2009 Hedge Fund Rankings: Top 10 Asset Losers

After covering Alpha's 2009 hedge fund rankings, we thought it would also be prudent to cover the firms who suffered the most in 2009. The top of Alpha's list is full of cream-of-the-crop hedge funds with a boatload of assets under management. Hidden in their annual rankings are also a few hedge funds that while still ranked, they truly had a bad year in terms of amassing AUM. In fact, they didn't amass assets, but rather lost them seemingly with ease. Listed below are the hedge funds that suffered the biggest year over year decrease in capital.

1. Harbinger Capital Partners: Assets -60.8% year over year

2. Atticus Capital: Assets -60% year over year

3. Marshall Wace: Assets -56% year over year

4. GLG Partners: Assets -51.9% year over year

5. Gartmore Investment Management: Assets -51.4% year over year

6. Glenview Capital Management: Assets -50.5% year over year

7. Cantillon Capital Management: Assets -46.8% year over year

8. Citadel Investment Group: Assets -46.4% year over year

9. AllianceBernstein: Assets -46% year over year

10. BlackRock: Assets -45.5% year over year


Now, keep in mind that these decreases in assets could be any combination of poor performance, redemptions, and other circumstances. Barely escaping this list were Thomas Steyer's Farallon Capital Management and Jim Simons' Renaissance Technologies. Farallon saw a 44.4% decrease in assets year over year while Renaissance saw a 39.9% decrease YoY. Interestingly enough, even with such large year over year decreases, they are still both tied for 10th place in the hedge fund rankings, clinging desperately to their coveted place in the top 10.

Philip Falcone's Harbinger Capital Partners and Timothy Barakett's Atticus Capital definitely experienced some of the most severe drops in terms of their ranking from 2008 to 2009. Atticus dropped from being 13th last year to 51st this year. Harbinger, on the other hand, dropped from 16th last year down to 57th this year. While all the funds listed about definitely slipped in the rankings, these two funds saw arguably the most meaningful moves.

Philip Falcone's Harbinger Capital Partners

Curiously enough, Harbinger Capital Partners has been absurdly busy with SEC filings and portfolio re-shuffling. And, this very slippage in assets under management is undoubtedly one of the major sources of the problem. As we've detailed very recently, Harbinger has been decreasing their Cliffs Natural Resources (CLF) position, selling off some of their Calpine (CPN), and is seeing bidders for their NYT stake, among many other portfolio moves. When you run a portfolio concentrated with some big stakes, you're bound to experience volatility. And, couple that with 2008 being the most volatile year in a while and you see just where Harbinger is hurting. When they began selling some of their CLF stake, they issued a statement that they were merely bringing portfolio metrics back in line. With all of the volatility they've experienced, their portfolio has undoubtedly been thrown out of whack. Harbinger's Offshore fund finished -22.7% for 2008. They were up 0.95% for January 2009, 4.64% for February, and +0.74% for March, leaving them at +4.06% year to date as of then. And, we also got word that Falcone would be returning to his roots in terms of investing style and would be opening a new fund. You can view Harbinger's portfolio here.

Timothy Barakett's Atticus Capital

Atticus has had their fair share of scares as well. Way back when the market turmoil started to heat up around September 2008, Atticus' Global fund and European funds were down anywhere from 30-to-40% at certain times. And, as such, they were subject to flying liquidation rumors. However, they did not liquidate and are still very much alive today. We detailed their panic as we saw their portfolio holdings drop massively in terms of assets reported to the SEC. Their portfolio deleveraged from multiple-billions of dollars down to around $500 million. Then, from Q3 of 2008 to Q4 of 2008, Atticus' reported assets (long positions) rose up from $500 million back up to $1.9 billion in Q4. So, they essentially took off a lot of positions and moved to cash to stop the bleeding and to meet any redemptions.

After dealing with their crisis and stabilizing their boat, they began to put money back to work last quarter. Interestingly enough, they mainly moved into Call options on some of the very positions they held common stock in previous to their debacle. (We detailed the portfolio changes in their entirety here). So, after being down as much as 30-40% in 2008, Atticus was hoping for a better start to 2009. In terms of recent performance, we've seen that their European fund was -0.8% for February and sat -10% for 2009 at the end of that month, as noted in our series of January & February hedge fund performance numbers (March numbers here). So, while they have seemingly crawled back from the grave, they are not yet out of the hedge fund graveyard. As always, we'll continue to monitor their situation and recently detailed their sales of some Legend International (LGDI).

Ken Griffin's Citadel Investment Group

Lastly, touching on Ken Griffin's firm, we see that while he slipped in the rankings, he is still within striking distance. His firm fell from 13th in 2008 down to 33rd this year as their assets dropped over 46% year over year. Much of this can be attributed to his flagship funds' poor performance (Kensington and Wellington). In 2008, those funds were down around 55% for the year. Things got so bad that they had to halt redemptions and then subsequently sent out this investor letter regarding their situation. Yet, Griffin seems to have turned Citadel's fortunes around as they were up 5% for January, and up another 2.6% for February (as per our performance numbers list). And, most recently, Kensington & Wellington were +3% in March, bringing them to +11% year to date as of then. And, since those flagship funds won't be seeing performance fees for a while due to poor performance, Citadel has started new hedge funds in an effort to boost their revenues and get a fresh start.

