Harbinger Capital Rebalances Cliffs Natural Resources Stake

Harbinger Capital Partners has filed numerous amended 13D's on Cliffs Natural Resources (CLF) over the past few months, as we've noted it is selling down some of its position to bring the percentage allocation in line with its portfolio's goals.

We're here to update the most recent filing which details activity on April 9th, 2009. The hedge fund ran by Philip Falcone has now disclosed a 7.29% ownership stake in CLF with 8,273,276 shares owned on aggregate by all its reporting parties. So, Harbinger has been selling some more shares, as it had previously disclosed owning 9,163,764 shares in its 13F filing. Again, make note that Harbinger itself has come out and said it is selling due to portfolio metrics that it needs to bring back in line (percentage weightings) and that it continues to pursue CLF as an investment.

So, we'll monitor these amended filings and keep everyone up to date on the latest developments. You can also view the rest of Harbinger's portfolio holdings. Harbinger's activist stake in CLF has been an up and down soap opera, to say the least. Originally, Cliffs was to buy/merge with Alpha Natural Resources (ANR) and Harbinger tried to oppose this move, as it had other plans for Cliffs. At one point, Harbinger owned nearly 15% of CLF.

Harbinger Capital Partners is 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, he's been focused on equities it seems, but Harbinger's new fund will redirect his focus back to his roots.

At one point during 2008, Harbinger was up as much as 42%. But, its fortunes turned as its 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 (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 its way, noting that the firm had reduced exposure to some of its higher volatility holdings (both on the long and short side).

In Harbinger's latest letter to investors, the fund 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, it is sticking with its major stakes in Calpine (CPN) and the New York Times (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). 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.

Taken from Google Finance:

Cliffs Natural Resources (formerly known as Cleveland Cliffs) is "an international mining and natural resources company. The Company is a producer of iron ore pellets in North America, a supplier of direct-shipping lump and fines iron ore out of Australia, and a producer of metallurgical coal. Cliffs is organized according to product category and geographic location: North American Iron Ore, North American Coal, Asia Pacific Iron Ore, Asia Pacific Coal and Latin American Iron Ore."

Comments

[johnmorrison9:]

Anything these guys touched has turned to mud for me.
I have MIR and some other holdings, and I think they have been renting shares to shorters, like Warren Buttman.
As they have to close these agreements some of the holdings should keep climbing.
What is with the NYT move? I think the grey lady is dead meat.

Apr 16 11:14 AM