Philip Falcone and Harbinger Capital’s Wireless Adventure

Philip Falcone’s Harbinger Capital Partners dove into an illiquid and risky wireless adventure- one which proved to be a big concern for his investors. The adventure brought some legal troubles for both Harbinger and Philip Falcone.

HARBINGER

Philip Falcone is famous for betting against subprime mortgages, which made Harbinger $11 Billion in 2007. Harbinger Capital Partners Fund returned 116% that year. Harbinger was doing fine until mid 2008, but Falcone’s flagship fund lost half its value during the rest of 2008. Phil Falcone’s Harbinger returned 42% in 2009, which was much better than most funds. However, 2010 was very bad for him. He lost about 12% in 2010.

Harbinger’s assets under management reached $26 Billion at its peak, but recently went back down to around $7 Billion. Investors have been doubting Philip Falcone’s ambitious wireless investments. These investments both led to poor performance and redemptions. Falcone’s illiquid investments is also one of the reasons why he couldn’t meet redemption requests in a timely manner.

Some investors see Falcone’s LightSquared investment as a giant gamble. He’s building a wholesale wireless network that will compete with AT&T (T) and Verizon (VZ), and he’s been launching satellites to achieve his dream. LightSquared already raised $2 Billion but probably needs another $6 Billion to complete its network.

According to Reuters, Harbinger is reducing headcount to cut expenses. This week 39-year-old Lawrence Clark left Harbinger to start his own fund. Kenneth Turano, 29 year old trader, left Harbinger probably to join Clark in the new fund. Two other investment analysts Clark Baker, 49, and Eli Benson, 36, were laid off.

Philip Falcone’s Harbinger has other investments as well. Here are some of his holdings at the end of September:

1. iPath S&P 500 VIX Short-Term Futures ETN (VXX): Harbinger had more than $60 Million of VXX in its portfolio. VXX was one of the best stocks to short after the increase in volatility at the end of May. VXX declined more than 50% since September 30th, adding to Phil Falcone’s woes.

2. Cliffs Natural Resources Inc (CLF): Cliffs Natural Resources returned more than 39%. Insiders at Cliffs Natural were selling during the past quarter as the stock kept climbing.

3. Corn Products Intl. (CPO): The stock increased nearly 28% since September. Three insiders at Corn Products Intl were selling below $45, and there was another insider, James P. Zallie, who bought more than 3,000 shares at $46.87.

4. Crosstex Energy Inc (XTXI): Crosstex Energy returned 14.4% since September, beating the S&P 500 by 1 percentage point. Susan J Mcaden, VP Accounting, sold more than 10,000 shares in November.

5. Exco Resources (XCO): Harbinger had nearly $99 Million invested in XCO and the stock returned 31.5% since September.

6. New York Times (NYT): This is another failed investment of Harbinger. They still had $95 Million of New York Times stock at the end of September. The stock gained 32% since then.

7. SPDR Gold Shares (GLD): Harbinger is one of the hedge funds that invests in gold. Daniel Loeb’s Third Point and Brevan Howard are also investors in GLD.  There are several other hedge funds that invest in gold through gold miners or hold physical gold. (See Paulson & Co Holdings, Curtis Schenker’s Scoggin Capital, David Einhorn’s Greenlight Capital, and Mohnish Pabrai’s holdings)

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!