Notes From SALT Conference Risk Panel: Falcone, Sprott, Rieder & Ivascyn

At the Skybridge Alternative Conference (SALT) in Las Vegas yesterday, a panel on risk featured Harbinger Capital's Phil Falcone, Sprott Asset Management's Eric Sprott, Blackrock's Rick Rieder, as well as PIMCO's Daniel Ivascyn. The talk was entitled, "Risk On, Risk Off: How to Generate Profits in a Macro Driven World."


Phil Falcone of Harbinger Capital Partners essentially referenced his Lightsquared venture when he made comments regarding investors being too fixated on liquidity.  He argues that people are passing on solid long-term opportunities because they want access to their capital.  The Harbinger man believes regulation has hurt the free market.

He also went on to say that because of the market's risk on/risk off mentality, there are many who aren't even paying attention to fundamentals out there.  The manager labeled the market one of the most difficult to time investments.


Eric Sprott of Sprott Asset Management is yet again pounding the table on gold due to the problems in Europe.  He also commented on the "post-Lehman" world and mentioned that there can't be liquidity events as that could bring down the whole system.


Rick Rieder talked about how investing strategies are shifting from beta to idiosyncratic. He also believes that contagion isn't as big of an issue in Europe.


Daniel Ivascyn stressed the importance of aligning the right vehicle with the investment opportunity.  Long term opportunities need to be placed in the right structure, he says.


For more notes from the SALT Conference, check out:

- Identifying opportunities in emerging markets with John Burbank

-  Notes from panel with Kyle Bass, Dmitry Balyasny & Steven Tananbaum


- Barry Rosenstein, Leon Cooperman & Joel Greenblatt's panel on stocks






The above was compiled from notes sent in along with help from live tweets from: @ldelevingne , @pdmckenna ,  @AttainCapital & @realrobcopeland

Why Phil Falcone Likes Spectrum Brands: Stock of the Week

This week's focus stock is Spectrum Brands (SPB) and the article takes a look potentially at why Phil Falcone's hedge fund Harbinger Capital Partners has established such a large position. Previous write-ups include: why Maverick Capital owns Amdocs and why George Soros owns Comverse Technology.


The following is written by Tsachy Mishal, portfolio manager at TAM Capital Management.

The subject of billionaire hedge fund manager Philip Falcone elicits strong feelings. He is best known for his big bet on Lightsquared but lesser known for his other big bet: Spectrum Brands (SPB). Phil Falcone controls over 50% of the $1.65 billion company.

Spectrum Brands is a roll-up of many consumer brands such as Rayovac batteries, Remington shavers, Hot Shot bug killer, Tetra fish food and many more. The largest chunk of the profits comes from the batteries division. Spectrum Brands has had good momentum versus its peers as their discount brands tend to gain market share during difficult economic times.

SPB has a $3.35 billion enterprise value and a $1.65 billion market cap. On an enterprise value to EBIDTA basis, Spectrum Brands trades at an 11% discount to peers based on 2013 expectations. This does not even take into consideration the $1.2 billion net operating loss carry forwards (NOLs) they hold.

What I Like:

- Spectrum's stock has 23% upside before trading at the valuation of its peers, even ignoring the NOL's.
- The businesses have positive momentum and are gaining share. Consumers are likely to continue shifting towards lower price brands.
- Spectrum Brands has a greater than 12% free cash flow yield based on 2012 expectations.
- The controlling shareholder seems to have his incentives aligned with the best interests of other shareholders.


What I Don't Like:

- The company is carrying a lot of debt.
- The business is cyclical both from an economic perspective and a market share perspective.
- The stock is illiquid as a few owner's control 70% of the company. Fewer than 200k shares trade a day on average.
- Phil Falcone does not seem to have the highest ethical standards as he borrowed money from his hedge fund while locking up other investors.


The valuation of Spectrum Brands is attractive compared to its peers and is the most tempting aspect of the stock. I suspect that it will outperform but in the end I decided not take a position due to the negative factors I listed.

---

Thanks to Tsachy for the write-up. We've also highlighted how Harbinger has been buying SPB shares recently. The hedge fund originally acquired shares back in August 2009 when the company emerged from reorganization (Chapter 11).

At a past investment conference, Falcone has previously stated that he likes Spectrum Brands' solid balance sheet, high 11-12% free cashflow yield, and the fact that the company had been focused on debt paydown by reducing leverage from 3.5x to 3x.


You can scroll through all of the previous stock of the week articles via this link.

Phil Falcone's Harbinger Capital Scooping Up Shares of Spectrum Brands (SPB)

Phil Falcone's hedge fund Harbinger Capital Partners has been on a buying spree as of late. Per an amended 13D with the SEC, Harbinger's various entities combined now own 55.9% of Spectrum Brands (SPB) with 28,988,997 shares.

While the Harbinger Capital Partners Master Fund only owns 180,189 shares, the overwhelming majority of the position is owned by Falcone's Harbinger Group (HGI).

Overall, Harbinger's entities have scooped up 768,850 shares since January 20th. This most recent disclosure was made due to trading activity on February 8th. The majority of Harbinger's recent purchases have come at a price of around $29.50 per share.

Harbinger's History With SPB

So while this offers investors a somewhat rare chance to buy at prices right alongside a hedge fund, just know that they've built their stake up over time and these most recent shares are just a drip in the their bucket full of shares.

We originally detailed Harbinger's original acquisition of SPB shares back in August 2009 when the company emerged from reorganization relief under Chapter 11.

The hedge fund manager also explained Harbinger's Spectrum Brands thesis at a hedge fund best ideas conference back in September of last year.

About Spectrum Brands

Per Google Finance, SPB is "a consumer products company. The Company manufactures and markets alkaline, zinc carbon and hearing aid batteries, herbicides, insecticides and repellants and specialty pet supplies. Its consumer products have positions in seven product categories: consumer batteries; pet supplies; home and garden control products; electric shaving and grooming products; small appliances; electric personal care products, and portable lighting."


