market folly

Harbinger Capital Partners has filed numerous amended 13D's on Cliffs Natural Resources (CLF) over the past few months, as we've noted they are selling down some of their position to bring the percentage allocation in line with their portfolio's goals. We're here to update the most recent filing which details activity on April 9th, 2009. The hedge fund ran by Philip Falcone has now disclosed a 7.29% ownership stake in CLF with 8,273,276 shares owned on aggregate by all their reporting parties. So, they have been selling some more shares, as they had previously disclosed owning 9,163,764 shares in their 13F filing. Again, make note that Harbinger themselves have come out and said they are selling due to portfolio metrics they need to bring back in line (percentage weightings) and continue to pursue CLF as an investment.

So, we'll monitor these amended filings and keep everyone up to date on the latest developments. You can also view the rest of Harbinger's portfolio holdings. Harbinger's activist stake in CLF has been an up and down soap opera, to say the least. Originally, Cliffs was to buy/merge with Alpha Natural Resources (ANR) and Harbinger tried to oppose this move, as they had other plans for Cliffs. At one point, Harbinger owned nearly 15% of CLF.

Harbinger Capital Partners is a $13 Billion firm ran by Philip Falcone. Harbinger was started in 2000 with seed capital from Harbert Management ($25 million). And, just recently, we've learned that Falcone is buying out Harbert to be the owner of the firm. Falcone made a name for himself in 2007 when he started shorting subprime mortgages and returned 117%. He focuses on intensive credit research, on bankruptcies and proxy fights, and was previously involved with high yield debt trading. Lately, he's been focused on equities it seems, but Harbinger's new fund will redirect his focus back to his roots.

At one point during 2008, they were up as much as 42%. But, their fortunes turned as their Offshore fund finished -22.7% for the year as noted in our 2008 hedge fund performances list. One position that treated them nicely was their short of Wachovia (WB), which we detailed here. Back in September, in a letter to investors, Falcone had assured investors that Harbinger was adequately positioned to stave off any further volatility the markets may bring their way, noting that the firm had reduced exposure to some of their higher volatility holdings (both on the long and short side).

In Harbinger's latest letter to investors, they noted that they had covered their shorts on metal producers and financials and also got out of some credit default swaps. While they have been winding down equity positions, they are sticking with their major stakes in Calpine (CPN) and the New York Times (NYT). Falcone also mentioned that they had added trade claims on an energy company and credit default swaps on various consumer plays (retailers, products, & services). Harbinger was +0.74% for March and sits at +4.06% year to date for 2009, as noted in our hedge fund March performance post. Lastly, Philip Falcone was recently unveiled as a part of Forbes' billionaire list.

Taken from Google Finance,

Cliffs Natural Resources (formerly known as Cleveland Cliffs) is "an international mining and natural resources company. The Company is a producer of iron ore pellets in North America, a supplier of direct-shipping lump and fines iron ore out of Australia, and a producer of metallurgical coal. Cliffs is organized according to product category and geographic location: North American Iron Ore, North American Coal, Asia Pacific Iron Ore, Asia Pacific Coal and Latin American Iron Ore."