I haven't talked him in a long time but even I am surprised by the boldness of it all. Phil Falcone, the contrarian investor whom I had likened to Wilbur Ross, is turning into someone else. In bold move that could make or break his reputation, Phil Falcone is betting as much as 40% of his partners' funds in LightSquared, a company trying to provide 4G wireless communications throughout America. The goal is to provide wholesale wireless services through a network of terrestial towers and orbiting satellites. Reuters has a lengthy story on Phil Falcone:
Harbinger's two main investment funds are the owners of LightSquared, an upstart Reston, Virginia-based telecom company that plans to use two orbiting satellites to bring high-speed Internet service to some 260 million in the U.S. by 2015.
Roughly $3 billion or 40 percent of Harbinger's assets are tied-up in LightSquared, say people familiar with the funds. Formerly known as SkyTerra Communications, the telecom company is the hedge fund's single largest and most concentrated bet.
In some respects, Falcone's LightSquared gambit is one of the riskiest hedge fund trades ever. And that's saying a lot for an industry where brash managers are famous for making outsized bets on everything from oil to gold to natural gas to lumber.
The difference is few hedge funds have ever staked so much on the success of a single business -- especially one a manager is trying to build himself largely from scratch in the protean technology field.
Harbinger's gradual metamorphosis from a fund that specialized in distressed debt investing to a mobile telecom incubator is a stark example of how some big hedge funds are looking more and more like private equity firms or even venture capital shops.
Tags: Phil Falcone