Coming out of the price-freeze wreck in 1973, O’Brien was buying and selling lots of yearlings out front, trying to make money on the basis. He was also managing a lot of cattle on feed for a lot of other folks.

O’Brien and Teel Bivins understood that feeding cattle at that time provided an attractive tax shelter due to a loophole in the tax code. There were strict limitations on how that could be accomplished, though. Long story short, armed with the management capability of O’Brien’s software, the pair formed an untold number of partnerships for a bevy of investors.

Managing lots of cattle offered other advantages, too. For instance, the large numbers of cattle on feed they controlled allowed them to trade for feed discounts with the yards where the cattle were being fed.

Even before that, O’Brien was partnering with Bivins on different deals. That led to O’Brien partnering up with Teel and his brother Tom to manage the Bivins’ family ranch north of Amarillo, TX.

“They wanted to run cattle on their ranch in a way that would improve the asset while creating a sustainable profit,” O’Brien explains. “That’s basically the mission statement for all of the ranches I manage: Care for the land and create a sustainable profit.”

That initial partnership, one enduring more than four decades so far, sowed the seeds for subsequent ones, including O’Brien’s ongoing management of the storied JA Ranch.

“The thing I’m proudest of is that we’ve continued all these partnerships over the years without a falling-out, because we all have the same motives and incentives for the long haul,” O’Brien says.

Since 1997, O’Brien says Dale Smith, of Amarillo, has been a full partner in all of his cattle ventures and ranch management.

Even though the owners of the ranches O’Brien manages are uninvolved in the day-to-day management, he and Smith make communicating with them a priority in order to avoid misunderstandings. And, O’Brien explains, “Someone questioning you is almost always beneficial.”

For O’Brien, stocker cattle continue to be a key answer to the question of improving the ranches in his care while cleaving a sustainable profit.

“The opportunity is that you have a resource in forage that basically has no other beneficial use than turning it into beef. You can do that with stockers or with cows,” O’Brien reflects. “If you don’t put cattle on it, you don’t have a way to get paid anything for the grass.” 

Cattle trump law degree


O’Brien had a seat waiting for him at the University of Texas Law School following his 1967 graduation from Yale University. Then he got to trading cattle.

Specifically, O’Brien explains, “Tom Reid was buying lots of fat cattle for Southeast packers. He hired me to drive him, and cut me in on the deals.”

O’Brien was fascinated. Until that point, his cattle experience was spending his summers working on the commercial Hereford ranch in eastern New Mexico owned by his dad’s family. Not much there sparked his enthusiasm.

Next, O’Brien briefly worked for Eugene Schwertner and Capitol Cattle Co. “I got to see lots of different cattle going lots of different ways,” he says.

He partnered with his brother, Bill, who also runs cattle over wide swaths of country. He was feeding cattle, too, but he says there wasn’t enough to keep him occupied.

At a Texas Cattle Feeders Association convention, O’Brien ran into Champ Gross of CALF News. Gross said he needed to hire a writer and asked O’Brien for prospects.

O’Brien thought the job would allow him to visit with and learn from some of the bright minds in the business. He also needed the money — so he told Gross he was interested. Despite his misgivings, Gross said OK, and O’Brien ended up writing for Gross for several years.

Among the lessons gleaned, O’Brien remembers visiting with Jack Carruthers following the 1973 cattle wreck.
“All the gurus were saying the market would stay bad forever,” O’Brien recalls. “Jack had the audacity to tell me that, due to the large number of calves on feed at the time, we were about to hit a bull market that would astound me. We proceeded to have one of the best bull markets we’d ever seen.”

O’Brien, like many, didn’t bet as optimistically. “Nothing teaches you like when you’re wrong. Stupid is forever,” he says.

The lesson he learned, though, is that “there’s a real place in the industry for contrarians, market-wise. If everyone is convinced something is going to happen, it probably isn’t.”

And at least a first cousin to that notion, O’Brien says, is “What’s easy is often the least profitable.”

 

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