(Bloomberg News) Philip Falcone left his hometown of Chisholm in northern Minnesota's rusting Iron Range in 1980 in the passenger seat of a 12-year-old Mercury Cougar that cost $150.

Neil Sheehy, from nearby International Falls, had offered Falcone a ride to Harvard University, which had recruited both of them to play hockey for the Crimson. The car stalled in front of Falcone's house, and Sheehy had to restart it on a hill while Falcone's mother and one of his sisters sobbed their goodbyes.

"It'll be all right, Mrs. Falcone; it'll be all right," Sheehy recalls telling Caroline Falcone as the car chugged to life and headed east.

Phil was the youngest of nine children and had grown up poor. His mother worked in a shirt factory, and his father never made more than $14,000 a year as a superintendent at a local utility.

Falcone rode to Cambridge, Massachusetts, with his feet on the dashboard because Sheehy had packed a skate-sharpening machine on the floor of the front seat, Bloomberg Markets magazine reports in its November issue. Halfway there, the roof liner came loose and showered the young men with fiberglass insulation that stuck to them as they sweated in the late summer heat.

Now, when he goes home to Minnesota, Falcone can fly in his own jet, on which the linens are made by the luxury Italian textile firm Frette, according to a person who's flown with him. He and his wife, Lisa Maria, are renovating a 27-room mansion in New York for which they paid $49 million and which was once owned by Bob Guccione, the publisher of Penthouse magazine.

The household includes a pet potbellied pig named Wilbur.

Big Mortgage Bet

Falcone, 48, is the founder of New York-based Harbinger Capital Partners. In 2008, Harbinger was one of the world's most successful hedge funds, with assets of $26 billion. Falcone succeeded by coaxing value out of stocks and bonds of struggling companies. Beginning in late 2006, Falcone bet millions that securities cobbled together from subprime mortgages would collapse.

When they did, in 2007, Harbinger made $11 billion, driving a 116 percent return for its flagship, Harbinger Capital Partners Fund.