This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.
Next up, we have Harbinger Capital, a $13 Billion firm ran by Philip Falcone. Harbinger was started in 2000 with seed capital from Harbert Management ($25 million). And, just recently, we've learned that Falcone is buying out Harbert to be the owner of the firm. Falcone made a name for himself in 2007 when he started shorting subprime mortgages and returned 117%. He focuses on intensive credit research, on bankruptcies and proxy fights, and was previously involved with high yield debt trading. Lately, Falcone has been focused on equities it seems, but Harbinger's new fund will redirect Falcone's focus back to his roots.
At one point during 2008, Harbinger was up as much as 42%. But, their fortunes turned as their Offshore fund finished -22.7% for the year as noted in our 2008 hedge fund performances list. One position that treated Harbinger nicely was its short of Wachovia (NASDAQ:WB), which we detailed here.
Back in September, in a letter to investors, Falcone had assured investors that Harbinger was adequately positioned to stave off any further volatility the markets may bring their way, noting that the firm had reduced exposure to some of their higher volatility holdings (both on the long and short side).
In Harbinger's latest letter to investors, the firm noted that it had covered its shorts on metal producers and financials and also got out of some credit default swaps. While it has been winding down equity positions, Harbinger is sticking with its major stakes in Calpine (NYSE:CPN) and the New York Times (NYSE:NYT). Falcone also mentioned that Harbinger had added trade claims on an energy company and credit default swaps on various consumer plays (retailers, products, & services). The fund has also been selling off some Cliffs Resources (NYSE:CLF), essentially to ensure that their portfolio balance is where they want it to be. Harbinger was +0.74% for March and sits at +4.06% year to date for 2009, as noted in our hedge fund March performance post. Lastly, Philip Falcone was recently unveiled as a part of Forbes' billionaire list.
The following was Harbinger's long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC in Harbinger's Master Fund filing. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.
Some New Positions (Brand new positions that Harbinger initiated in the last quarter):
Consol Energy (NYSE:CNX)
Electronic Arts (ERTS)
Williams Sonoma (NYSE:WSM)
ICO Global (NASDAQ:ICOG)
Some Increased Positions (A few positions they already owned but added shares to)
New York Times (NYT): Increased by 68%
Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Mirant (MIR): Reduced by 96%
Southern Union (NYSE:SUG): Reduced by 96%
General Moly (NYSEMKT:GMO): Reduced by 95%
Ultrashort Financials (NYSEARCA:SKF): Reduced by 92%
Spectrum Brands (SPC): Reduced by 87.5%
RTI International (NYSE:RTI): Reduced by 85%
Media General (NYSE:MEG): Reduced by 67%
Medivation (NASDAQ:MDVN): Reduced by 64%
United States Oil Fund (NYSEARCA:USO) Puts: Reduced by 61%
Constellation Energy (NYSE:CEG): Reduced by 40%
Cablevision (NYSE:CVC): Reduced by 14%
Removed Positions (Positions they sold out of completely)
Owens Corning (NYSE:OC)
Ultrashort S&P500 (NYSEARCA:SDS)
Ultrashort Dow 30 (NYSEARCA:DXD)
Bank of Montreal (NYSE:BMO)
Cablevision (CVC) Calls
Northwest Airlines (inactive)
Green Builders (GBH)
Top 15 Holdings (by % of portfolio)
- Calpine (CPN): 23% of portfolio
- Cliffs Resources (CLF): 10.5% of portfolio
- Consol Energy (CNX): 9.85% of portfolio
- Cablevision (CVC): 9.6% of portfolio
- New York Times (NYT): 9.1% of portfolio
- Leap Wireless (LEAP): 8% of portfolio
- Navistar (NYSE:NAV): 6.5% of portfolio
- Atlas Air (NASDAQ:AAWW): 6% of portfolio
- Solutia (NYSE:SOA): 4.2% of portfolio
- Electronic Arts (ERTS): 3.32% of portfolio
- Constellation Energy (CEG): 2.1% of portfolio
- United States Oil Fund (USO) Puts: 1.6% of portfolio
- Hughes Communications (NASDAQ:HUGH): 0.9% of portfolio
- Medivation (MDVN): 0.8% of portfolio
- Ultrashort Financials (SKF): 0.6% of portfolio
Yet again we see another fund with some massive deleveraging and equity exposure reduction. Harbinger runs a somewhat concentrated portfolio in that a large percentage of their equities exposure is in the top 8 or 9 positions, with Calpine far and away the largest holding. Their Puts on USO worked out well as oil prices declined steeply (remember, these positions were as of Dec. 31st, before oil started to rebound).
We also want to make sure to highlight that you've got to monitor their Cliffs Resources (CLF) position almost on its own, since they have such a large stake in it but have been actively selling. In the past, they have sold some shares because they were bringing their portfolio percentage allocations back in line. So, this 13F is not necessarily up to date with the most recent changes to this position. And, as a matter of fact, they just filed yet another amended 13D on CLF yesterday which we'll be covering in a separate post.
We also want to note that since this 13F filing, they've also made numerous other SEC filings with regards to both current and (now) old positions. Assets from the collective long US equity, options, and note holdings were $4.8 billion last quarter and were $2.2 billion this quarter.
This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered:
- Well known gurus such as: Carl Icahn, Warren Buffett, & George Soros
- 'Tiger Cub' portfolios: Stephen Mandel's Lone Pine Capital, Andreas Halvorsen's Viking Global, Lee Ainslie's Maverick Capital, Chase Coleman's Tiger Global, Chris Shumway's Shumway Capital Partners, Touradji Capital Management (Paul Touradji), and John Griffin's Blue Ridge Capital
- Global macro giants: Bruce Kovner's Caxton Associates, Louis Bacon's Moore Capital Management, Peter Thiel's Clarium Capital, & Paul Tudor Jones' Tudor Investment Corp
- Value & Activist players like: Bill Ackman's Pershing Square, Seth Klarman's Baupost Group, John Burbank's Passport Capital, Art Samberg's Pequot Capital, & David Einhorn's Greenlight Capital
- Concentrated portfolios like: Bret Barakett's Tremblant Capital, & Timothy Barakett's Atticus Capital
- Some solid names: Paulson & Co (John Paulson), Thomas Steyer's Farallon Capital Management, and Eric Mindich's Eton Park Capital
- Newer funds on the scene: James Pallotta's Raptor Capital Management, Anand Parekh's Alyeska Investment Group, Stanley Shopkorn's Hilltop Park Fund (no 13F yet) & David Stemerman's Conatus Capital
- Troubled funds: Jeffrey Gendell's Tontine Associates
- Quant & high frequency trading funds (purely for fun/entertainment): Jim Simons' Renaissance Technologies (Rentec), Steven Cohen's SAC Capital
We cover a new hedge fund each day and you can see the complete list of hedge fund