Vietnam Venture
Phil Falcone’s Harbinger Capital Partners 2008 side-pocket has two remaining investments: a Vietnamese casino, Grand Ho Tram Strip, in which he invested more than $450 million, and a minority stake in a telecommunications company previously known as LightSquared into which he poured at least $2 billion. (LightSquared filed for bankruptcy in 2012 and has since reorganized as Ligado Networks.) Ten years later, Falcone is still trying to wring money from the investments. He has been pushing Vietnam to change its laws so citizens can gamble in casinos, and he sued Apollo Global Management, alleging it fraudulently induced Harbinger to invest in LightSquared. The suit is pending.
Soy Vey
Rob Ellis, who runs commodities fund Ridgefield Capital Asset Management and once worked for famed investor Julian Robertson, still has a side-pocket that includes two Brazilian holdings, an ethanol plant and a soybean-crushing operation. After holding the investments for a decade, Ridgefield has yet to sell them as Brazil’s economy has tanked over the past five years.
Energy World
Bennelong Asset Management has a side-pocket with an investment in a public company listed in Australia called Energy World Corp. yet the firm hasn’t sold its position. The company has lost about three-quarters of its market value since mid-September 2008.
Private Equity
Thane Ritchie was already facing trouble even before the financial crisis hit. The Geneva, Illinois-based hedge fund segregated its private-equity holdings into a side-pocket in 2005 after big losses in natural gas caused clients to flee. More than 10 years on, the firm has yet to sell all the holdings. Ritchie Capital didn’t reply to a phone message.
Investors Revolt
In October 2008, after incurring heavy losses, Highland Capital Management told investors it would wind down its Crusader and Credit Strategies funds. Both invested mainly in high-yield loans. The plan was to exit the investments over a three-year period. In 2016, the unwind still not complete, a group of frustrated Crusader investors sued the firm and later replaced it with restructuring specialists Alvarez & Marsal, which is still unloading the assets. Investors in the credit strategies fund had their own triumph, winning confirmation of an arbitration award in 2016 over the sale of a position at a below-market price. Highland later agreed to buy back the rest of the assets in the side-pocket, nullifying the lawsuit.
“The funds’ investors were involved in forming and approving the respective plans, and while this approach came with complexity and challenges, it ultimately delivered significantly more value for investors than a liquidation at the market trough,” the firm said in a statement.
This article was provided by Bloomberg News.