Falcone's Harbinger Dumps Calpine (CPN) Shares, Adds Options ~ market folly

Thursday, March 11, 2010

Falcone's Harbinger Dumps Calpine (CPN) Shares, Adds Options

In an amended 13D filed with the SEC, Philip Falcone's hedge fund Harbinger Capital Partners is now showing a 2.21% ownership stake in Calpine (CPN) with 10,000,000 shares. The filing was made due to activity on March 3rd, 2010 and the fine print reads, "This amount consists of Shares that the Reporting Person may be entitled to obtain upon the exercise of options." Digging into the filing further, we see that Harbinger has acquired options that are exercisable into shares within 60 days for their Master & Special Situations funds, as they bought $18,000 worth of options. This paints a vastly different picture from what we last saw when we looked at Harbinger's portfolio. After having a dismal 2008, Harbinger had a solid showing last year as they finished up 46.5% as we noted in our 2009 hedge fund performance numbers post.

These transactions comes after a wave of selling as Falcone's fund was disposing of CPN shares throughout January. We now also see that Harbinger's Master Fund sold 18,310,600 Calpine shares on March 3rd at a price of $10.75 per share. Their Special Situations Fund sold 9,155,300 shares at the same price on the same date. Then, interestingly enough, Harbinger purchased the above referenced options on the same day.

Here is a graphical breakdown of their recent transactions in Calpine:

(click to enlarge)

In conclusion, they dumped a bunch of shares and then picked up options. So, they're definitely up to something here and we'll continue to watch the developments. For more from Philip Falcone's hedge fund, check out our coverage of Harbinger's portfolio.

Taken from Google Finance, Calpine is "a wholesale power company in the United States. Calpine owns and operates natural gas-fired and geothermal power plants in North America and has a presence in power markets in the United States. Its portfolio consists of two types of power generation technologies: natural gas-fired combustion turbines, which are combined-cycle plants, and renewable geothermal conventional steam turbines."

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