Ned returns to the Gordons, having escaped from his abduction, but the constable doubts his story. Simey sells Beauty to Waggs but he escapes, attempting to return home. Beauty arrives at the Jones farm and is adopted by the young Rosie, who renames the horse Mike. Kevin, Ned and Jenny keep hoping for Black Beauty's return.

Ned spends his time playing circus with Jonah instead of doing chores, angering Dr. Gordon. Ned decides to run away when Alf and Wilt, two circus journeymen, ride through but they con him out of Jonah. Ned and the doctor need Black Beauty's help to get the pony back.