While Harbinger certainly owns a huge stake in Spectrum, keep in mind that this hedge fund has made a much bigger bet on a 4G wireless venture: LightSquared.

Phil Falcone & Harbinger's 4G Wireless Network Bet: LightSquared

Philip Falcone's hedge fund Harbinger Capital Partners has invested $2.9 billion into private 4G wireless network: LightSquared. We've detailed Harbinger's 4G bet before, but Falcone yesterday was interviewed by Maria Bartiromo from the Delivering Alpha Conference.

His whole goal with this venture is to bring powerful wireless broadband to rural areas in an attempt to essentially blanket America with coverage. He says that the future is all about smartphones and tablets, and those devices need access to wireless networks.

Too Big of a Bet?

Critics have said that Harbinger has essentially morphed into a private equity fund or venture firm by allocating so much capital to one private investment. Falcone addresses this by saying that there's "a real asset here" as he first started looking at it five or six years ago.

He thinks the venture will change the wireless market. While he acknowledges that this single bet is quite large for one fund, he believes people would understand how valuable this is from both a capital and social perspective if they were around the everyday workings like he is.

GPS Interference?

Regarding the claims that LightSquared interferes with GPS, Falcone says that GPS is actually using their spectrum as they were given the right to build on that spectrum and the GPS manufacturers knew it. Falcone says that, "they're interfering with us, we're not interfering with them."

Embedded below is the video of Falcone's interview from the Delivering Alpha conference:



Falcone also presented his idea of going long Spectrum Brands (SPB) at the conference on the hedge fund best ideas panel which we also covered.

Hedge Fund Best Ideas: Kyle Bass, Dan Loeb, Leon Cooperman, Phil Falcone

All today we've been covering the Delivering Alpha conference and we conclude with the Best Ideas & Alpha panel featuring Kyle Bass (Hayman Capital), Leon Cooperman (Omega Advisors), Philip Falcone (Harbinger Capital), Dan Loeb (Third Point), J. Tomilson Hill (Blackstone Alternative), and Anne Popkin (Symphony Asset Management). Each presented their best current idea:

Kyle Bass (Hayman Advisors)

Bass is well known for his subprime short and prediction of sovereign defaults. At the conference, he said that the sovereign debt crisis is unlike anything seen in history.

Bass believes Japan is in the worst position, saying "Japan spends almost half of their revenue on debt service. So, a minute move can put them literally into check-mate ... We see a structural anomaly creating the cheapest option in the world."

Simply put, Bass says to buy price put options on government bonds in Japan. He believes it's the best opportunity in the world. In the past, we've outlined how Bass was betting against Japanese Government Bonds (JGBs).


Leon Cooperman (Omega Advisors)

Earlier this summer, the legendary hedge fund manager presented at the Leaders in Investing Summit where he was concerned about employment and thought that bonds were screaming to be shorted. At today's conference, Cooperman says that the economic and financial crisis from 2008 would not repeat in 2011 or 2012.

The manager continues to avoid government bonds and again says that stocks are the "best house in the asset management neighborhood." He likes stocks assuming that Obama softens his 'anti-wealth' stance and that the Middle East remains stable. He mentioned liking Apple (AAPL), Sallie Mae (SLM), and Boston Scientific (BSX). To see what other stocks Cooperman is invested in, head to our Hedge Fund Wisdom newsletter.

Cooperman will also be presenting his latest investment ideas at the Value Investing Congress next month.


Philip Falcone (Harbinger Capital)

Falcone has seen somewhat of a transformation lately as his hedge fund looks more like a private equity fund with his large private investment in a 4G wireless network: LightSquared. At the conference, he pitched Spectrum Brands (SPB), noting the company's solid balance sheet and high free cashflow (11-12% free cashflow yield).

The company sells batteries, personal care products, home and garden items, and more. Falcone points to their strong management team and collection of strong global brands. The company is currently focused on debt paydown and reducing leverage from 3.5x to 3x.

Harbinger owns 28 million shares via his publicly-traded Harbinger Capital. We detailed Falcone's original acquisition of SPB shares back in August 2009 as well as his subsequent purchase in April of 2010. While SPB isn't a "high octane" stock, he likes it.


Dan Loeb (Third Point)

We've covered Loeb's recent activist investment in Yahoo! (YHOO) and that's exactly what he talked about at the conference. Just today he sent another letter to Yahoo as his first conversation didn't seem to go too well. Ahh, the trials and tribulations of activist investing.

He feels YHOO has an intrinsic value of around $20 per share and you can see Loeb's investment thesis in his original letter to Yahoo. But in summary, he feels that the company has great assets but has been horribly mismanaged. Calling the board of directors "clowns," Loeb points out that the company hasn't changed since 2004, has kept a "crappy interface" and the "same stupid logo."

In particular, it seems that Loeb really likes their ownership stake in Alibaba Group. Interestingly enough, Loeb says that the company does not need to break up. He says they've hedged the position against the S&P 500 and they've also hedged exposure to Yahoo Japan.

We've also detailed how Third Point has reduced equity exposure for four consecutive months.


J. Tomilson Hill (Blackstone Alternative Asset Mgmt)

This manager believes that non-performing loans and mortgage-backed securities are the best play on a risk-adjusted basis. He also says that, "you have the ability to buy mortgage servicing rights at prices we've not seen before."


Anne Popkin (Symphony Asset Management)

She argued that levered credit is cheap and is focused on loans and high yield bonds. The manager cautioned not to put all your eggs into this one basket and not to buy an entire position right away. Popkin says, "risk management is absolutely crucial here, because volatility is very high." So it sounds as if she's used the volatility in the sector to slowly assemble a position.


