In the purest definition of nomenclature irony, Harbinger has now become a harbinger of what is in store for the whole hedge fund industry as a whole. And for those who may have missed yesterday's news, Phil Falcone's multi-billion hedge fund is now essentially finished. As William Cowan said yesterday, "you may be seeing right before your eyes the unwinding of this hedge fund" and he proceeds to compare Harbinger to the two Bear Stearns hedge funds whose unwind was the key catalyst to the end of the credit bubble. Goldman's redemption of its $120 million interest in Falcone is merely the start of the avalanche for the once perceived as flawless Falcone, and now has become the butt of jokes in the hedge fund industry. Today we read that both Blackstone and the NY Pension fund are pulling their money as well, which means the liquidation run has commenced. Yet what is happening with Harbinger is just an indication of what will happen to all hedge funds at the end of the year who are underperforming the S&P, or heaven forbid, negative for the year. After all, the news that Falcone was "misappropriating" locked up funds was public in March - Goldman's pull using that as an excuse is merely a strawman to get out of losing positions. Which is why the beta leveraged ramp is about to hit desperation levels, as not one fund can create alpha. In other words, if something happens to Apple in the next 5 weeks, the next leg of the depression is about to take off.
But back to Harbinger, where in FinAlternatives we read that Goldman's pull out was just the start:
Goldman Sachs and the Blackstone Group may redeem their investments in Harbinger Capital Partners’ flagship after the hedge fund’s founder said he borrowed more than $100 million from another fund to pay his taxes.
Both firms filed redemption notices with the New York-based hedge fund, which has about $9 billion in assets under management. The New York State Common Retirement Fund also plans to pull $41 million from the Harbinger Capital Partners Fund, which is down 15% this year.
And William Cowan's take on the imminent unwind of what as recently as 4 years ago was seen as the Paulson and Co. of that time.
Oh well, the biggest winner in all of this is Lisa Falcone, who, as she herself said previously, "Eighteen years and no prenup means family office." The question of what happens to the spoils as the office is liquidated is now a very unpleasant one for Phil.
Here are Falcone's top stocks (not that many - the fund is mostly involved in bonds and a crazy plan to take over the world via some zany wireless company scheme) which will soon be force liquidated. Position appropriately, especially since many of these are very illiquid.