Even through all the trauma, both Ken Griffin and Philip Falcone still find themselves on Forbes' billionaire list. And, for all of the funds listed above, 2008 was a year to forget. While some have started off 2009 on a much better foot, there is still a long way to go.

You can view the performance numbers of various hedge funds in our 2008 performance numbers list, as well as their recent performance in our March performance list. Make sure to also check out the 2009 hedge fund rankings.

Philip Falcone's Harbinger Capital Partners 13F Filing: Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up, we have Harbinger Capital, 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 noted 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). They have also been selling off some Cliffs Resources (CLF), essentially to ensure that their portfolio balance is where they want it to be. Harbinger was +0.74% for March and sits at +4.06% year to date for 2009, as noted in our hedge fund March performance post. Lastly, Philip Falcone was recently unveiled as a part of Forbes' billionaire list.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC in Harbinger's Master Fund filing. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Consol Energy (CNX)
Electronic Arts (ERTS)
Williams Sonoma (WSM)
ICO Global (ICOG)


Some Increased Positions (A few positions they already owned but added shares to)
New York Times (NYT): Increased by 68%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Mirant (MIR): Reduced by 96%
Southern Union (SUG): Reduced by 96%
General Moly (GMO): Reduced by 95%
Ultrashort Financials (SKF): Reduced by 92%
Spectrum Brands (SPC): Reduced by 87.5%
RTI International (RTI): Reduced by 85%
Media General (MEG): Reduced by 67%
Medivation (MDVN): Reduced by 64%
United States Oil Fund (USO) Puts: Reduced by 61%
Constellation Energy (CEG): Reduced by 40%
Cablevision (CVC): Reduced by 14%


Removed Positions (Positions they sold out of completely)
Owens Corning (OC)
Ultrashort S&P500 (SDS)
Nicor (GAS)
Ultrashort Dow 30 (DXD)
Sunoco (SUN)
Bank of Montreal (BMO)
Cablevision (CVC) Calls
Northwest Airlines (inactive)
Green Builders (GBH)


Top 15 Holdings (by % of portfolio)

1. Calpine (CPN): 23% of portfolio
2. Cliffs Resources (CLF): 10.5% of portfolio
3. Consol Energy (CNX): 9.85% of portfolio
4. Cablevision (CVC): 9.6% of portfolio
5. New York Times (NYT): 9.1% of portfolio
6. Leap Wireless (LEAP): 8% of portfolio
7. Navistar (NAV): 6.5% of portfolio
8. Atlas Air (AAWW): 6% of portfolio
9. Solutia (SOA): 4.2% of portfolio
10. Electronic Arts (ERTS): 3.32% of portfolio
11. Constellation Energy (CEG): 2.1% of portfolio
12. United States Oil Fund (USO) Puts: 1.6% of portfolio
13. Hughes Communications (HUGH): 0.9% of portfolio
14. Medivation (MDVN): 0.8% of portfolio
15. Ultrashort Financials (SKF): 0.6% of portfolio

Yet again we see another fund with some massive deleveraging and equity exposure reduction. Harbinger runs a somewhat concentrated portfolio in that a large percentage of their equities exposure is in the top 8 or 9 positions, with Calpine far and away the largest holding. Their Puts on USO worked out well as oil prices declined steeply (remember, these positions were as of Dec. 31st, before oil started to rebound). We also want to make sure to highlight that you've got to monitor their Cliffs Resources (CLF) position almost on its own, since they have such a large stake in it but have been actively selling. In the past, they have sold some shares because they were bringing their portfolio percentage allocations back in line. So, this 13F is not necessarily up to date with the most recent changes to this position. And, as a matter of fact, they just filed yet another amended 13D on CLF yesterday which we'll be covering in a separate post. We also want to note that since this 13F filing, they've also made numerous other SEC filings with regards to both current and (now) old positions. Assets from the collective long US equity, options, and note holdings were $4.8 billion last quarter and were $2.2 billion this quarter. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered:

• Well known gurus such as: Carl Icahn, Warren Buffett, & George Soros
• 'Tiger Cub' portfolios: Stephen Mandel's Lone Pine Capital, Andreas Halvorsen's Viking Global, Lee Ainslie's Maverick Capital, Chase Coleman's Tiger Global, Chris Shumway's Shumway Capital Partners, Touradji Capital Management (Paul Touradji), and John Griffin's Blue Ridge Capital
• Global macro giants: Bruce Kovner's Caxton Associates, Louis Bacon's Moore Capital Management, Peter Thiel's Clarium Capital, & Paul Tudor Jones' Tudor Investment Corp
  
• Value & Activist players like: Bill Ackman's Pershing Square, Seth Klarman's Baupost Group, John Burbank's Passport Capital, Art Samberg's Pequot Capital, & David Einhorn's Greenlight Capital
• Concentrated portfolios like: Bret Barakett's Tremblant Capital, & Timothy Barakett's Atticus Capital
• Some solid names: Paulson & Co (John Paulson), Thomas Steyer's Farallon Capital Management, and Eric Mindich's Eton Park Capital
• Newer funds on the scene: James Pallotta's Raptor Capital Management, Anand Parekh's Alyeska Investment Group, Stanley Shopkorn's Hilltop Park Fund (no 13F yet) & David Stemerman's Conatus Capital
• Troubled funds: Jeffrey Gendell's Tontine Associates
• Quant & high frequency trading funds (purely for fun/entertainment): Jim Simons' Renaissance Technologies (Rentec), Steven Cohen's SAC Capital
  

We cover a new hedge fund each day and you can see the complete list of hedge fund portfolios here.

