Harbinger Capital Suspends Redemptions In Credit Distressed BlueLine Fund

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For about a year now, hedge fund manager Phil Falcone's relationship with his investors has been a bit rocky. While many expressed displeasure at his decision to tie up a good chunk of money in a wireless bet that may or may not pan out, what really set a lot of people off was Falcone's decision, last November, to loan himself $113 million from a fund in which redemptions has been suspended, in order to pay personal taxes he hadn't set aside enough cash to cover. Since then, Phil has not only paid the $113 million back, but 1) proved he learned his lesson re: borrowing money from humorless clients (in July he failed to pay $201,101 in property taxes, which he could have loaned himself from you know who but didn't) and 2) offered investors interested in redeeming the opportunity to receive illiquid shares of his new company, or to sell their stakes on Craigslist. All of which is to say, he's grown a lot in the last year. BlueLine fund investors, who were told in Harbinger's most recent letter that their redemptions have been suspended, should keep that in mind.

Sayeth Phil:

"Blue Line was launched in April 2009 with the goal of achieving superior, absolute returns utilizing a fundamental,
bottom-up investment philosophy. Through September 30, 2011, our year-to-date performance for the Onshore Fund and the Offshore Fund is 11.61% and 11.38%, respectively, bringing our cumulative performance to 106.44% and 112.94%, respectively."

[...]

"As you are aware from the Fund’s offering memorandum, the Fund is designed to begin winding up on April 1, 2012. In anticipation of such wind-up, to allow for a prudent disposition of assets in a manner that we believe allows us to best capitalize on the expected value of these assets and in order to protect the interests of all current investors in the Fund, we have determined to suspend voluntary redemptions effective December 30, 2011 (for the Offshore Fund, such suspension was approved by its Board of Directors)."

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