Embedded below is video of the entire Best Ideas & Alpha hedge fund panel:




For more coverage of the Delivering Alpha conference, head to our posts:

- Bill Ackman's new investment: long Hong Kong Dollar

- China: Bubble or Bonanza? Dan Arbess versus Jim Chanos

- Paul Touradji & Jeff Scott on commodities

- Jim Chanos: long corruption, short property in China

Ira Sohn Conference Notes: Hedge Fund Manager Presentations

The Ira Sohn Conference is taking place today in New York and features an all-star line-up of hedge fund managers. This post features part 1 of our notes from their presentations. ***Update: We've also posted up part 2 of our notes from Ira Sohn as well.

Part 1:


Erez Kalir / Sabretooth Capital: His pick was a long of MBIA (MBI) as a 'favorably asymmetric' play. His presentation was entitled, "Economic Death as a Special Situation." He feels that MBIA has 100%-200% upside with only 30% downside at worst, so the risk/reward skew is favorable.

He also likes Argentina as a compelling investment arena since its default in the early 2000's. In particular, he's looking at energy exploration & production names. He points to stocks like YPF SA (YPF) and Crown Point Ventures (CWV).

On the topic of inflation hedging, Kalir doesn't like gold. In fact, he warned against owning it. He also dislikes shorting treasuries. Instead, he prefers to buy farmland. This stance no doubt echoes the sentiment of Jim Rogers, the ex-Quantum fund manager who has also been a staunch advocate of owning farmland. Additionally, we've detailed how subprime profiteer Michael Burry also bought farmland.


Dinakar Singh / TPG-Axon Capital: Singh thinks the current market is a great environment for stockpicking and fancies shares of wireless provider Sprint (S), which David Einhorn's Greenlight Capital also likes (see Einhorn's thoughts here). Singh cites the company's low valuation and it's his favorite turnaround story.

He says S needs to consolidate its two networks starting now with the next generation phones. Singh actually feels like the T-Mobile / AT&T (T) merger is good for Sprint because it removes their largest competitor. Singh notes that the US wireless market could offer defensiveness like utility stocks, but with the added benefit of growth. He thinks S could have 40-70% upside, saying its worth $8-14 per share (currently trading around $6).

TPG-Axon's leading man cited Zhongpin (HOGS) as a compelling investment due to its top line growth and the fact that it's trading at 7x earnings.

Singh also mentioned he thinks that Orkla (OSL: ORK) has a fair value of $65 to $80 as the company was mismanaged and restructuring could unlock value.


Jeff Aronson / Centerbridge Partners: His pick was to go long shares of CIT Group (CIT). This has been a hedge-fund-favorite as some of the largest owners also include Bruce Berkowitz's Fairholme Capital, Howard Marks' Oaktree Capital, David Einhorn's Greenlight Capital, Marc Lasry's Avenue Capital, and Dan Loeb's Third Point. Before Chapter 11, Centerbridge was buying CIT debt. Since then, they've been buying the equity.

Aronson says that the company's intrinsic book value is $59 per share and notes that they have $12 billion in cash on their balance sheet. He highlights that CIT has publicly stated it could buy a retail bank (whose deposits would boost earnings). As a takeout candidate, Centerbridge thinks CIT could be worth as much as $65 (shares trade around $41 currently.)


Robert Howard / KKR: Howard (representing KKR's new equity team) pitched shares of Wabco (WBC), a company that produces anti-lock braking systems among other things. He cites three major trends that WBC can benefit from: cyclical recovery (US & Europe trucking recovery), emerging market growth, as well as tighter safety rules. Howard mentions the company is often overlooked by investors too.

KKR's man also pitched HSN, Inc (HSNI), otherwise known as the Home Shopping Network. He likes their demographic of 30-55 year old women with solid annual income to spend. Howard thinks that John Malone's Liberty Media could make a play for the company too, as he points out that Liberty owns 30% of HSNI and all of QVC, the other major player in the shopping-via-television arena.


Phil Falcone / Harbinger Capital Partners: Falcone talked about his wireless venture, LightSquared. We've covered this play numerous times and while it's not publicly traded yet, Falcone says that it will be some day. Essentially, this is Harbinger's concentrated bet on a 4G network.

Numerous hedge funds have invested in the 'more mobile data usage' theme via various plays. Some have elected to buy the wireless tower operators like American Tower, (AMT), Crown Castle (CCI), and SBA Communications (SBAC). Falcone, on the other hand, has elected to straight up build out his own network as his hedge fund has morphed into a semi-private equity-like fund. He noted that they've accumulated spectrum and are looking at a 4G terrestrial network.

Falcone also likes Crosstex Energy (XTXI). We covered his investment in XTXI back in December and the Harbinger manager likes it due to its complex financial structure. A master limited partnership owns the assets and then XTXI owns that partnership. He drew attention to the fact that this isn't a company that pulls gas out of the ground, but rather a play on gas processing and transmission. Falcone thinks XTXI is worth double what it's trading at now or more (around $9.50 currently).


Jim Chanos / Kynikos Associates: The well-known short-seller attacked alternative energy 'green' plays with a presentation entitled, "Does Solar and Wind = Hot Air?" Chanos said that, "wind is 50% more expensive than natural gas, and solar is 4 times more expensive" and that natural gas prices have essentially shot an "economic arrow" into alternative energy.

In particular, Chanos mentioned Denmark-based Vestas (CPH:VWS or PINK: VWDRY), a company focused on wind power that might be worth looking at for a short.

However, he is most excited about shorting solar power via First Solar (FSLR), a company he believes has outdated technology. Chanos was recently on television talking negatively about this name as well. He points out that Spain and Italy utilize solar power the most. But, the problem there is that the demand is highly subsidized. Also, he points to the management exodus at FSLR as a warning sign for investors to exit shares.


