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Is Phil Falcone's Mega Bet On SkyTerra Going To Be His Last?
Phil Falcone, who rode the leverage wave into prosperity has fallen on hard times: according to a recent HSBC report, his fund was down 10.7% YTD, which has forced many people to reevaluate whether his "strategy" was anything more than gobbling up second liens and hoping for a cheap flip or for profitable debt-for-equity conversions. Now that the economy has moved back into a depression, his recent results may be far more indicative of his endogenous alpha generation "ability" than riding the levered beta wave of 2005-2007. Yet that did not stop him from pocketing $825 million in 2009, making him the 10th best paid manager according to Absolute Return + Alpha. What is even more troublesome for LPs is his latest megabet on SkyTerra Communications, now known as LightSquared. As Matt Goldstein at Reuters reports, "roughly $3 billion or 40 percent of Harbinger’s assets are tied-up in
LightSquared, say people familiar with the funds. Formerly known as
SkyTerra Communications, the telecom company is the hedge fund’s single
largest and most concentrated bet." While such a concentrated bet is appropriate for a distressed, event-driven fund, many are grumbling that should this latest venture prove as "successful" as his other recent ones, then Harbinger may soon become a footnote in the rich tapestry of blown up hedge funds. "We are being paid to be more skeptical these days and we are quite
frankly concerned by what he seems to be doing,” said a representative
for an institutional investor, as Goldstein reports. Yet having amassed a multi-billion personal empire that also includes Bob Guccione's former house on 5th Avenue, we somehow think that Phil will be good no matter how Harbinger's LPs end up doing.
For much more on Falcone latest, and hopefully not last, massive gamble, here it the full report by Reuters' Matt Goldstein and Svea Herbst-Bayliss (link to article here)
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Someone should order them to stop exploding.
http://www.youtube.com/watch?v=KQYqsl4uwEo
Dun worry...how else do you think Steve Jobs is going to fix AT&T's network? They are going to start their own.
A 4G network for all? That is his big bet? He is toast.
OPM? Bet it all on black,bitchez!
I conducted extensive due diligence on Phil and his team. This hair-brained trade requires a minimum of $4 to $6 billion in capex to get off the ground, and first trials are middle of next year at the earliest. This is 25% of the flagship fund. They are convinced this is the next mortgage short, multi-bagger trade. Um, sorry, you guys are distressed investors, not venture capitalists. I'll look elsewhere...
I agree. And I will go further: he started as a great trader of distressed paper. He then convinced himself he was a distress investor - he got lucky/smart doing this, mainly by catching the cycle just right.
Now he fancies himself a venture capitalist. This is the end of the line for him because even a brilliant guy like Falcone eventually tries to go beyond his admittedly formidable skill set and blows up in the process. I wonder how much he is trying to outdo Harbert - his first backers and successful VCs in their own right.
I'll beat Weasely Phil to the roulette wheel, lettin it all ride on '5G for all'!
Sure, people soon will only be eating due to measely food bank handouts, but dammit they will still have their 5G Iphone for their nights under a bridge!
Why does he care? He'll retire and spend time figuring out how to spend his billions. Hopefully someone is sharpening up the guillotine for guys like this.
25% of the fund is Phil, and it's about 80% of his liquid net worth. So, whatever else his failings may be, his skin in the game...
severe road rash imminent.
Now don't you think that would be in the article Apocalicious?
No, because that reporter doesn't have the transparency, access, and level of detail I have.
All central banks of the world are racing to the bottom to devalue their currency. The question is, could it be possible the currency can be destroyed in this process?
I have been going out more, to shops and stuff trying to talk with common folk about social/economic issues. It is interesting to hear perspectives on economics from folks that don't look at charts all day or read REAL economic news sites like ZERO HEDGE.
They are all preparing for a devalued dollar and possibly run-away inflation and believe controlled Deflation is not a possible outcome. Interesting...
Basically we can see an overall trend of a total loss of faith in the government. That typically has been the perfect storm for Run-Away inflation.
The GOP is now not discussing the debt or deficits they are talking about more tax cuts to the wealthy and focusing on dumb social issues like the Mosque while ignoring Life/Death issues.
Is it possible they could be correct? The math screams deflation and is much needed to correct imbalances, but is it possible they might be correct?
All I know is that Alan Greenspan, once understood sound economics. Once he got to the FED he became a political hack and ignored warnings of Ron Paul and others what the outcome would be for his wrecklessness.
I don't know if anyone caught this or not. After the crash in 2008, Greenspan was interviewed on Fox business where he basically admitted the FED was unnecessary and that without a "check" on monetary policy the end result would be run-away inflation that would destroy the currency. Is it possible he is correct? After all he was the most powerful man in the world for 20 years and knows all the games that have been played by the world's central banks and still probably has full knowledge of what Bernanke is continuing now
I really do agree full-heartily with the math and agree a CRUSHING DEFLATIONARY Crash is in the cards. However, something inside me suggest that my USDs will not be safe. Gold is telling us something, whether or not you think it is useful or not. Is it wrong to think the dollar will be destroyed?
Here is the Greenspan clip.
http://www.youtube.com/watch?v=z5MVsm2cpc0
I so want to see Cerberus go tits up!
Not an impossibility. Given how bad they were in 08 and 09, and how difficult they are to work with regarding transparency, investor communications/outreach...
Yes. (At least, his last bet of any significance)
Why not just go to the blackjack table and save the time and transaction costs?
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