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From Bloomberg: Falcone's Harbinger Capital Faces Potential $200 Million Loss on Navistar

Harbinger Capital Partners, the New York-based hedge-fund firm run by Philip Falcone, has almost $200 million in potential losses on bets that Navistar International Corp.’s stock price would rise.

Harbinger bought swap contracts on 4.55 million shares of Navistar that would gain if the truck maker’s shares rose above certain prices, according to a Nov. 14 regulatory filing. Warrenville, Illinois-based Navistar has dropped 63 percent in New York trading this year to $19.86, about two-thirds below the price where the trades are profitable for Harbinger.


Falcone, 46, who oversees $20 billion in assets, lost about 13 percent this year through October after being up 42 percent in the first half of the year, investors said earlier this month. The unrealized Navistar losses could be reversed if Navistar’s stock rebounds. That’s not likely any time soon, said Walter Liptak, an analyst at Barrington Research Associates in Chicago...

... The swaps, provided by Deutsche Bank AG and Monecor Ltd., a London-based company that sells derivatives, permit Harbinger funds to reap any gains in Navistar shares greater than prices specified in the contracts. The funds must pay Deutsche Bank and Monecor should Navistar shares decline below the preset prices, which range from $48.21 to $69.95 a share.

This is ironic, being that I took my first short positions in Navistar in the $60's. I would have gladly sold long exposure to Harbinger:-) The blog research came out on August 21st, 2008 when Navistar closed at exactly $56, see The first forensic analysis of the next step in my investment thesis - Navistar. I hope my subcsribers realize that by following the subscription research, you have outperformed practically every hedge fund available, and you have paid a whole lot less than 2 & 20. I expect you guys to buy me a juicy lobster and some fine wine at the next BoomBustBlog get together. We will have it in Tribeca this weekend and I will post the details tonight (hopefully).


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