Sunjay Gorawara / Investment Idea Contest Winner: This year's Ira Sohn featured an investment idea contest where the winner was able to present their idea to all attendees. Michael Price introduced the contest winner but while he was talking, he mentioned that Goldman Sachs (GS) could be a buy as it should be worth $100 more than where it currently trades. And in general, he was bullish on financials.

Judges Bill Ackman, David Einhorn, Michael Price, and Joel Greenblatt selected the winning entry of Bridgepoint Education (BPI) from an undergraduate student at Indiana University who will be interning at JP Morgan this summer.

For more hedge fund coverage: Be sure to receive our free updates via email or free updates via RSS reader.


This concludes part 1. Please head to part 2 of our notes from Ira Sohn for coverage of presentations from David Einhorn, Bill Ackman, Carl Icahn and more.

Harbinger Capital Sells New York Times (NYT) and Sable Mining (SBLM), Buys Crosstex Energy (XTXI)

Phil Falcone's hedge fund Harbinger Capital Partners has executed some sizable transactions recently. Rumors have swirled that the manager was winding down its Special Situations fund but that has been denied. Harbinger recently sold shares in two securities of note: New York Times Co (NYT) and Sable Mining Africa (LON: SBLM).

Regarding his New York Times stake, Falcone last week revealed he sold 7 million NYT shares at around $8.13 each. Harbinger originally acquired shares in 2008 when they were trading around $19 per share, so they've sold at a large loss. According to a 13D filed with the SEC, the filing was reported due to portfolio activity on November 24th.

Previously, Harbinger owned 7.4% of the company. With its latest sales, the hedge fund now owns only 2.6%, retaining 3.7 million NYT shares. This is the second time Harbinger has sold NYT in the past month or so. Not to mention, they sold some shares back in April of this year as well.

Turning next to Harbinger's next sale, the hedge fund has announced that it placed 205,756,827 Sable Mining Africa shares (LON: SBLM) with new and existing shareholders. Due to this transaction, Harbinger no longer owns an interest in SBLM shares. Previously, we highlighted Harbinger's Sable Mining stake here as they owned over 23% of the company. Alas, no more.

So Harbinger has definitely been selling positions off (they also sold some Inmarsat (ISAT) as well), possibly to free up cash for their concentrated bet on a 4G network via their LightSquared project, but that's pure speculation on our part.

Lastly, Falcone's hedge fund firm also recently filed an activist 13D on Crosstex Energy (XTXI). Due to portfolio activity on November 16th, Harbinger has disclosed a 9.6% ownership stake with 4,500,000 shares. This is an increase in their position as they owned 3.8 million shares when they added to their XTXI position in August. Over the past three months, Harbinger has ramped up its position size by 18.2%. Harbinger paid $33,091,533 for the total shares reported.

Per Google Finance, Crosstex Energy is "is engaged, through its subsidiary, Crosstex Energy, L.P. (Partnership), the gathering, transmission, processing and marketing of natural gas and natural gas liquids (NGL). The Partnership operates two segments: Midstream and Treating. Its combined midstream assets consist of over 3,300 miles of natural gas gathering and transmission pipelines, nine natural gas processing plants and three fractionators located in two primary regions: north Texas and Louisiana."

New York Times is "a diversified media company that includes newspapers, Internet businesses, investments in paper mills and other investments."

Stay up to date on the latest hedge fund movements by scrolling through our coverage of SEC filings.

Falcone's Harbinger Reduces New York Times (NYT) Position

Phil Falcone's hedge fund Harbinger Capital Partners just filed an amended 13D with the SEC regarding shares of the New York Times (NYT). Per the filing, Harbinger has disclosed a 7.41% ownership stake in NYT with 10,757,386 shares due to portfolio activity on October 19th.

This is a decrease in Falcone's position because Harbinger previously owned 13,120,178 shares as of June 30th. This marks an 18% reduction in his position size. The hedge fund originally filed an activist 13D on NYT back in February of 2008 and they purchased shares at around $19.

Regarding the recent transactions, Harbinger's Master Fund sold 1,500,000 shares at $7.80 on October 19th. Harbinger also sold over 821,000 shares back in late August at prices of $7.16, $7.44, and $7.52. This comes after we've seen recent portfolio activity from Falcone where Harbinger sold some Inmarsat (ISAT) as well.

Taken from Google Finance, New York Times is "a diversified media company that includes newspapers, Internet businesses, investments in paper mills and other investments. The Company is organized in two segments: News Media Group and the About Group."

Scroll through our coverage of SEC filings to see what other top hedge fund have been investing in.

Hedge Fund Harbinger Capital Sells Some Inmarsat (ISAT)

Yesterday, Philip Falcone's hedge fund Harbinger Capital Partners announced its intention to sell 13% of its stake in Inmarsat plc (LON: ISAT), or 60,000,000 shares. A regulatory filing in the UK details that, "Harbinger hereby announces that it does not intend to make an offer to acquire the entire issued and to be issued share capital of Inmarsat not already held by Harbinger." It had long been thought that Falcone's fund would make a play for Inmarsat, but that is clearly not the case now. You'll recall that Harbinger has been building out a 4G network via LightSquared.

In the filing, Falcone also made a statement about Inmarsat saying, "Inmarsat has been a terrific investment for Harbinger and its investors. Although we have determined that we are not going to make an offer for all of the company, I remain a strong believer in the company's future and am extremely happy to maintain a core position in the company's stock and our partnership with Inmarsat through LightSquared Inc."

Per UK regulatory filings, Harbinger owns 14.1% of Inmarsat's outstanding shares as of October 5th, 2010 with 64,277,349 shares. This halves their prior stake of 28.76% owned back in March of 2009. Interestingly, the filing also notes that Harbinger's remaining shareholding will be "subject to a 180 day lock-up arrangement with Credit Suisse and UBS Investment Bank." Even though Falcone won't be pursuing the rest of the company, Harbinger's LightSquared has been working with Inmarsat on implementation of its spectrum co-operation plan for the 4G network.

