Pop quiz: you’re a hedge fund manager named Phil Falcone. Your relationship with your investors has been on the downhill since you loaned yourself $113 million from a gated fund in order to pay personal taxes you didn’t set aside enough cash to cover. You apologized after the fact but apparently that wasn’t good enough, because they’d already moved on to freaking out over your decision to tie up much of their capital in a side project building walkie-talkies that might not pan out on account of the growing opinion that it might kill a few people. A bunch of them asked for their money back and although you weren’t really in a place to be offering any cash refunds, in July, you came up with what you thought was a pretty genius alternative plan to offer them, in place of actual money, illiquid LightSquared equity. Great idea, right? You thought so, too, but noooooo, they didn’t like that.
At this juncture, most money managers would’ve said, you don’t like that? Well door number two is the option to go fuck yourself. But not you. Even with everything you’ve got going on, from your pissy investors to getting killed on the walkie-talkies, to the boss riding you, to a prima donna named Wilbur who doesn’t let a day go by without not only letting you know he’s got options but flaunting them in your face, you went back to the drawing board. And there, you came up with something even better.
Harbinger Capital partners LLC, the $6 billion hedge fund run by Philip Falcone, told clients who’ve been unable to withdraw all their money for almost three years they can sell their stakes to a third party, according to a letter obtained by Bloomberg News. “We are exploring several options in an attempt to accommodate investors,” Falcone said in the letter, dated yesterday. Harbinger, based in New York, said it would put investors in contact with unnamed “potential purchasers” who have approached the firm. It also will allow investors to strike their own deals with other bidders they may find. Transactions are subject to final approval by Harbinger, the firm said.
If anyone thinks this whole “we know a guy” thing sounds like just a bunch a smoke, think again. We have it on good authority that Phil has indeed has been making the weekend rounds at the Tri-state area’s best garage sales and flea markets for guys that might be in the market for quirky little numbers. If you think you can do better unloading this stuff yourself, as stated in the letter, be his guest.
Harbinger to Allow investors to Sell Stakes in Locked-up Funds [Bloomberg Brief]
Great news everyone, those shares you don't want are SO illiquid, we'll be resorting to accounting parlor tricks to avoid a nightmare-beyond-comprehension markdown scenario. And if you don't like it, so help me God I will zap you with all the sky lasers I, we, own.
Any chance we can get in on this too?
-Paulson Advantage Plus shareholders
Sometimes he reminds me of Brad Pitt's character from Legends of the Fall.
I think I'd still take door number two
Lightsquared & Wollensky
I think both doors lead to the same place.
The bank debt is trading in the 50's. The Lsquared equity has no value currently. The bids on an LP interest are going to be horrible. 10c at best for Lsquared and a 10-15% haircut on the rest. Good luck with all that. It'll be a ~50% haircut off the last NAV.
Ditto.
- BAC shareholder
I'd pick Lisa's back door over the other options.
That's exactly what I was thinking, only while reading the hooters article from this morning…
Trying to figure out this problem just put on my desk:
Harbinger Fund Value = sqrt(Lightsquared) – Light
- UBS Quant
Selling your stake in a struggling fund invested solely in illiquid shares > selling the illiquid shares you received as redemption
I could not have written this better. Brilliant.
-W Shakespeare
Worst comment ever.
I got an idea, sell it to Spri…. oh wait, they started to suck wind too the day you announced the 4G deal with them. How about Hewlett Packard, then? I heard they are looking for a reason to exist.
Wilbur & Wollensky
Pssst….. psssst….. my rich Uncle Pennybags will exchange the shares for you for cash that can be used to buy real estate, railroads and utilities. If you exchange a lot of shares, you could get enough cash to put up houses and hotels to rent– that is, if you collect all the title deeds of the same color.
A Lisa Falcone original What??
Try running another Vanity Fair piece. Should be good to attract a couple more yards.
I only invested to get closer to Wilbur. Please take me back, Porky! Please!!
The good news is that she won't get nothing as settlement. Her lump sum and alimony will be paid out in Light^2 shares.
Any chance you can introduce me to your uncle?
- Wilbur
Is that Lightsquared or LightSquared, if it is the latter; you meet our criteria for cutting edge new economy loan guarantees.
My Dear
Greetings,I know this mail may come to you as a surprise,I am Wilbur Falcone, the solicitor/counsel to the late Harbinger Fund who was then before its death, the President/Head of State of the Federal Republic of LightSquared.
I am conferred in that working with a American National only for the American to take advantage of the situation, there by setting her up in New York where she went to claim his husbands deposit on taxes. You can verify this fact your self through the IRS over an alleged Phil Falcone trying to pull out the sum of (US$113M) One-Hundrend and Thirty Million Dollars from the Fund.
At this point in time, we looking for a reputable gentleman who will be of great assistance to the family and somebody who can take over the sum of 27MM (Twenty Seven Million Shares of LightSquared)which is presently deposited in a place called limbo, for investment.
If you will be interested to act upon on receipt of this mail, please do contact me on the enlisted contact adress and more so be kind to issue me with your current Telephone Number for prompt conversation.
Regards,
Wilbur P. Falcone
How long until one of the investors actually files a lawsuit and demands the D.A. charges Phillip for thievery?
So can you legitimately say you run a $6B hedge fund if you are gated? Let's be honest, if the gate was lifted, this thing would be a $10 million family office.
I can bench 350lbs.
I'd go for the fourth hole….
- Giggity Giggity
@Guest, $10m family office is a bit ambitious don't you think…?
Pinchin your own cheek won´t make things better Phil…
But at least 6/30 is a good record date to buy off of?