New York Pulls Out
The New York State Common Retirement Fund is pulling its entire $68 million investment in Harbinger. It asked for $27 million at the start of 2010 and the remaining $41 million in mid-September, spokesman Dennis Tompkins says. He declined to say why the fund decided to redeem.
Falcone, in an August 2009 investor conference call, pledged to reduce the amount of stock and private-equity investments in the Capital Partners fund to about 50 percent of assets, moving more into bonds, according to investors who were on the call. They say that didn't happen.
Falcone declined to comment on the matter.
One investor is taking the big bets in stride. Mark Yusko, chief investment officer at Morgan Creek Capital Management LLC in Chapel Hill, N.C, says betting lots of money on a few ventures isn't necessarily bad.
'An Outstanding Investor'
"Concentration indicates passion and conviction," Yusko says. "I can manage around concentration because I don't have all my money with him. Philip is an outstanding investor. He has the intestinal fortitude and patience to stick with an investment."
Falcone's satellite play started out as the kind of distressed-debt investment typical of Harbinger. The licenses he's using to build his network have been bouncing from one owner to the next since 2000, when Motient Corp., a company that sold package-tracking services to United Parcel Service Inc., set up a partnership with other investors called Mobile Satellite Ventures LP (MSV) to try to build a network. It sold part of its stake in the unit in October 2001 and then sought bankruptcy protection.
Apollo Global Management LLC, the private-equity firm run by Leon Black, bought a piece of an Internet software company called Rare Medium Group Inc. in 1999. Two years later, Rare Medium bought into MSV. As the Internet boom went bust, Rare Medium morphed into a satellite communications company, changing its name to SkyTerra Communications in 2003 and going on to accumulate a majority of MSV in May 2006.
Buying SkyTerra
Falcone started acquiring SkyTerra shares about the same time, according to regulatory filings. He's been on a telecom bender ever since. He says buying wireless spectrum is a better bet than buying media properties.