In terms of other portfolio activity from Falcone's hedge fund, we've highlighted that Harbinger reduced its Tate & Lyle position (TATE). Also, the firm added to Crosstex Energy (XTXI) last month.

Taken from Google Finance, Inmarsat is "a provider of global mobile satellite communications services (MSS), providing data and voice connectivity to end users worldwide. The Company’s Inmarsat Global MSS segment is engaged in the supply of internally generated airtime, equipment and services to distribution partners and end users of mobile satellite communications by the Inmarsat business. Its Stratos segment is engaged in the supply of mobile and fixed-site remote telecommunications services, the provision of customized remote telecommunications solutions, value-added services, equipment and engineering services to end-users."

For more coverage of Harbinger's bet on 4G, Teri Buhl has an exclusive interview with Falcone and has also detailed Falcone's defense of his 4G plan.

Phil Falcone's Harbinger Capital Reduces Tate & Lyle Position (TATE)

Philip Falcone's hedge fund Harbinger Capital Partners have reduced their UK position in Tate & Lyle (LON: TATE). Per UK regulatory disclosures, Harbinger now own less than 3% of the company's shares outstanding due to portfolio activity on the 27th of August. Falcone's hedge fund actually disclosed two sales with the most recent leaving Harbinger in possession of 14,161,182 shares of TATE. Back in July, we detailed how Harbinger owned 8.95% of Tate & Lyle previously. As such, this is a pretty sizable reduction in position size. This portfolio news comes right after we saw hedge fund Harbinger Capital add to Crosstex Energy (XTXI).

Since their position in Tate & Lyle is below the 3% threshold, the UK regulatory body does not require further disclosure of the position from Harbinger. So, we don't know if they're slowly selling completely out of the name or merely reducing position size. And unfortunately, we won't get any other regulatory updates unless they for some reason raised their stake back above the 3% threshold, which would trigger another filing.

Harbinger's thesis on Tate & Lyle was to supposedly push for a link with Bunge (BG), the US food group which Harbinger also previously owned. Back in 2008, Tate & Lyle's then CEO Iain Ferguson said that Harbinger's investment in the company stemmed from Falcone's habit of focusing on scarce assets that are hard to replicate. In the case of TATE, he was focusing on their US plants, including the first corn wet mill built in twelve years, Fort Dodge. But, given Falcone's vast reduction in his position sizing, it appears that his interest in this name has waned.

Taken from Google Finance, Tate & Lyle is "a manufacturer of renewable food and industrial ingredients. The Company, through its subsidiaries, is engaged in developing, manufacturing and marketing food and industrial ingredients made from renewable resources. The Company operates through four divisions: Food and Industrial Ingredients, Americas; Food and Industrial Ingredients, Europe; Sugars, and Sucralose. Tate & Lyle participates mainly in four markets: food and beverage; industrial ingredients; pharmaceutical and personal care, and animal feed. The Company holds a 16.6% interest in Tapioca Development Corporation."

View our previous coverage of Harbinger's portfolio for more.

Hedge Fund Harbinger Capital Adds to Crosstex Energy (XTXI)

Per a 13G filed with the SEC, Philip Falcone's hedge fund Harbinger Capital Partners has updated its stake in Crosstex Energy (XTXI). Due to portfolio activity on August 17th, 2010, Harbinger has disclosed an 8.1% ownership stake in XTXI with 3,804,916 shares. This is a massive increase in their position because back on June 30th, they only owned 213,600 shares. As such, Harbinger has boosted its stake by over 1,681% in the past two months, adding 3,591,316 more shares.

Taken from Google Finance, Crosstex Energy is "engaged, through its subsidiary, Crosstex Energy, L.P. (Partnership), the gathering, transmission, processing and marketing of natural gas and natural gas liquids (NGL). The Partnership operates two segments: Midstream and Treating. Its combined midstream assets consist of over 3,300 miles of natural gas gathering and transmission pipelines, nine natural gas processing plants and three fractionators located in two primary regions: north Texas and Louisiana."

You can view all of our previous coverage of Harbinger's portfolio here.

Phil Falcone's Hedge Fund Adds to Corn Products Stake

After market close yesterday, Phil Falcone's hedge fund Harbinger Capital Partners filed a 13G with the SEC on Corn Products International (CPO). Due to portfolio activity on June 21st, 2010 Harbinger now shows a 5.22% ownership stake in CPO with 3,930,019 shares. This marks an increase in their stake because back on March 31st, Falcone's hedge fund owned 3,483,280 shares of Corn Products when we looked at Harbinger's portfolio. They've added 446,739 more shares to their position over the past three months, a 12.8% increase in shares owned.

Just yesterday, we also detailed how Harbinger has been selling Tate & Lyle shares. This is interesting because both companies are essentially involved in the corn industry in some fashion or another so we'll have to see what Falcone has in mind here.

Taken from Google Finance, Corn Products International, Inc. "manufactures and sells a number of ingredients to a variety of food and industrial customers. The Company is a corn refiner and a supplier of food ingredients and industrial products derived from wet milling and processing of corn and other starch-based materials."

Be sure to check out the rest of Harbinger's portfolio as well as our continuing hedge fund portfolio updates.

Hedge Fund Harbinger Capital Reduces Stake in Tate & Lyle

Phil Falcone's hedge fund firm Harbinger Capital Partners recently filed a regulatory disclosure in the UK regarding shares of Tate & Lyle (LON: TATE). While not a major change in position size, they've gradually reduced their stake over time and we now see that Harbinger owns 41,171,670 shares, or 8.95% of the shares outstanding. This disclosure was made due to activity on Thursday June 24th. We covered Harbinger's previous filing on TATE from back in October 2009 when they owned a 9.21% stake.

