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Harbinger Capital

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Not to be confused with Harbinger Group or Harbinger Systems.
Harbinger Capital Partners
Company typePrivate company
IndustryFinancials
Founded2001[1] in Birmingham, Alabama by Harbert Management Corporation
HeadquartersNew York City, New York, USA
Key people
Philip Falcone (Senior Managing Director)
AUM$9 billion[2]
Websitewww.harbingercapital.com

Harbinger Capital Partners is a private hedge fund based in New York City, New York, founded by Philip Falcone. Falcone remains the fund's Senior Managing Director.

Overview

Harbinger is a highly diversified multi-strategy hedge fund.[3] It has bet against sub-prime mortgages in the United States and the United Kingdom, including HBOS.[1][4] It is also a major investor in LightSquared, a troubled wireless communications company that filed bankruptcy in 2012, formerly known as SkyTerra Communications Inc.[5] Harbinger's $3.05 billion restructuring plan gives 74 percent of LightSquared to Cerberus Capital Management LP, Fortress Investment Group LLC and JPMorgan Chase & Co., leaving Falcone with 12.5 percent of the company's equity.[6] In March 2015, a judge approved Harbinger Capital's restructuring plan of LightSquared, which pays off lender Charlie Ergen, putting LightSquared in the hands of investors.[7]

In November 2014, Falcone announced his resignation as chief executive and chairman from Harbinger Group HRG, whose second biggest shareholder is Harbinger Capital. Falcone was paid a lump-sum of $40.3 million upon his resignation.[8][9]

In March 2015, the lawsuit accusing Falcone and Harbinger Capital Partners of "misleading investors about the firm's stake in LightSquared Inc." was dismissed.[10]

The firm's hedge funds include the Harbinger Capital Partners Master Fund, the Credit Distressed BlueLine Fund, and Harbinger Capital Partners Special Situations Fund.[11]

According to press accounts the assets under management at Harbinger peaked at $26 Billion in 2008 and had declined to approximately $9 Billion as of 2010 due to sizeable investor redemptions with approximately 40% of that total (approximately $3.5 Billion) concentrated in investments related to building a high-speed wireless network in the United States.[12]

History

Harbinger was founded in 2001[13] by its Senior Managing Director Philip Falcone and Harbert Management Corporation, a Birmingham, Alabama-based investment company that provided much of the original funding. Harbinger had funds under management of $26.5 billion (£13.4 billion) as of the end of June 2008.[14][15] In 2009, Harbinger acquired the ownership of its funds from Harbert, although Harbert handled administrative functions for Harbinger for a short transitional period. Also in 2009, Harbinger acquired controlling stock of the Zapata Corporation from the Glazer family and changed its name to The Harbinger Group Inc. (NYSE: HRG).[16] The hedge fund is based in New York, New York.[13]

Harbinger has owned large stakes in The New York Times Company, Cleveland-Cliffs, and 28% stock ownership of satellite communications company Inmarsat. The company has also owned stakes in rival satellite operators SkyTerra and Terrestar, and British sugar producer Tate & Lyle.[15]

In 2008, Harbinger Capital was ranked 19th on the Wall Street Journal's "The Hedge Fund 100" list, pulling in 23.85 percent in three-year annualized returns.[17] In 2009, Harbinger Capital was ranked 12th on the Wall Street Journal's "Top 100 Hedge Funds" list, pulling in 30.48 percent in three-year annualized returns.[18]

Harbinger Capital, which owned Russell Hobbs, merged it with Spectrum Brands on June 16, 2010 for $661 million and now controls approximately 64% of the appliance maker, Spectrum.

