Harbinger’s wireless bet rankles investors
Mon Aug 30, 2010
Philip Falcone likes hard-to-value private equity, but now it’s his entire fund, which could exacerbate losses
Most hedge funds chose not to put illiquid private equity
investments directly into their hedge funds after getting
burned on those investments during the financial crisis of
2008. Not so Philip Falcone, whose Harbinger Capital Partners
was forced at that time to put more than a third of its
portfolio into a side pocket that still has not been fully
And now Falcone has a huge private equity bet right in his
dwindling flagship hedge fund. About 98% of his $3.4 billion
flagship fund's net asset value is in telecom, telecom services
and cellular telecom positions, the bulk of which is private.
The valuation of those positions is so uncertain that Harbinger
Capital Partners could be nursing heavier losses than it is
reporting, according to investors. Through mid-August, the fund
lost 13%, a number that could be double that amount because of
leverage, some fear.
The main worry...
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