Philip Falcone's Harbinger Capital to Start New Hedge Fund

Phil Falcone is going back to his roots at Harbinger Capital Partners. Falcone first started his fund to focus on distressed debt and he is returning to those origins (having been focused on equities a lot of last year). He is starting the Credit Distressed Blue Line Fund aimed to buy 'troubled loans and bonds.' The $7 billion hedge fund has had an interesting year in which they've faced uphill battles in some of their equity holdings where they control large stakes. Additionally, their less liquid private equity investments led them to limit redemptions in their funds to 65% of assets. As we noted in our year end hedge fund performance numbers, Harbinger's Offshore fund finished -22.7% for 2008.

In Harbinger's latest letter to investors, they noted 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). They have also been selling off some Cliffs Resources (CLF), essentially to ensure that their portfolio balance is where they want it to be.


Courtesy of Bloomberg:

"Falcone is starting the distressed fund to “seek to capitalize on the current dislocation in the credit markets,” he wrote in his letter. The new fund will buy credit-default swaps, which act like insurance against loan going bad.

It will purchase devalued high-yield bonds, bank loans and trade claims, which are debts that a bankrupt company owes to its suppliers. The fund won’t borrow money to make purchases, nor will it buy stocks. Harbinger expects the fund to be capped at $500 million to $1 billion, and to wind down after the credit crisis subsides.

Falcone also started a private-equity fund with a Korean company as an anchor investor, according to the letter. The Global Opportunities Breakaway Fund LP has a five-year term, and will draw down capital as it makes investments. Harbinger plans to open a Singapore office as part of the management of the new fund, the letter said."

Remember that we're in the midst of our hedge fund Q4 portfolio tracking series where we look at the portfolios of prominent hedge funds, covering a new fund each day. We'll be covering Harbinger's Q4 holdings here very soon, so stay tuned. In the mean time, read the Bloomberg article in its entirety.

Harbinger Capital Partners (Philip Falcone): Portfolio Update / 13D Filings

Philip Falcone's $13 billion hedge fund, Harbinger Capital Partners, has filed amended 13D's with the SEC recently. Firstly, they have disclosed a 20.9% stake in SeraCare Life Sciences (SRLS). They have 3,872,370 shares as per the latest amended 13D. You can view the rest of Harbinger's portfolio holdings here.

Secondly, in an amended 13G, Harbinger has disclosed a 13.5% ownership in Augusta Resources (AZC) with 11,991,339 shares.

Thirdly, they've disclosed that they've been selling some shares and now have a 10.63% ownership stake in Cliffs Natural Resources (CLF). We detailed the changes to this position before when we covered Harbinger's Form 4 and press release. They have continued to sell shares, with their latest Form 4 showing 10 large batches of sales on January 14th, 15th, and 16th at around $22 per share.

Fourthly, in an amended 13D, they've noted their current 7.5% stake in Cablevision systems (CVC).

Next, in an amended 13G, they've also shown their 9% stake in Navistar International (NAV).

Lastly, they have disclosed a 63.8% ownership stake in SkyTerra Communications (SKYT). In the filing, they may be deemed to beneficially own 43,466,176 shares. The filing itself is complex and full of many details, so we suggest reading it in its entirety to fully understand Harbinger's position in the company. You can view the rest of Harbinger's portfolio holdings here.

Taken from StreetInsider, Harbinger is "a disciplined value investor with an emphasis on intensive credit research. Its focus is on middle market companies that tend to be misunderstood or under-researched by the market. Investment approaches include: Restructuring/Bankruptcy, Turnaround, Liquidation, Event Driven, Capital Structure Arbitrage, Short Sale and Special Situations." At one point during 2008, they were up as much as 42%. But, their fortunes turned as they found themselves giving up those gains. One position that treated them nicely was their short of Wachovia (WB), which we detailed here.

Taken from Google Finance,

SeraCare "serves the global life sciences industry by providing products and services to facilitate the discovery, development and production of human and animal diagnostics and therapeutics. The Company’s portfolio includes diagnostic controls, plasma-derived reagents and molecular biomarkers, biobanking and contract research services."

Augusta Resource is "engaged in the acquisition, exploration and development of natural mineral resource properties. The Company does not produce, develop or sell any products. The properties that the Company has interests in are in the exploratory stage."

