Goldman Sachs redeems funds from Philip Falcone
Philip Falcone was among the winners in the financial crisis, as he bet big against sub-prime bonds and the like. But he stumbled badly after that. And investors are now yanking their investments. Goldman Sachs (NYSE: GS) has joined the disgruntled list in a big way. Bloomberg reports the bank plans to redeem its entire $120 million investment from Philip Falcone's main hedge fund Harbinger Capital Partners Fund after returns lagged and Falcone borrowed $113 million from one of his smaller funds, one that conveniently had suspended redemptions from investors.
Falcone "took the loan from the Harbinger Capital Partners Special Situations Fund in October 2009 to pay personal taxes," notes Bloomberg. Investors in Harbinger's main fund are limited to redemptions of 25 percent per quarter, so that a full redemption for Goldman will take it into January 2012.
It's been a rough road for Falcone no doubt, a real roller coaster. So where does redemption come from? Some think it will come from his LightSquared venture, which we've written about on occassion. While some call it foolish, he's convinced it will return him to glory. The new network will be powered by satellites and cell towers and cover the entire nation. LightSquared intends to pay Nokia Siemens Networks $7 billion to build the network over the next eight years. This is his most ambitious bet yet, a massive reputational doubling down.
- here's the Bloomberg article