Hedge Fund Harbinger Capital Portfolio Update: Selling Large Chunk of Calpine (CPN) & Other Moves ~ market folly

Thursday, September 24, 2009

Hedge Fund Harbinger Capital Portfolio Update: Selling Large Chunk of Calpine (CPN) & Other Moves

If you're getting tired of reading about Philip Falcone's hedge fund Harbinger Capital Partners, we don't blame you. It's just that they've adjusted their portfolio so much recently that we've got a never ending flow of SEC filings. Earlier this morning we noted that one of their holdings, SkyTerra, was going private in a transaction that involved Harbinger in a new entity. Then earlier this week we also noted that they were selling shares of The New York Times (NYT) and Leap Wireless (LEAP). This time around, we're covering their activity in Calpine (CPN) and Complete Production Services (CPX).

Firstly, we see some big news that Harbinger is putting a chunk of their Calpine (CPN) stock up for sale. While Harbinger has been a believer in Calpine's business model, there apparently have been some clashes ever since Philip Falcone picked up shares of CPN when it emerged from Chapter 11 bankruptcy. Apparently Falcone was upset firstly that they shunned an $11 billion takeover from NRG Energy (NRG) and secondly that Calpine was searching for a CEO, something he felt would hinder a deal. According to an amended 13D filing with the SEC, Philip Falcone's hedge fund now shows a 19.7% ownership stake in CPN with 86,980,047 shares. The filing was made due to activity on September 22nd, 2009.

Their transactions in CPN are a bit more complex so let's break it down really quick. On July 29th, 2009 Harbinger received 2,784,430 shares due to various claims within the reorganization of the Issuer and related debtors. Of those shares, 2,120,959 went to their Master Fund and 663,471 went to their Special Situations Fund. In addition to this transaction, Harbinger bought 328,046 shares in their Master Fund spread out on August 14th and August 20th at prices of $12.52, $11.98, and $12.26. However, their Special Situations Fund has been selling shares as they dumped 2,672,426 shares between July 9th and 13th at prices ranging from $10.31 to $10.58. Also, they have just recently sold another 965,800 shares in the Special Situations Fund at a price of $12.66. If you net out all of these transactions from July until present, Harbinger as a whole has sold 625,750 shares.

Most importantly and in addition to the above transactions, here are the details regarding the portion of its stake that Harbinger has put up for sale, as taken directly from the SEC filing, "On September 22, 2009, the Issuer, the Master Fund and the Special Fund entered into an underwriting agreement with Morgan Stanley & Co. Incorporated, as underwriter. Pursuant to the underwriting agreement, the Master Fund agreed to sell, and the underwriter agreed to purchase, 13,333,334 shares, and the Special Fund agreed to sell, and the underwriter agreed to purchase, 6,666,666 shares in each case at a price of $11.40 per share. In addition, the Master Fund granted the underwriter a 30-day option to purchase up to 2,000,000 additional shares and the special fund granted the underwriter a 30-day option to purchase up to 1,000,000 additional shares. The public offering contemplated by the underwriting agreement has been registered under the Securities Act of 1933 and will be completed on or about September 28, 2009." Harbinger has been selling shares of CPN in the past and obviously that trend continues as they now sell a large chunk of shares. We'll post up and further updates as we receive them in this regard.

Secondly, Philip Falcone's hedge fund has also filed a 13G on Complete Production Services (CPX). In the filing, we see that Harbinger holds a 5.6% ownership stake with 4,301,200 shares due to activity on September 21st, 2009. This is a new position for them as they did not own it in their last 13F filing that disclosed positions as of June 30th, 2009. They have since acquired their stake over the past 3 months.

We also wanted to note that they filed another amended 13D on Leap Wireless (LEAP) just days after their previous filing. In the new 13D, they disclose they have sold another 1 million shares. Their ownership stake now sits at 4.5% with 3,451,000 shares remaining due to activity on September 18th, 2009.

Lastly, Philip Falcone's hedge fund also filed another amended 13D on SkyTerra where they disclosed a a 70.7% ownership stake with 61,346,518 shares due to activity on September 22nd, 2009. But as we reported earlier this morning, SkyTerra is going private with a new entity that involves Harbinger.

That sums up the changes in this particular update but be aware they've been very active as of late and we have been covering their moves. We've noted their sales of NYT & LEAP, as well as their 13D on Spectrum Brands (SPEB). Additionally, we've covered Harbinger's long US equity portfolio in the past for those interested. If you're unfamiliar with Harbinger, they're a $6 billion hedge fund ran by Philip Falcone. While Harbinger deals in equity markets, Falcone's roots are in distressed investing and his investment style focuses on bankruptcies, proxy fights, and intensive research on credit.

Taken from Google Finance,

Calpine is "an independent wholesale power generation company engaged in the ownership and operation of natural gas-fired and geothermal power plants in North America. The Company sells wholesale power, steam, capacity, renewable energy credits and ancillary services to its customers, including industrial companies, retail power providers, utilities, municipalities, independent electric system operators, marketers and others."

Complete Production Services is "provides specialized services and products focused on helping oil and gas companies develop hydrocarbon reserves, reduce costs and enhance production. The Company focuses on basins within North America, and delivers services and products required by its customers within each specific basin. Complete operates in three business segments: completion and production services, drilling services and product sales."

Leap Wireless is "a wireless communications carrier that offers digital wireless service in the United States under the Cricket brand."

SkyTerra is "operates its business through its subsidiary, SkyTerra LP, which focuses to develop, build, and operate a next generation mobile satellite system. The Company has five subsidiaries: SkyTerra GP Inc., SkyTerra LP, SkyTerra (Canada) Inc., SkyTerra Holdings (Canada) Inc., and SkyTerra Finance Co. SkyTerra LP offers mobile satellite services using two nearly identical geostationary satellites that support the delivery of data, voice, fax, and dispatch radio services."

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