Cliffs Natural Resources "formerly Cleveland-Cliffs Inc, is an international mining company, a producer of iron ore pellets in North America and a supplier of metallurgical coal to the global steelmaking industry. It operates six iron ore mines in Michigan, Minnesota and Eastern Canada, and three coking coal mines in West Virginia and Alabama. Cliffs also owns 80.4% of Portman, an iron ore mining company in Australia, serving the Asian iron ore markets with direct-shipping fines and lump ore. In addition, it has a 30% interest in the Amapa Project, a Brazilian iron ore project, and a 45% economic interest in the Sonoma Project, an Australian coking and thermal coal project. It is organized into three business segments: North America Iron Ore, North American Coal and Asia-Pacific Iron Ore."

SkyTerra Communications is "a holding company that owns 99.3% of Mobile Satellite Ventures LP (MSV) and 11.2% of TerreStar Networks. Its subsidiaries and affiliates operate in the United States and Canada. The Company offers a range of mobile satellite services (MSS) using two geostationary satellites that support the delivery of data, voice, fax and dispatch radio services."

Cablevision Systems is "a cable operator in the United States. The Company operates through its subsidiary, CSC Holdings, Inc. (CSC Holdings). The Company operates cable programming networks, entertainment businesses and telecommunications companies."

Navistar International "is a holding company that operates through its principal operating subsidiaries, Navistar, Inc. and Navistar Financial Corporation."

Harbinger Capital Partners (Philip Falcone) Sells Some Cliffs Natural Resources (CLF)

In a Form 4 filed with the SEC on Friday night (1/9), Harbinger Capital Partners disclosed that they sold shares of Cliffs Natural Resources (CLF) on January 7th and January 8th, 2009. In total, Harbinger sold 1,867,121 shares through 10 different sets of orders. After all was said and done, Harbinger now owns 7,254,789 shares, down from their previous 9,121,910.

In addition to the SEC Form 4 filing, this press release was issued:

"NEW YORK--(BUSINESS WIRE)--As part of ongoing portfolio management and rebalancing, the Harbinger Capital Partners® funds announced a reduction in their exposure to Cliffs Natural Resources (NYSE: CLF) in order to bring the position in line with current portfolio metrics and may continue to do so in the future, as conditions permit. Harbinger maintains its conviction that Cliffs controls unique and valuable assets and believes Cliffs will be one of the prime beneficiaries of the eventual economic recovery.

Though it has adjusted its stake in Cliffs, Harbinger maintains its commitment to supporting value-maximizing strategies at Cliffs and, as such, reserves the right to be in contact with members of management, members of the Board, shareholders and other relevant parties regarding alternatives that Cliffs could employ to maximize shareholder value. Harbinger also reserves the right to repurchase shares in the future if it deems it appropriate for its investors should the portfolio metrics permit."

You can view the rest of Harbinger's portfolio holdings here (13F filing).

Harbinger Capital Partners (Philip Falcone): Hedge Fund Tracking - 13F Filing Q3 2008

This is the 3rd Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the preface to the series we're doing on Hedge Fund 13F filings here.


Next up, we have Harbinger Capital, 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 his new fund has redirected his focus back to his roots.

At one point during this year, they were up as much as 42%. But, their fortunes turned as they found themselves -13% for the year as of October, as we noted in our hedge fund performance numbers post. 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). They have been very proactive in managing their portfolio this year, as evidenced by their Q2 portfolio. For more on the manager of Harbinger, then head over to our post about Philip Falcone.


The following were their long equity, note, and options holdings as of September 30th, 2008 as filed with the SEC. All holdings are common stock unless otherwise denoted.


Some New Positions (Brand new positions that they initiated in the last quarter):
Navistar (NAV)
United States Oil Fund (USO) Puts
Constellation Energy (CEG)
Alpha Natural Resources (ANR)
Seracare Life Sciences (SRLS)
Bank of Montreal (BMO)
Owens Corning (OC-WS-B) Warrants B
Green Builders (GBH)


Some Increased Positions (A few positions they already owned but added shares to)
Ultrashort S&P 500 ETF (SDS): Increased position by 150%
Ultrashort Dow30 ETF (DXD): Increased position by 150%
Cablevision (CVC): Increased position by 111%
Solutia (SOA): Increased position by 69%
Nicor (GAS): Increased position by 31%
Medivation (MDVN): Increased position by 12%
Calpine (CPN): Increased position by 5%


Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Northwest Airlines (NWA): Reduced position by 99%
Ashland (ASH): Reduced position by 94%
Cablevision (CVC) Calls: Reduced position by 60%
Ultrashort Financials ETF (SKF): Reduced position by 50%
Southern Union (SUG): Reduced position by 37%
Hughes Communications (HUGH): Reduced position by 20%
Mirant (MIR): Reduced position by 8%


Removed Positions (Positions they sold out of completely)
Georgia Gulf (GGC)
Horsehead Holding (ZINC)
Wachovia (WB) Puts
Nisource (NI)
Spdr S&P Retail ETF (XRT) Puts
Peabody Energy (BTU)
Yahoo (YHOO)
Wiliams Sonoma (WSM)
Corn Products (CPO)
Sprint Nextel (S)
AK Steel (AKS)
Freeport McMoran (FCX)


Top 20 Holdings (by % of portfolio)

