Goldman Sachs (GS) Inc. partner James Covello says that when it comes to race horses, his work on Wall Street has taught him it’s all about spreading the risk.
It was still a big leap in purchasing a 40 percent stake in Falling Sky, one of 20 horses scheduled to run in the 139th Kentucky Derby at Churchill Downs (CHDN) in Louisville, Kentucky, in two days, Covello said. The 3-year-old went for $425,000 at the Ocala Breeders Sales Co. winter sale in January, by far the highest price of the session three years after the colt was purchased for $16,000 at Keeneland.
“It’s a calculated risk,” Covello, 40, said in a telephone interview. “You have to be as analytical as possible in trying to marry the numbers.”
Falling Sky will go off at 50-1 in the Derby, the first leg of thoroughbred racing’s Triple Crown. Since Covello and his partners bought the colt, he has won the Sam F. Davis on Feb. 2, come in third at the Tampa Bay Derby on March 9 and fourth in the Arkansas Derby, the longest of his races at 1 1/8 miles, to earn $205,000 so far in 2013. The Kentucky Derby is 1 1/4 miles.
Covello, a semiconductor analyst at Goldman Sachs, studies Thoro-Graph, a performance-rating number that is calculated on the basis of time of the race, beaten lengths, ground lost or saved, weight carried, the effect of wind, and a track variant. Falling Sky’s number is 5, the same as Giacomo, a 50-1 longshot that captured the Derby in 2005 to return $102.60 on a $2 win bet.
“He’s going to be a longshot; he should be a longshot,” Covello said. “Honestly, there are 20 horses running and I don’t think any horse has more than 5 percent chance to win.”
Covello, a football and baseball player at Georgetown University, was introduced to racing by his wife, Teri, and her parents, who took him to Saratoga Race Course in Saratoga Springs, New York, shortly after they returned from their honeymoon in 1998.
“Seeing your first horse race at Saratoga is like seeing your first baseball