Weekly Hedge Fund Overview: Union Square Park Capital

Another interesting Hedge fund to breakdown this week

Union Square Park Capital Management

Founded by Leon Zaltzman in 2015. The fund sits at a total return of 45.39% since inception. According to Linkedin, Union Square Park has a team of 7-10. 

Methodology

Union Square is another event driven fund. They utilize catalysts in financial markets to identify asymmetric opportunites. In their methodology(private source), they mention special situations that are often misunderstood. On their website they also describe the ideal situation is under followed. An intriguing approach.

Personally, I always find it amazing when an investor or trader can identify a narrative that as yet to be followed by markets. These can offer lucrative opportunites as well as asymmetric returns. This means the potential upside is far greater than the downside. 

Catalysts that were previously under followed:

• COVID-19

• Brexit

• Market under pricing Federal Reserves Hawkishness(Q2-Q3 2021)

• Russia/Ukraine

At a point in time, many of these catalysts were under followed. A savvy trader/investor who was capable of spotting the ramifications of these catalysts would have gained fantastic returns. These are the asymmetric opportunites Union Square Park aims to identify.

Assets Under Management

The team at Union Square Park is fairly small, around 7-10 employees. Total AUM sits at $149MM, with a minimum investment of $100,000

After looking into the fund more, it looks as if they keep a more equity exposure. Fintel.io can give some further insights on this. 

Leon Zaltzman was also Managing Director of Equities Strategy Group at Lehman brothers. I bet he has some wild stories from '08!

Takeaway

Many funds take a deep macro & fundamental approach to markets. If you check out Leons Linkedin, he has quite a bit of experience. During his career there have been countless opportunities driven by macro/fundamental flows in markets. Being able to understand the fundamentals going on and driving your market are extremely beneficial. 

You can still replicate some concepts from the Hedge funds posted here. Union Square Park Capital focuses on high probability opportunites where the market has yet to catch on to. The "under followed" narrative approach can help identify asymmetric returns. When a market has yet to catch on to a catalyst or narrative, that can be a big money opportunity. 

Imagine having a strong bias about COVID driving financial markets before it spread out of China. Look at the US Dollar for the last year. The "under followed" catalyst at the time was a hawkish Federal Reserve. Many thought the Fed would remain Dovish. The Fed was also sounding Dovish. Being able to indentify the misalignment in expectations and reality was crucial to understand 2021.

The reality being inflation was not "transitory" and there was evidence showing to a degree prices could continue rising.

The sooner you can identify an under followed catalyst that could have ramifications on prices, the greater the return.