Let's take a historical look at their stake in Tate & Lyle: Hedge fund Harbinger started to really ratchet up their stake in early 2008. Their position then peaked at a high of 19% ownership back in July 2008. Since then, Falcone's firm has slowly decreased its position size to current levels. Over the past year or so, the press has speculated that Harbinger would completely sell out of the stake but that does not appear to be the case (at least for now).

It appears as though Harbinger's thesis with Tate & Lyle was a push for a link with Bunge (BG), the US food group which Harbinger also previously had an interest in. (Sidenote: Falcone's fund had sold out of Bunge a while back but when we looked at Harbinger's portfolio from the first quarter of 2010 we saw they re-initiated a new position in Bunge). Back in 2008, Tate & Lyle's then CEO Iain Ferguson said that Falcone's investment in the company stems from his habit of focusing on scarce assets that are hard to replicate.

Specifically in the case of Tate & Lyle, the scarce assets Falcone fixated on were its US plants, including the (then new) Fort Dodge plant in Iowa which was the first corn wet mill built in twelve years, along with the company's access to valuable slots on the US rail system. We'll have to see where this stake goes, but ever since 2008 it's been slowly and steadily reduced by the team at Harbinger Capital Partners. For more portfolio activity out of this hedge fund, check out their latest new position as well as our previous look at Falcone's portfolio.

Taken from Google Finance, Tate & Lyle "is a manufacturer of renewable food and industrial ingredients. The Company, through its subsidiaries, is engaged in developing, manufacturing and marketing food and industrial ingredients made from renewable resources. The Company operates through four divisions: Food and Industrial Ingredients, Americas; Food and Industrial Ingredients, Europe; Sugars, and Sucralose. Tate & Lyle participates mainly in four markets: food and beverage; industrial ingredients; pharmaceutical and personal care, and animal feed. The Company holds a 16.6% interest in Tapioca Development Corporation."

For more on the latest moves from prominent money managers, head to our coverage of hedge fund investments in the UK and scroll through our continuing hedge fund portfolio tracking series.

Phil Falcone's Harbinger Capital Shows Massive New Citigroup Position: 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund filings.)

Next up is Philip Falcone's hedge fund Harbinger Capital Partners. Harbinger is a multi-billion dollar hedge fund firm with a focus on both distressed assets and equity plays. They often take highly concentrated positions and so they're an easier fund to track. After horrible performance in 2008, Harbinger rebounded in 2009 and finished up 46.5% as noted in our hedge fund performances post. In terms of recent portfolio activity, we detailed Harbinger's new position in African Medical Investments and saw that they've been selling New York Times shares. Falcone's firm has actually been quite active and ambitious as of late as we learned they will be starting a 4G wireless network as they make a large bet on mobile data transmission.

The positions listed below were Harbinger's long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:


Brand New Positions
Citigroup (C)
NRG Energy (NRG)
Bunge (BG)
Seagate (STX)
Trina Solar (TSL)
Consol Energy (CNX)
VIX Short-term Futures (VXX)
Harbinger Group (HRG)
Vantage Drilling (VTG)
Clearwire (CLWR)
Pioneer Drilling (PDC)
Calpine (CPN) Calls


Increased Positions
Strategic HL & RS (BEE): Increased position size by 252.8%
SPDR Gold (GLD): Increased by 145%
Corn Products (CPO): Increased by 141.9%
Exco Resources (XCO): Increased by 75.7%
Superior Well Service (SWSI): Increased by 33.6%


Reduced Positions
Harry Winston (HWD): Reduced by 60.1%
Istar Financial (SFI): Reduced by 54%
Sprint (S): Reduced by 33.8%
Freeport McMoran (FCX): Reduced by 11.8%


Positions They Sold Out of Completely
Calpine (CPN)
Walter Energy (WLT)
Interpublic (IPG)
Take-Two Interactive (TTWO)
Cloud Peak (CLD)
ProShares Ultrashort Financials (SKF)
Alpha Natural Resources (ANR)
August Resource (AZC)
ICO (ICOG)
Mgic Investments (MTG)
Delta Petroleum (DPTR) Notes


Top 15 Holdings (by percentage of assets reported on 13F filing)

1. Citigroup (C): 15.2%
2. Sprint (S): 10.1%
3. New York Times (NYT): 10%
4. NRG Energy (NRG): 8.5%
5. SPDR Gold (GLD): 7.2%
6. Exco Resources (XCO): 6.9%
7. Corn Products (CPO): 6.5%
8. Bunge (BG): 5.2%
9. Complete Production (CPX): 4.6%
10. Calpine (CPN) Calls: 4%
11. Freeport McMoran (FCX): 3.4%
12. US Airways (LCC): 3.2%
13. Terrestar (TSTR): 2.2%
14. Seagate (STX): 2%
15. Trina Solar (TSL): 1.7%

Please keep in mind that these equity holdings are by no means representative of Harbinger's entire portfolio. They undoubtedly also hold numerous distressed plays and positions in other markets that aren't required to be disclosed. That said, we do get an interesting look at some of their long US equities exposure which totals $1.9 billion.

Harbinger started a few massive new long positions in the first quarter, most notably in Citigroup and NRG Energy. They also disposed of longstanding stakes in Calpine, Walter Energy, and Take-Two Interactive. The latter is interesting because we've seen corporate activist Carl Icahn adding TTWO shares and actively trying to drum up shareholder value. And while Harbinger sold completely out of CPN common stock, they also added a new position in CPN call options so they still have some exposure there.

One interesting talking point is Harbinger's use of exchange traded funds presumably as hedging tools. They've held a position in SPDR Gold Trust (GLD) for a while but heavily added to it in the first quarter. They also started a brand new stake in VXX, an ETF based on the volatility index (VIX). As volatility increases (as it definitely has as of late), VXX increases in value. In essence, Harbinger is looking for hedges against panic and for assets that might increase when equity markets are declining.