Top equity holdings

As of 2015, the top equity holdings of the firm were in the shares of the following companies: Spectrum Brands Inc, Harbinger Group Inc, North American Energy Partners Inc, and EXCO Resources Inc.[2]

SEC settlement

In August 2013, the firm reached a settlement with the SEC agreeing to pay more than $18 million and admit wrongdoing. As part of the settlement, Harbinger Senior Managing Director Philip Falcone was also barred from the securities industry for at least five years but did not prohibit him from working as an officer or director of a public company.[19] Among the SEC's multiple allegations were that Falcone misused fund assets and diverted fund assets for personal use, that the fund engaged in redemption and other practices that favored certain investors over others and that fund attempted to conduct an improper short squeeze on the bonds of Canadian manufacturing firm, partially in retaliation against a competitor investment firm. Harbinger and Falcone largely admitted to these allegations in the settlement.[20]

July 4, 2014, the U.S. Security and Exchange Commission's Office of the Whistleblower issued a "Final Order" in matter number 2012 -81[21] ruling that rejected a claim made by an individual requesting a reward for assisting in the investigation. The SEC rejected the claim, asserting in the "Claimant did not provide information that led to the successful enforcement" and denying the application.[22]

See also

References

  1. ^ a b Foley, Stephen. "Hands up if you made billions of dollars out of the credit crisis". The Independent. Retrieved 6 August 2014.
  2. ^ a b "Harbinger Capital Partners LLC - Investor Profile". Hedge Tracker. Retrieved 9 April 2015.
  3. ^ HERBST-BAYLISS, SVEA (13 November 2008). "Falcone makes big bet on food products". Reuters. Retrieved 10 April 2015.
  4. ^ Burton, Katherine. "JPMorgan, Renaissance Trail Hedge-Fund Gains in 2007". Bloomberg. Retrieved 6 August 2014.
  5. ^ "Our Investor". Lightsquared. Retrieved 6 August 2014.
  6. ^ Checkler, Joseph (1 July 2014). "LightSquared unveils plan led by Cerberus, Fortress, JPMorgan". Denver Post. Retrieved 10 April 2015.
  7. ^ CHECKLER, JOSEPH; CORRIGAN, TOM. "Judge Approves LightSquared's Restructuring Proposal". Wall Street Journal. Retrieved 9 April 2015.
  8. ^ Vardi, Nathan (25 November 2014). "Phil Falcone Resigns From Harbinger Group, Collects $40.3 Million". Forbes. Retrieved 9 April 2015.
  9. ^ Goldstein, Matthew (25 November 2014). "Philip Falcone, Hedge Fund Chief in Exile, Is Stepping Down". New York Times. Retrieved 10 April 2015.
  10. ^ Van Voris, Bob. "Harbinger Investor Suit Over Lightsquared Dismissed by Judge". No. 30 March 2015. Bloomberg Business. Retrieved 9 April 2015.
  11. ^ "Harbinger Capital Partners". Hedge Tracker. Retrieved 6 August 2014.
  12. ^ "Lisa Falcone: Who You Calling 'Wife of'?". Business Week. September 16, 2010. Retrieved 6 August 2014.
  13. ^ a b "Company Overview of Harbinger Capital Partners LLC". Bloomberg. Retrieved 9 April 2015.
  14. ^ "Harbinger Capital Imposes Limits on Withdrawals". Financial Times. January 11, 2009. Retrieved 6 August 2014.
  15. ^ a b http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4289635.ece
  16. ^ Weiss, Miles (June 29, 2009). "Manchester United Owner Glazer Turns to Falcone". Bloomberg. Retrieved 6 August 2014.
  17. ^ "The Hedge Fund 100" (PDF). Wall Street Journal. Retrieved 10 April 2015.
  18. ^ "Top 100 Hedge Funds" (PDF). Wall Street Journal. Retrieved 10 April 2015.
  19. ^ Chung, Juliet; Checkler, Joseph (25 November 2014). "Falcone to Depart Harbinger Group, Focus on Separate Company". Wall Street Journal. Retrieved 10 April 2015.
  20. ^ "Philip Falcone and Harbinger Capital Agree to Settlement". Securities & Exchange Commission. Retrieved 6 August 2014.
  21. ^ "Order Administering Cease-and-Desist Proceedings - Harbinger Capital Partners, LLC" (PDF). Securities & Exchange Commission. Retrieved 6 August 2014.
  22. ^ "In the Matter of Harbinger Capital Partners, LLC, File No. 3-14928 PRELIMINARY DETERMINATION OF THE CLAIMS REVIEW STAFF" (PDF). Securities & Exchange Commission. Retrieved 6 August 2014.
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