Harbinger Capital: Ashland Stake and Performance Update

In a recent 13G filed with the SEC, $13.8 billion hedge fund Harbinger Capital, ran by Philip Falcone, has disclosed a 6% ownership stake in Ashland (ASH). They now own 3,789,266 shares. Curiously enough, in their last 13F filing disclosing their portfolio holdings as of June 30, 2008, Harbinger held 5,871,426 shares of ASH. A 13G filing signifies a passive investment in a company. But, as we are all too familiar with Harbinger's activist exploits in the coal/steel arena, there's always the option they could shift this position from a passive investment, to an activist one (which would require a 13D filing).

Taken from Google Finance:

Ashland Inc. is a global diversified chemical company that consists of four wholly owned divisions: Ashland Performance Materials, Ashland Distribution, Valvoline and Ashland Water Technologies.

Now, turning to Harbinger's recent performance, we see that they've had a pretty rough second half of the year. They were -12% for the month of September as of September 19th. This brings their year-to-date performance to 2%. So, the pain continues for Harbinger. I previously wrote about how many hedge funds were having a rough July. And, it looks like August and September were no different. The market has been a rollercoaster this year and I don't think anyone exemplifies this more than Harbinger.

Earlier in the year, they were up as much as 42%. But, with a tumultuous turn of events, they now find themselves barely above break-even for the year. Don't get me wrong, they are still outperforming the indexes; but, it is by a much slimmer margin than it was just a few months prior. How's that for volatility?

In his letter to investors, Falcone had assured investors that they are 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). Additionally, Falcone mentioned that they were not employing leverage anymore; at least as of August. His portfolio had been 52% long and 48% short. Some of Harbinger's largest positions include Calpine (CPN), Freeport McMoran (FCX), and Cleveland Cliffs (CLF). All three have seen massive sell-offs as of late, which would easily explain Harbinger's poor recent performance.

If you missed my earlier post, I've covered Harbinger's recent SEC filings here. Additionally, if you want to know about the man behind Harbinger Capital, you can read about Philip Falcone here.

Source:

• Bloomberg

Comments

[tinman:]

CLF projected earnings of $40/sh over next 3 years, closed today around $65 (down another $3 with the DJI rising nearly 300). It's forward PE is around 4, reported blowout results July 31, and earnings estimates are being raised sharply.

Does anyone else smell a rat? A short-selling rat?

2008 Sep 25 04:52 PM

[tinman:]

Follow up: I see CLF closed under $40 yesterday amid the wreckage. That puts it's fwd PE under 3. WTF?

2008 Oct 03 11:55 AM

[Market Folly:]

other hedge funds are "front running" each other's top positions since they know they will have to sell them to free up cash for redemptions/de-leverag... etc etc.

fundamentals got thrown out of the window a long time ago. market is driven by hedge funds right now who are getting absolutely killed/killing each other. and, if their september performance figures are any indicator, the selling won't stop anytime soon: www.marketfolly.com/20...

2008 Oct 03 07:16 PM

[tinman:]

How about now? Are we there yet?

2008 Dec 29 11:33 AM