By Sarah Mauet
Patrick Horsman (Eller Finance, Accounting, and Entrepreneurship ’02) is a serial entrepreneur and investor with 13 years of experience in hedge funds and alternative investments. His focus is uncovering esoteric and niche investment strategies that have a sustainable competitive advantage exploiting some type of structural inefficiency. These are typically not mainstream strategies and may operate on the periphery of financial markets, or outside of traditional financial markets entirely. Horsman resides in Miami Beach, Florida, and in addition to being an avid golfer and spear fisherman, he is:
- A managing partner of Blue Sand Securities LLC, which he co-founded in 2002. Blue Sand has raised more than $10 billion in assets from institutional investors for its single manager hedge fund clients.
- The chief operating officer and co-founder of Merion Investment Management LP, an event-driven hedge fund he launched in 2009 that currently manages $1 billion in assets.
- A co-founder and managing partner of Integrated Ag LP, an agricultural investment firm focused on identifying arbitrage opportunities in the physical production of agricultural commodities and associated hedging and risk management strategies.
- A founder and managing partner of Cypress Settlements LLC, a financial technology company that allows institutional investment managers to electronically identify and claim class action securities settlements from historical positions in their portfolios. Cypress was founded in 2010 and serves numerous large institutional investors with billions of dollars in assets under management.
What do you consider your biggest entrepreneurial success?
The two biggest success of my career are Blue Sand Securities LLC, which I founded with my partner Michael Cooney the month I graduated from the University of Arizona in 2002, and Merion Investment Management LP, which I founded with Andy Barroway and Sam Johnson in 2009. Blue Sand Securities is an alternative investment firm devoted to raising capital for hedge funds, private equity, and real estate partnerships. The firm is a registered broker dealer with offices in New York City, Washington D.C., Scottsdale, Naples, and Austin. Blue Sand and its principals have successfully placed over $10 billion in alternative investments since we founded the firm. Blue Sand helps alternative investment managers to access large institutional investors; we are basically investment bankers to investment funds instead of companies. The second success Merion Investment Management LP, is a hedge fund with $1 billion in assets that I started from the idea stage with my partners and personally raised the majority of the capital for. Merion had $10 million at launch and three years later manages just over $1 billion in assets.
What is most surprising about being an entrepreneur?
The biggest surprise to me is the daily challenge of sticking with it and believing in yourself and having a strong vision for how to build the business, and then all of a sudden you wake up one day and you have this huge company around you. I really enjoyed working with my friends and family in building my various businesses. Both my brother Alex Horsman and my sister Katherine Brewster work with me across several of my companies and my business partner Michael Cooney’s brother Nelson Cooney also works with us. It makes for a strong business culture having family involved as you can really trust them and rely on them.
What was the most important lesson you learned in the Entrepreneurship Program?
Believe in yourself and don’t worry too much about what other people are telling you. Be OK going against the grain or against the advice of what other people are telling you to do. The business plan I wrote with my partner Matt McCabe during our time in the entrepreneurship program was a company focused on helping banks manage foreclosed home inventory. At the time in 2002 the housing market was on fire with no top in sight and our advisors in the program criticized us and said that the banks will never have a need for this type of service and this idea won’t work. To the contrary, when the housing market started to slow and then collapsed there was a big need for this service and Matt, my former partner, had gone on to actually start the business and grew it to several hundred employees and had the largest banks and lenders in the country as his clients managing inventory of thousands of foreclosed homes.
What impact has the Entrepreneurship Program had on your career or life?
I have been an entrepreneur my entire life: there are pictures of me at age seven parking cars on my family’s front lawn as we lived near the college football stadium in Madison, Wisconsin. In junior high, I started a pizza business bringing in personal pizzas to our school and having kids order them in advance. It got shut down by the principal as I was making too much money, which he claimed was making the other kids jealous. At the University of Arizona, I founded Ethernet Express my sophomore year and had a staff of six people installing Ethernet cards in students computers in the dorms the first few months of the school year. So by the time I got to the entrepreneurship program, I had some experience and was looking to fine-tune my skills and add new ones. Learning to write a proper business plan is a good exercise and helps you really think through all the angles, but I believe that the true entrepreneurs have the majority of that plan in their head and are able to make decisions quickly and rationally to react to new issues and challenges.
What advice would you give to aspiring entrepreneurs?
Believe in yourself and strive to find an idea, business, or concept that has a truly defined edge. You need a unique idea, starting another dry cleaning business or car wash is not unique. My specific expertise has been in the financial markets and the hedge fund and alternative investment business. In this industry there are many people who have funds who invest in stocks and they will all tell you why they are better than the next guy at picking stocks. The key to success for me has been to identify investors and investment strategies that have nothing to do with the stock market and as a result have a much higher chance of success and sustained success. A couple that I have been involved in personally are a litigation strategy focused on undervalued cash merger deals, and an agriculture strategy that invests in farmland and uses government-backed crop insurance programs to hedge the downside. The second piece of advice I would offer is that once you find that great undiscovered idea, you have to have the courage to implement it and start the business. Most people can’t get past the idea stage and execution is the key, get out there and build it and you could be the next great success story.
The McGuire Center for Entrepreneurship is celebrating its 30th anniversary with a project to profile 30 University of Arizona Entrepreneurship Program graduates. If you would like to be part of the 5 Questions series, please contact us: McGuireMedia@eller.arizona.edu.
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