Harbinger Builds Gold Position

Paulson & Co is not the only famous hedge fund that favors gold.  We hear that Philip Falcone’s Harbinger Capital Partners quietly added to its SPDR Gold Trust holding in the summer.

Mr. Falcone started investing in gold about a year ago. Since then the investment has increased more than six-fold. The Harbinger flagship fund had around $365 million in the gold ETF as of July. While much less than the several billion dollars Paulson & Co has in SPDR Gold, the Harbinger holding is a nevertheless significant part of the portfolio.

John Paulson’s comments suggest that he invests in gold as a hedge against future inflation.  We don’t know Mr. Falcone’s reason.

Gold is not his biggest position. He had around $655 million in Spectrum Brands Inc., a diversified consumer products company that includes George Foreman grills, Remington hair driers and a brand of insect repellent. Spectrum is the type of investment one would expect Mr. Falcone to make on the basis of his history of taking large stakes and an activist role in selected companies. On the face of it, the Gold ETF does not fit that strategy.

He’s been selling Calpine, the electricity supplier that came out of bankruptcy in 2008. He made a big bet on Calpine and held on for years, with some disappointment as hoped-for mergers did not happen.

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