1. Calpine (CPN): 19.2% of portfolio
2. Cliffs Natural Resources (CLF): 9.7% of portfolio
3. Cablevision (CVC): 8% of portfolio
4. Navistar (NAV): 7.9% of portfolio
5. Solutia (SOA): 6.2% of portfolio
6. Atlas Air (AAWW): 6.1% of portfolio
7. Mirant (MIR): 5.8% of portfolio
8. Leap Wireless (LEAP): 5.4% of portfolio
9. New York Times (NYT): 5% of portfolio
10. United States Oil Fund (USO) Puts: 4.8% of portfolio
11. Owens Corning (OC): 4.5% of portfolio
12. Ultrashort Financials ETF (SKF): 3.4% of portfolio
13. Ultrashort S&P500 ETF (SDS): 1.8% of portfolio
14. Nicor (GAS): 1.6% of portfolio
15. Ultrashort Dow 30 ETF (DXD): 1.6% of portfolio
16. Constellation Energy (CEG): 1.6% of portfolio
17. Medivation (MDVN): 1.2% of portfolio
18. Hughes Communications (HUGH): 0.9% of portfolio
19. RTI International (RTI): 0.88% of portfolio
20. Augusta Resource (AZC): 0.87% of portfolio

Assets from the collective long US equity, options, and note holdings were $9.3 billion last quarter and were $4.8 billion this quarter. As you can see, Harbinger decreased long equity and options exposure pretty significantly. They completely sold out of numerous previous top holdings of their firm. They sold completely out of Freeport McMoran (previously 11% of their firm's holdings), AK Steel (previously 8% of their firm's holdings), and Sprint Nextel (previously over 6% of their firm's holdings). So, they were unloading some very large positions. It is also worth mentioning that ever since the 13F filing has come out, Harbinger has been active in filing various 13D and 13G forms which detail changes in their ownership of various companies listed above. We will also be covering these new position details over the next few days so everything ties into a cohesive whole. After all, Harbinger has changed up their portfolio quite a bit over the course of the year. Please note that we have not detailed changes to every single position in this update, but we have covered all the major moves. Also, keep in mind that these filings only include long equity, notes, and options holdings. They do not reflect their cash, short portions, or holdings in other markets (currency, commodities, debt, foreign markets, private equity etc). This is just one of many funds in our hedge fund tracking series in which we're tracking 35+ prominent funds. The other funds we've already covered include:

• Timothy Barakett's Atticus Capital
• Whitney Tilson's T2 Partners
• Peter Thiel's Clarium Capital
• Bill Ackman's Pershing Square
• Bret Barakett's Tremblant Capital
• John Paulson's Paulson & Co
• David Einhorn's Greenlight Capital
• Dan Loeb's Third Point
• Paul Tudor Jones' Tudor Investment Corp
• Louis Bacon's Moore Capital Management
• Bruce Kovner's Caxton Associates
• George Soros Soros Fund Management
• Chase Coleman's Tiger Global
• Stephen Mandel's Lone Pine Capital
• Lee Ainslie's Maverick Capital
• John Griffin's Blue Ridge Capital
• Andreas Halvorsen's Viking Global
• Chris Shumway's Shumway Capital Partners
• Touradji Capital (Paul Touradji)
• Eric Mindich's Eton Park Capital
• Barry Rosenstein's Jana Partners
• Seth Klarman's Baupost Group
• Art Samberg's Pequot Capital Management
• Ricky Sandler's Eminence Capital
• Thomas Steyer's Farallon Capital Management
  

Overall, its been one of the worst years ever for hedge funds, as we noted in our new November hedge fund performance number update. Thus, the recent moves they've made in their portfolios become all the more interesting given the way the market has played out.

More on Falcone, Harbinger, & hedge funds:
- Harbinger profits on Wachovia short
- Harbinger's Q2 portfolio
- Prominent Hedge Fund manager interviews
- Hedge Fund investor letters
- Hedge Fund Rankings
- November hedge fund performance numbers
- October hedge fund performance numbers

Philip Falcone's Harbinger Capital Profits on Wachovia (WB) Short

Excerpts taken from a NY Post article,

"Philip Falcone, of New York-based Harbinger Capital, rang up the incredible profit by shorting a whopping 117 million Wachovia shares at $30 back in May after his top analyst and investment chief pointed out problems with the Charlotte, N.C.-based bank's mega-billion dollar Option ARM loan portfolio.

The mortgages were defaulting at a fast rate which could make them worth only pennies on the dollar by year's end, the analyst's research revealed, according to sources at Harbinger. In addition, Wachovia would be socked with sky-high capital costs related to $40 billion of debt maturing in the fourth quarter, the sources added.

...

The super-profitable trade will remind some of Falcone's move earlier this year in the iron-ore sector - he made a huge profit when Cleveland Cliffs stock doubled on huge demand for the mineral.

Falcone has proven time and again that he can spot opportunity before the market sees it and gets in when the value, or lack of it, isn't yet priced into the stock.

In an interview with the Wall Street Journal last week about the health of his fund Falcone noted: "While we've taken our risk down, our portfolio is still well positioned to profit in the months ahead."

How well positioned it was is now known. The profitable trade will help offset what has been a tough quarter for Harbinger.

