Falcone Says ‘No Issues’ With Harbinger Redemptions

Nov 12 2010 | 11:02am ET

Harbinger Capital Management has moved to assuage client fears following news that three major investors were pulling their money from the $9 billion firm.

Hedge fund founder Philip Falcone yesterday assured investors that Harbinger would have no difficulty meeting the redemption requests filed by the Blackstone Group, Goldman Sachs and New York State Common Retirement Fund, among others. There are “no issues,” Falcone said, and his flagship fund will not have to sell its considerable illiquid investments to meet the redemptions, the Financial Times reports.

Harbinger Capital Partners manages about $3.4 billion, and some 90% of the fund is said to be invested in wireless and telecommunications companies. It is unclear how much money clients have filed to redeem; Goldman and the New York pension have asked for a combined $161 million.

The fund is down 16% this year.

Falcone’s confidence no doubt stems in part from Harbinger’s redemption policy. Investors may withdraw only 25% of their money per quarter, limiting the amount the hedge fund has to liquidate each redemption period.

Investors have expressed concern over the flagship’s concentration of telecommunications investments as well as its performance. There have also been fears about a $113 million loan Falcone took from another Harbinger fund, which he is liquidating, to pay his personal taxes. According to the FT, Falcone has since paid that money back, earning the closing fund a substantial return.

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