Trust Pay Off For Klarman And Lawrence In Preakness Stakes

by | 05.21.2017 | 3:57pm
Bill Lawrence and Seth Klarman hoist the Preakness trophy in the winner's circle

For a couple of kids who grew up just down the street from the racetrack, winning the Preakness with a horse of their own amounts to the dream of a lifetime. Seth Klarman, a Baltimore native, grew up just down the street from Pimlico, while his partner, Bill Lawrence, grew up near Saratoga in New York. Both made their fortune in the investment business, and joined forced about 25 years ago to pursue their passion for Thoroughbred sport. Their dreams came to a head on Saturday afternoon when 3-year-old Cloud Computing rallied down the stretch to score by a head in the second jewel of the Triple Crown.

“I started out as a teenager handicapping, enjoying the races, enjoying the athletic performances and enjoying the puzzle of trying to figure out who might win a race,” said Klarman. “This is gambling; this is a risky undertaking. This is not at all unlike what I do in the rest of my life, but it does provide one of the highest levels of excitement that a person can have. It's really been a thrill and this is the highlight of our careers as Thoroughbred owners.”

“If you find people who are actually making money in this sport, then please let me know,” Lawrence joked in an interview with the Wharton Magazine. “For me, being from Wharton, for Seth, who is a great investor, this business is very incongruous to how we would normally think otherwise.”

The high of winning on the nation's biggest stage more than makes up for the risks involved, the two men agreed. In the investments industry, the goal is to find under-valued assets and capitalize on them, so Klarman and Lawrence have utilized those strategies in their racing business to find success at the highest levels. Cloud Computing, for example, is sired by the relatively new stallion Maclean's Music, and the owners paid just $200,000 for the colt, who has now earned over $1 million.

“His breeding isn't the top sire, he's a relatively inexperienced sire,” Klarman explained. “When the trainer loved him at the sale physically and he vetted clean, we made the decision to buy him.”

While that purchase decision was clearly an important one, perhaps even more important was the decision to skip the Kentucky Derby and point straight to the Preakness, despite the fact that Cloud Computing had enough points to enter the Run for the Roses.

“No regrets,” Klarman continued. “I think possibly some of the reasons we won today was because we were patient and didn't throw an inexperienced horse against a 20-horse field in the Derby on a very difficult track. I think that's actually why we're here today. I also learned in life that you don't look back with a lot of would've, could've, should've. We made a great call, and we're ecstatic and we'll worry about the future, not the past.”

Whether or not that future includes the Belmont Stakes in three weeks' time, Klarman and Lawrence are committed to doing the right thing by their new star colt, and will lean on the advice of their Eclipse Award-winning trainer Chad Brown to make the right decision.

“We trust Chad and feel very confident in him,” Lawrence said. “He'll let us know how the horse is doing and his team. They're working there every day, and we're not in the barn every day. I think we're pretty good about making suggestions but following Chad's lead. If he says go, we'll go. If he says no, we're not going to go.”

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