When the ban on short sales of hundreds of financial stocks took effect Sept. 18 it was a game changer for Falcone, who had successfully been betting on more then one troubled bank stock falling - Harbinger Capital fell 5.5 percent that day, possibly the firm's biggest one-day drop ever.

"It was ugly, but we survived," Falcone said in a text message that day to The Post."

We recently detailed Harbinger Capital's portfolio holdings from their most recent 13F filing. Although the information is interesting, do consider that the 13F is a lagging indicator and as noted in the interview, Harbinger has made adjustments to their portfolio since.

You can read the entire NY Post article here.

Goldman Sachs Conviction Buy List Update

Yesterday (10/2), Goldman Sachs (GS) was out making some changes to its esteemed conviction buy list. They removed Freeport McMoran (FCX) from the list, but still reiterated a normal 'buy' rating on the name. Additionally, they have added Suncor (SU) to the list.

Copper mining giant Freeport McMoran (FCX) hit a new 52-week low of $45.17 yesterday as it continues to get obliterated. Just a few months back, it was trading as high as $125. Nowadays, amidst the commodity sell-off, deleveraging, and hedge fund redemptions, FCX is getting no love. Its valuation is borderline absurd, trading at around a 5 trailing PE and a 3.9 forward PE. But, valuation got thrown out a long time ago in this market environment. Hedge fund giants such as Timothy Barakett's Atticus Capital and Philip Falcone's Harbinger Capital had massive positions in FCX as of their most recent respective 13F filings with the SEC. Undoubtedly, the decline in FCX's share price has hit these funds hard. And, they most likely have been contributing to the selling. Last time we checked various hedge fund's year-to-date performances, Atticus was down 25% for the year and Harbinger, after being up 42% for the year, now finds themselves up only 2% (more numbers here). You can view Atticus' portfolio holdings here and Harbinger Capital's portfolio holdings here. Additionally, you can read more about Harbinger's exploits here.

Suncor (SU), on the other hand, was being added to the conviction buy list as shares continued to tumble. SU has fallen from a high of $73 to current levels of $33. Canadian Oil Sands giant Suncor (SU) is owned by numerous hedge funds, including legendary oil maverick T. Boone Pickens' BP Capital. And, as you can imagine, the share price depreciation in SU has affected Boone's portfolio in a negative way. Although not the sole reason for his funds' decline, Boone still finds himself down $1 billion for the year. You can view all of T. Boone Pickens' BP Capital equity holdings here.


Source: StreetInsider 1, 2

Hedge Fund Tracking: Harbinger Capital's 13F Filing (Managed by Philip Falcone)

(Note: Before reading this update, make sure you check out the preface to the series I'm doing on Hedge Fund 13F's here).

It's time to continue the Hedge Fund tracking series. If you've missed them, I've already covered Jeffrey Gendell's Tontine Partners, Bret Barakett's Tremblant Capital, Peter Thiel's Clarium Capital, Stephen Mandel's Lone Pine Capital, Lee Ainslie's Maverick Capital, John Griffin's Blue Ridge Capital, Boone Pickens' BP Capital, Louis Bacon's Moore Capital Management, Paul Tudor Jones' Tudor Investment Corp, Bruce Kovner's Caxton Associates, and Timothy Barakett's Atticus Capital. And, if you want to hear some insightful thoughts from many of the hedge fund managers listed above, head over to my post on Hedge Fund manager interviews. This week, I'm taking a slightly different approach to the hedge fund tracking series. I'm doing so because the 13F SEC filings are filed on a quarterly basis, so these materials are time sensitive and the next ones are due out in November. I stated in my series preface that you need to treat these as a lagging indicator, because that's what they are. The holdings discussed below reflect portfolio holdings as of June 30th, 2008. So, since these forms are so tedious to sort through, I've condensed the rest of the hedge funds I track to summarize their major moves and top holdings.

Harbinger Capital is a $13.8 Billion firm ran by Philip Falcone. Taken from StreetInsider, Harbinger is "a disciplined, value investor with an emphasis on intensive credit research. Its focus is on middle market companies that tend to be misunderstood or under-researched by the market. Investment approaches include: Restructuring/Bankruptcy, Turnaround, Liquidation, Event Driven, Capital Structure Arbitrage, Short Sale and Special Situations." At one point during this year, they were up as much as 42% (more on that below). And, if you're interested in more on the manager of Harbinger, then head over to my post about Philip Falcone.

So, now that we've got a background on Harbinger Capital, let's take a quick look at their portfolio highlights. Keep in mind that this is merely a brief summary of their top holdings. Due to the time sensitive nature of the 13F material, I wanted to get this information posted before the next set of filings come out in November.