Lastly, we highlight Harbinger's continued stake in numerous natural resource plays. They've owned and have been in & out of various plays but seemingly like Freeport McMoran and Cliffs Resources the best.

Assets reported on the 13F filing were $1.9 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source for hedge fund tracking, replicating, and performance backtesting (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.

This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group, Warren Buffett's Berkshire Hathaway, Stephen Mandel's Lone Pine Capital, and Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, Mohnish Pabrai's Investment Fund, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Bruce Berkowitz's Fairholme Capital Management, Andreas Halvorsen's Viking Global, Dan Loeb's Third Point, John Paulson's hedge fund Paulson & Co, Chase Coleman's Tiger Global, and Roberto Mignone's Bridger Management. Be sure to check back daily for new hedge fund updates.

Hedge Fund Harbinger Capital Discloses New Position in African Medical Investments

Phil Falcone's hedge fund Harbinger Capital Partners have disclosed yet another stake via regulatory filings in the UK. Harbinger now owns 41.89% of the ordinary shares in African Medical Investments (LON: AMEI). They own 86,501,000 shares in the company and this marks a brand new position for them. African Medical recently issued a secondary offering on April 30th, 2010 for 12,500,000 shares.

Falcone's hedge fund has seen a flurry of portfolio activity as of late. Their latest AMEI position comes after we recently saw that Harbinger still owns shares in Mercer International (MERC) and also sold shares of New York Times (NYT). Additionally, Falcone's hedge fund started a new stake in Palm prior to the buyout from Hewlett Packard. Not to mention, the hedge fund even announced its ambitious plans for a 4G wireless network.

Taken from Google Finance, "African Medical Investments plc (African Medical Investments) is engaged in the healthcare sector in Africa. The Company, through VIP Healthcare Solutions Limited (VIP Healthcare), manages the Dar es Salaam Trauma Centre and Well Woman Clinic, the Trauma Centre in Harare and Airport Medical & Travel Vaccination Centres at Johannesburg International Airport and Cape Town International Airport. The Company has two further facilities in development: the Maputo Trauma Centre and Well Woman Clinic in Mozambique and the Airport Medical & Travel Vaccination Centre at Kilimanjaro International Airport. On December 9, 2009, the Company acquired VIP Healthcare Solutions Limited (VIP Healthcare)."

For more on our coverage of Falcone's hedge fund, head to Harbinger's recent portfolio activity.

Phil Falcone's Harbinger Capital Still Owns Mercer International (MERC)

Philip Falcone's hedge fund firm Harbinger Capital Partners recently filed an amended 13G with the SEC due to activity on April 23rd, 2010. In it, we learn that they own a 6.11% stake in Mercer International (MERC) with 2,228,194 shares. This is the exact same amount of shares they held on December 31st, 2009 when we took a look at Harbinger's portfolio. So, there has been no change in their position. While not as exciting as a 'buy' or 'sell', we just wanted to update you on their 'hold' status since they filed a disclosure.

While Harbinger still owns shares of MERC, we just recently learned that David Einhorn's hedge fund Greenlight Capital recently sold their Mercer stake after holding it for many years so we see a little difference in opinion here. In their letter to investors, Greenlight Capital mentioned that they first purchased their stake in 1997 and sold most of their common shares in 2008. They continued to hold their debt position and Einhorn's fund just sold this in the first quarter. Greenlight said they were, "happy to move on."

Taken from Google Finance, Mercer International is "a producer of market northern bleached softwood kraft (NBSK), pulp in the world. The Company operates in the pulp business. It is a kraft pulp producer, and producer of pulp for resale, known as market pulp, in Germany."

If you've been following all of our coverage regarding Harbinger Capital Partners, you know it's been a bit of a zoo in terms of SEC filings. Falcone's fund recently sold New York Times shares (NYT), started a stake in Palm (PALM) and the hedge fund also interestingly planned a 4G wireless network. We'll continue to keep you updated on all their disclosed activity.

Falcone's Hedge Fund Harbinger Capital Sells New York Times (NYT) Shares

Phil Falcone's hedge fund Harbinger Capital Partners just filed a Form 4 and an amended 13D with the SEC regarding shares of The New York Times Co (NYT). In the disclosures, we see that Harbinger sold 1,500,000 shares of NYT at a price of $12.30 on April 20th. The next day, they sold 1,750,000 more shares of NYT at a price of $12.55. After these transactions, Harbinger still owns 13,636,799 shares of The New York Times. So while they definitely still own a sizable stake, this means they sold 19.2% of their position. According to the 13D filing, Falcone's hedge fund is left with a 9.43% ownership stake in the company. This is the second time in recent weeks that they've sold NYT shares and we detailed their previous sales.

Falcone's hedge fund focuses on event driven, bankruptcy, and value plays as they seek "alpha-generating ideas that are uncorrelated to investment cycles." Falcone has been quite busy as of late as we recently saw Harbinger start a stake in Palm (PALM) as the company has positioned itself to be sold. Harbinger also revealed plans for a 4G wireless network in a move we've never seen a hedge fund make before. The hedge fund was up 1.77% for the year at the end of March as noted in our first quarter hedge fund performance numbers post.

Taken from Google Finance, The New York Times Co is "a diversified media company that includes newspapers, Internet businesses, investments in paper mills and other investments. The Company is organized in two segments: News Media Group and the About Group."

To see the rest of Falcone's equity investments, head to Harbinger's portfolio.

