Portfolio Update on Philip Falcone's Harbinger Capital Partners (13D & Form 4) ~ market folly

Thursday, April 23, 2009

Portfolio Update on Philip Falcone's Harbinger Capital Partners (13D & Form 4)

Philip Falcone's hedge fund Harbinger Capital Partners made numerous SEC filings yesterday after the close and so we wanted to cover those really quick. Firstly, Harbinger has filed an amended 13D on TerreStar (TSTR) due to activity on April 20th, 2009. They are now showing a 48.6% ownership stake in TSTR with 88,855,174 shares owned in aggregate. Back in their 13F filing detailing positions from December 31st, 2008, Harbinger had previously owned 26,954,794 shares. So, over the past few months they've definitely ramped up their position. You can view Harbinger's entire portfolio here.

Secondly, Harbinger has also filed an amended 13D and a Form 4 on Solutia (SOA). They are showing a 31.9% ownership stake in SOA. The Form 4 details that they sold 2,031,700 shares on April 20th & 21st at prices of $2.96, $3, & $3.07 per share.

Lastly, we also recently noted that they have been selling some of their Cliffs Resources (CLF) position. Harbinger has seen recent portfolio performance of +0.74% for March 2009, and +4.06% year to date as of that timeframe, as referenced in our detail of hedge fund performances. They've been quite active with filings and we'll continue to monitor them going forwards.

Harbinger Capital Partners is a $13 Billion firm ran by Philip Falcone. Harbinger was started in 2000 with seed capital from Harbert Management ($25 million). And, just recently, we've learned that Falcone is buying out Harbert to be the owner of the firm. Falcone made a name for himself in 2007 when he started shorting subprime mortgages and returned 117%. He focuses on intensive credit research, on bankruptcies and proxy fights, and was previously involved with high yield debt trading. Lately, he's been focused on equities it seems, but Harbinger's new fund will redirect his focus back to his roots.

At one point during 2008, they were up as much as 42%. But, their fortunes turned as their Offshore fund finished -22.7% for the year as noted in our 2008 hedge fund performances list. One position that treated them nicely was their short of Wachovia (WB), which we detailed here. Back in September, in a letter to investors, Falcone had assured investors that Harbinger was adequately positioned to stave off any further volatility the markets may bring their way, noting that the firm had reduced exposure to some of their higher volatility holdings (both on the long and short side).

In Harbinger's latest letter to investors, they mentioned that they had covered their shorts on metal producers and financials and also got out of some credit default swaps. While they have been winding down equity positions, they are sticking with their major stakes in Calpine (CPN) and the New York Times (NYT). Falcone also mentioned that they had added trade claims on an energy company and credit default swaps on various consumer plays (retailers, products, & services). Lastly, we saw that Philip Falcone was recently unveiled as a part of Forbes' billionaire list.

Taken from Google Finance,

TerreStar is "in the integrated satellite wireless communications business through its ownership of TerreStar Networks and TerreStar Global. TerreStar Networks is the Company’s principal operating entity. In cooperation with its Canadian partner, 4371585 Canada, it plans to launch wireless communications system to provide mobile coverage throughout the United States and Canada using small, lightweight handsets similar to mobile devices. The Company’s core network strategy is based on three elements: the space segment; the terrestrial network; and universal chipset architecture to be integrated into a range of mobile devices."

Solutia is "a global manufacturer and marketer of a variety of chemical and engineered materials that are used in a range of consumer and industrial applications. The Company maintains a global infrastructure consisting of 25 manufacturing facilities, six technical centers and over 29 sales offices globally, including 14 facilities in the United States. The Company’s segments are Saflex, CPFilms and Technical Specialties."

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