Top 20 Holdings by % of Portfolio
1. Freeport McMoran (FCX) - Added to position by 4.3%
2. Cleveland Cliffs (CLF) - Boosted stake by 127%
3. AK Steel (AKS) - Added to position by 12%
4. Mirant (MIR) - Added to stake by 7.5%
5. Sprint Nextel (S) - New position
6. Ultrashort Financials (SKF) - Decreased stake by 10%
7. Atlas Air Worldwide (AAWW) - Barely moved stake, literally only sold 4 shares
8. Leap Wireless (LEAP) - No change in position
9. Ashland (ASH) - Increased position by 17.4%
10. New York Times (NYT) - Sold literally only 12 shares
11. Owens Corning (OC) - Boosted stake by 4.8%
12. Cablevision (CVC) - New position
13. Corn Products International (CPO) - Increased stake by 168%
14. Williams Sonoma (WSM) - Sold literally only 3 shares
15. Yahoo (YHOO) - New position
16. TerreStar Corp (TSTR) - Boosted stake by 2.7%
17. Peabody Energy (BTU) - New position
18. RTI International Metals (RTI) - No change in position
19. Northwest Airlines (NWA) - Added only 46 shares
20. Hughes Communication (HUGH) - No change in position

Harbinger's top 3 holdings have undoubtedly increased the volatility in their portfolio. Those three stocks have been on a downward spiral to hell. Freeport McMoran (FCX), Harbinger's top holding, traded around $110-120 at the time of this SEC filing. Since then, FCX has sold off hard and currently trades around $53. Additionally, their position in Cleveland Cliffs (CLF), which they increased by 127% last quarter, has played out in similar fashion. (They basically bought additional CLF at the top). CLF traded around $120 at the time they disclosed their positions. Now, CLF trades around $48. How about some more? Let's move on to AK Steel (AKS), which traded around $70 at the time of this filing. Now, it trades around $23. Undoubtedly, you get the picture. Harbinger's metals and natural resource plays have really been a thorn in their side. And, if there is one 13F filing I am most looking forward to come November, Harbinger's would be it. Because, in that next filing, we will get to see their updated portfolio to see if they were "buying the dip" in these names, or whether they were puking them up with the rest of the market. Harbinger has massive positions in these names, as they are their top 3 largest portfolio holdings.

So, how much pain did those positions (among others) cause Harbinger? Well, a lot, as I recently noted in my performance update on Harbinger. Earlier in the year, they were up as much as 42%. And, nowadays, they find themselves up only 2% for the year. How's that for a swing? This is why I say that their next filing will be very interesting, because many of their top holdings have seen wild volatility. And, if you're interested in other hedge funds, then head over to my last hedge fund year-to-date performance update.

Other notable portfolio news includes new positions in Sprint Nextel (S), Cablevision (CVC), Peabody Energy (BTU), and Yahoo (YHOO). These are positions that Harbinger did not hold in the prior quarter and thus are new holdings. And, they were sinking a lot of money into these positions, as they brought all of these holdings all the way up to top 20 holdings in their portfolio.

One last thing I want to mention is their position in Corn Products International (CPO). Over the past quarter, they boosted their position in this company by 168%, bringing it up to their 13th largest holding. So, on one hand, you can highlight that they were buying with conviction and that maybe it's a name we should be paying attention to. On the other hand, they added to CLF with conviction and look where that got them. Point being, they were heavily adding to this name.

Also, since this 13F filing, we have seen additional activity by Harbinger. In a recent 13G filed with the SEC, Harbinger has disclosed a 6% ownership stake in Ashland (ASH). They now own 3,789,266 shares. Curiously enough, in the 13F detailed above, Harbinger held 5,871,426 shares of ASH. So, they've decreased their position substantially recently. A 13G filing signifies a passive investment in a company. But, as we are all too familiar with Harbinger's activist exploits in the coal/steel arena, there's always the option they could shift this position from a passive investment, to an activist one (which would require a 13D filing). But, for now, they've maintained it as a passive investment while decreasing their stake.

That sums up the details of Harbinger's filing. Overall, it's been the worst year for hedge funds in a long time, and Harbinger is a perfect example of such volatility.

You can view Harbinger's entire 13F filing over at the SEC.

Worst Year for Hedge Funds in a Long Time

Well, that's stating the fairly obvious, now isn't it? But, here are the cold hard facts. Hedge funds who we all adored for their dominating performance figures over the past few years are now struggling to stay positive on the year. It's no longer a question of "How much will we dominate this year?" But, instead, "Can we scrape by?"

Case in point: We've already seen the closure of Ospraie's $3 billion commodities fund after it lost 40% this year, which I wrote about here. This just goes to show that even those who had learned from some of the best can be brought to their knees. Dwight Anderson, manager of Ospraie, had learned from both Julian Robertson and Paul Tudor Jones, legends in their respective strategies.

Next, we've got word that even more typically dominant funds are struggling now more than ever. Ken Griffin's Citadel has seen their Kensington fund down 15% for the year, as of a week ago. This multistrat fund hasn't had a losing year since 1994. All this comes at a time when I noted that Citadel is trying to start a $1 billion macro fund. And, I can't blame them. Although many macro funds have had a rough summer, they are still up on the year. And, I think you'll see that macro funds will be the longer term winners as we continue to see an evolving financial landscape.

Stevie Cohen's SAC Capital is also down 3.5% this year. Well, at least his multistrat fund is. This is his fund's worst year since 1992.

I recently wrote that Boone Pickens' BP Capital has lost nearly $1 billion so far this year. I also wrote about Harbinger Capital being up 42% at one point earlier this year, only to find themselves up only 2% for the year. Then there's TPG-Axon, who hasn't had a losing year since 2005. They're down 18% year-to-date as of last week.