Phil Falcone's Harbinger Capital Shows Stake in Palm (PALM)

In a 13G filed with the SEC, Phil Falcone's hedge fund Harbinger Capital Partners has disclosed a position in Palm (PALM) as of April 12th, 2010. Harbinger now shows a 9.48% stake in PALM with 16,000,000 shares. This is a passive stake as they filed a 13G and if they intended to go activist they would have filed a 13D instead. This is a brand new position for them as we previously did not see it in Harbinger's portfolio. Palm essentially put itself up for sale as it looks for bidders after posting weak results in the most recent quarter.

This stake certainly plays right into Harbinger's wireless investment theme as the hedge fund recently announced plans for a 4G wireless network and they also have a large position in Sprint Nextel (S). Palm of course manufactures smartphones (primarily on Sprint's network) so there's a tie-in there. But you also have to consider that Falcone has a history of taking highly concentrated positions in companies and various M&A situations.

The initial reaction to this stake is that he could be gaming the possible takeover as maybe he sees more value in PALM than the $1-2 billion enterprise value that has been floated around by various analysts. Falcone's prior expertise is primarily in distressed companies and while Palm is not distressed (at least not yet), they certainly have struggled financially in the cut-throat smartphone arena. They still have $387 million in long-term debt as noted in their most recent 10-Q, but they also have $376 million in cash. So, it's hard to say exactly what Falcone's rationale is for taking this stake but clearly he sees an opportunity. We'll continue to monitor the developments.

In terms of other notable activity out of Harbinger, we posted that they had sold some shares of The New York Times (NYT). Philip Falcone's hedge fund was up 1.77% for the year at the end of March as noted in our first quarter hedge fund performance numbers post.

Taken from Google Finance, Palm is "a provider of mobile products for individual users and business customers worldwide. Palm’s products for consumers, mobile professionals and businesses include Palm Pre, Treo and Centro smartphones, as well as software, services and accessories."

You can view all of our previous coverage of hedge fund Harbinger Capital Partners here.

Falcone's Harbinger Acquiring Spectrum Brands (SPB) Shares

We have some transactions to update you on regarding shares of Spectrum Brands (SPB), Philip Falcone's hedge fund Harbinger Capital Partners, as well as hedge fund D.E. Shaw & Co's Laminar Portfolios. Firstly, we see that Harbinger filed an amended 13D with the SEC and now shows a 39.68% ownership stake in SPB with 12,153,819 shares. The filing was made due to activity on March 30th and we also have some color on recent transactions. We initially covered when Harbinger went activist on Spectrum back in 2009 as the company was reorganizing from Chapter 11 bankruptcy. Shares of Spectrum recently switched from ticker symbol SPEB in the over-the-counter (OTC) market and began trading under ticker SPB on the NYSE.

In the fine print of the recent filing, we see that Falcone's hedge fund has entered into a 10b5-1 purchase instruction with Credit Suisse Securities, "pursuant to which the parties thereto established a trading plan to effect purchases of up to 100,000 shares per week." These purchases can be made Monday through Thursday of each week at a price not to exceed $31.50. This plan will exist until either August 6th or the mailing of a definitive proxy statement to stockholders in connection with the merger, whichever date comes first.

Secondly, we see that Harbinger has entered an agreement with fellow hedge fund D.E. Shaw & Co (Laminar Portfolios) where Harbinger acquired Shaw's 89,300 shares at a price of $30 per share. This transaction was reflected in Form 4's filed with the SEC by both D.E. Shaw Laminar and Harbinger. In addition to this, Falcone's hedge fund updates us on the amount of SPB shares they purchased on March 31st and April 1st. Here is a breakdown of their transactions and keep in mind that the purchases executed at $30 are the D.E. Shaw transactions:

(click to enlarge)

So, Harbinger is slowly but surely scooping up the shares of Spectrum Brands (SPB). Overall, Falcone's hedge fund firm has been quite busy as of late. They of course recently announced plans for a 4G wireless network and completed the SkyTerra merger. Additionally, we took note that they've been selling some New York Times (NYT) shares as well. They've definitely been active in the SEC filing department, that's for sure. In terms of other activity out of fellow hedge fund D.E. Shaw, we saw they recently updated a position and we covered their research on leverage as well.

Taken from Yahoo Finance, Spectrum Brands "together with its subsidiaries, operates as a consumer products company worldwide. The company offers consumer batteries, including alkaline and zinc carbon batteries, rechargeable batteries and chargers."

To see what other equity positions Falcone owns, you can view Harbinger's portfolio here.

Hedge Fund Harbinger Capital Consummates Skyterra Communications Merger

Just a few days ago we touched on how Philip Falcone's hedge fund Harbinger Capital Partners announced plans for a 4G wireless network as spectrum is apparently the hottest new asset class out there. They are doing so via their stakes in TerreStar (TSTR) and Skyterra Communications (SKYT) and yesterday after the market close we see that they filed an amended 13D and a Form 4 with the SEC, providing us an update as to what's going on behind the scenes. Simply put, Harbinger acquired 45,147,477 shares of stock and paid $5.00 in cash per share for each totaling $225,737,385. Upon the completion of this transaction, the stock was canceled and ceased to exist (i.e. merger complete). As such, the company is now privately held with no public market for stock.

Before we dive into the legal jargon, we'll just preface this in layman's terms by saying that all you really need to know is that the merger between SKYT and Harbinger was consummated. On March 29th, Harbinger acquired 23,042,077 shares of voting common stock at $5 per share and 22,105,400 non-voting shares at the same price. This transaction was part of Harbinger's acquisition of Skyterra through a merger and all shares of common stock not previously held by Falcone's hedge fund firm were "converted into a right to receive $5.00 in cash, subsequently canceled and ceased to exist." Additionally, all warrants were canceled and ceased to exist as well. So, this appears to be one of the first major steps towards their play on spectrum and make sure you head to their plans for a 4G wireless network.

Other recent activity out of hedge fund Harbinger includes selling some New York Times (NYT) shares and you can view the rest of Falcone's equity portfolio here.