By hedge fund manager standards, Harbinger Capital
Partners Phil Falcone and his wife have been pretty high
Like John Paulson, he became a billionaire several years ago
by betting early that the sub-prime mortgage market would
collapse. He has taken activist positions with a number of
well-known companies, including The New York Times.
And earlier this year, Falcone, who managed $8 billion in
his hedge funds at year-end, was celebrated for his ambitious
plan to develop 4-G technology after buying SkyTerra
We also know he owns 40 percent of the Minnesota wild hockey
team, bought the townhouse once owned by former Penthouse
Magazine publisher Bob Guccione, and, along with his wife, were
sued for sexual harassment by a former employee.
However, so far he has been able to keep one curious
endeavor pretty quiet Harbinger Group. What is Harbinger
Group? It is a shell corporation that is traded on the New York
Stock Exchange under the ticker HRG. Its chairman and CEO is
Falcone, who gained control of the company in June 2009 after
buying 52 percent of the shares. In other words, anyone
including non-accredited investors can invest with
Harbinger Group actually used to operate under the name
Zapata Corp., which was controlled by one-time investor and
corporate raider Malcolm Glazer, who owns the Tampa Bay
Buccaneers in the National football League and the celebrated
British soccer team, Manchester United Football Club.
The company was reincorporated as Harbinger Group in
December 2009. The Rochester, N.Y. holding company currently
has about $151.9 million in cash and cash equivalents. It owns
about 98 percent of Zap.Com Corp., a Bulletin Board traded
company whose stock is priced at $0.07 but rarely trades.
According to its most recent 10-K filing, Harbinger
Groups principal focus is to acquire other businesses. It
said targets could be in any industry, but most likely in the
U.S., although it did not rule out non-U.S. companies.
This is pretty shrewd. Harbinger Group provides Falcone
additional access to capital. Harbinger Group says in public
documents it plans to pay for the acquisitions using its cash,
debt or equity securities or a combination. It also said it may
raise additional capital through the issuance of equity or debt
securities, including preferred stock. We believe that
our status as a public entity and potential access to the
public equity markets may give us a competitive advantage over
privately-held entities with a similar business objective to
acquire certain target businesses on favorable terms, it
says in the filing.