I could go on and on, but you get the picture. Take all the performance figures I've divulged above and compare them to my hedge fund performance update written at the beginning of September.

Hedge funds are struggling, 401k investors are struggling, and the economy is struggling. The financial landscape is changing and look for numerous hedge fund redemptions and possible liquidations to sprout up in the coming months. There has already been a massive outflow of cash from the hedge fund space as investors become nervous. I expect this trend to continue, and so do the hedge funds. After all, why else would they have set aside an estimated $600 billion in cash accounts to cover these outflows?

It's beyond obvious at this point, but only the strongest will survive.

Harbinger Capital Update (Performance & 13G Filing)

In a recent 13G filed with the SEC, $13.8 billion hedge fund Harbinger Capital, ran by Philip Falcone, has disclosed a 6% ownership stake in Ashland (ASH). They now own 3,789,266 shares. Curiously enough, in their last 13F filing disclosing their portfolio holdings as of June 30th, 2008, Harbinger held 5,871,426 shares of ASH. A 13G filing signifies a passive investment in a company. But, as we are all too familiar with Harbinger's activist exploits in the coal/steel arena, there's always the option they could shift this position from a passive investment, to an activist one (which would require a 13D filing).

Taken from Google Finance, Ashland Inc "is a global diversified chemical company that consists of four wholly owned divisions: Ashland Performance Materials, Ashland Distribution, Valvoline and Ashland Water Technologies."

Now, turning to Harbinger's recent performance, we see that they've had a pretty rough second half of the year. They were -12% for the month of September as of September 19th. This brings their year-to-date performance to 2%. So, the pain continues for Harbinger. I previously wrote about how many hedge funds were having a rough July. And, it looks like August and September were no different. The market has been a rollercoaster this year and I don't think anyone exemplifies this more than Harbinger. Earlier in the year, they were up as much as 42%. But, with a tumultuous turn of events, they now find themselves barely above break-even for the year. Don't get me wrong, they are still outperforming the indexes; but, it is by a much slimmer margin than it was just a few months prior. How's that for volatility?

In his letter to investors, Falcone had assured investors that they are 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). Additionally, Falcone mentioned that they were not employing leverage anymore; at least as of August. His portfolio had been 52% long and 48% short. Some of Harbinger's largest positions include Calpine (CPN), Freeport McMoran (FCX), and Cleveland Cliffs (CLF). All three have seen massive sell-offs as of late, which would easily explain Harbinger's poor recent performance.

If you missed my earlier post, I've covered Harbinger's recent SEC filings here. Additionally, if you want to know about the man behind Harbinger Capital, you can read about Philip Falcone here.

Source: BBerg

Rough July for Macro Funds

Oh, how the fruits of success can come back and force-feed you some humble pie. Many macro strategy hedge funds savored their gains during the first half of the year as their large bets on long energy, short financials paid them off handsomely. July, on the other hand, was a different story. As oil retreated and numerous financials rallied, macro funds took it on the chin.

Peter Thiel's Clarium Capital was -6.8% for the month of July (hat tip JimPunkRockford). But, fanboys will be quick to point out that his fund is still up over 45% year to date.

Philip Falcone's Harbinger Capital was -16% for July (via BusinessWeek) as their large concentrated bets on energy and commodities (specifically Cleveland Cliffs - CLF) blew up in their face. But, once again, fanboys will be quick to point out that they are still up over 23% year to date.

This all when the S&P500 is roughly -14% over the exact same time frame. But, its all relative, right?

Harbinger Capital At It Again

Well, looks like Falcone and his Harbinger Capital is at it again. While this technically occurred last week while I was gone, I still want to highlight it. Harbinger has been building up a 6.6% stake in Sunoco (SUN). They make mixed petroleum products and petrochemicals so I have to wager this is a play on oil prices coming down. They filed this as a 13G which was curious, because it means this was a 'passive' stake rather than their normal 13D 'activist' stake. I can only imagine they will eventually flip the activist switch on and turn to their normal rabblerousing days. In their last 13F filing (last quarter) they did not show a position in SUN at all, so this is fairly recent. Just wanted to point this out for all who might be interested because after all, Harbinger is killing it this year, up more than 40% YTD.

Source: StreetInsider.com

Feature on Harbinger Capital's Philip Falcone

I want to give thanks to reader Alex for tipping me to this specific piece on Harbinger Capital's manager, Philip Falcone. I most likely would have never even seen this piece because its from a local Minnesota paper. Harbinger Capital is a successful activist hedge fund notable for making a ton of money by shorting the housing market. Additionally, they heavily shorted Bear Stearns before its subsequent meltdown. And, year to date, their fund is up 42.8% as of June.

The article covers Falcone's background and talks about Harbinger's activist ways. And, speaking of activism, our boy at Harbinger is up to no good once again, just recently opposing Cleveland Cliffs (CLF) takeover bid for Alpha Natural Resources (ANR). (Harbinger owns 18.4% of CLF and is opposed to the merger, as noted here).

At any rate, check it out because its an interesting profile for those curious about how Harbinger/Falcone operate. You can find the Minneapolis / St. Paul Star Tribune piece on Falcone here.