Harbinger Plans New Distressed Debt Hedge Fund

Mar 25 2009 | 2:04am ET

Philip Falcone is going back to his roots with a new distressed credit hedge fund.

The Harbinger Capital Partners chief is launching the Credit Distressed Blue Line Fund, the firm wrote to investors last week. The new fund will use a strategy similar to that employed by Harbinger’s flagship when it launched in 2001, investing in distressed loans and bonds while shorting higher-rated debt.

Harbinger Capital Partners I returned an average of 22% annually from inception until March 2004, when the distressed credit cycle ended and Harbinger refashioned itself into an equities and activist fund. That fund, which now manages $5 billion, was forced to restrict redemptions last year after as it posted losses of 28%. All told, redemptions and investment losses cost the firm more than 70% of its assets; it dropped from $26 billion to just $7 billion.

Harbinger said it expects to cap the new fund at between $500 million and $1 billion. And unlike its flagship, when this credit crisis ends, the firm plans to close the fund.

Falcone is also moving what’s left of Harbinger I back into distressed debt. The flagship will make the same investments as Blue Line, although it will continue to invest in stocks and private equity, as well.


In Depth

Star Fund Managers Battered By Rocky Ride In Yields, Currencies

May 28 2015 | 6:05am ET

Some of the biggest names in the investment world have been whipsawed by the recent...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

The Road To Tax Alpha

May 28 2015 | 5:36am ET

Tax-related alerts are increasingly helping investment managers harvest tax alpha...

 

Sponsored Content

Editor's Note