Falcone Shuts Down Fund Slowly

Chidem Kurdas

Philip Falcone, mired in persistent losses and legal problems, is liquidating one of his investment vehicles, Harbinger Capital Partners Special Situations Fund. He’s taking his time with this. Investors have been told that selling the portfolio holdings and returning the money to them could take four years or longer.

The investors expect to end up with a substantial loss but the magnitude depends on the prices Mr. Falcone manages to get for the assets and also on when the investor bought into the fund. One client says some may lose over 50% of the capital from the time of the original investment.

Special Situations Fund, which had around $2 billion in assets, is separate from the flagship Harbinger Capital Partners. Mr. Falcone committed both funds heavily to his LightSquared wireless telecommunication venture. This displeased many of his clients and led to large redemptions. The LightSquared venture is shaky and, for now, illiquid.

He has been selling other investments, like Crosstex Energy, a natural gas producer.  This past November HedgeFundAlert reported that Harbinger is downsizing and letting go of employees.

Mr. Falcone tried other ways to raise long-term capital and in 2010 floated a public company for this purpose.

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One Response to “Falcone Shuts Down Fund Slowly”

  1. Falcone Keeps Distress in Side Pocket « HedgeFundSmarts Says:

    […] that their withdrawals will be restricted because the investment is illiquid. They may have to wait four years or longer.  This was not what they bargained for, so they headed for the door to the extent they […]

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