falcone still buying fmg

The Australian, 11/3/09

File this under Falcone

A CASCADE of substantial shareholder notices forced by discreet structural change within New York's Harbinger Capital has provided further insight into the depth of the hedge fund's engagement with the Australian equities market.

Harbinger's hedge fund is run by Philip A. Falcone and he has become, I will admit, something of a personal fascination since he stepped up to the plate for Fortescue Metals back in 2004.

Five years later, Harbinger has shareholdings of influence in iron ore hopeful Murchison Metals, Compass Resources, Moly Mines and Andrew Forrest's new nickel plaything, Poseidon Nickel. Along the way, Harbinger has also built a 20.3 per cent stake in homewares group Breville and a 17 per cent stake in something called Island Sky Australia, which apparently owns technology to turn air into water.

Interestingly, yesterday's filings show he has been a net seller of Murchison over recent months, but a net buyer of Fortescue, adding another 13 million or so shares to his pile, taking Harbinger's holding to 16 per cent.

That position is going to be reduced to something nearer 6 per cent when and if the federal Government approves Fortescue's plans for a strategic alliance with China's Hunan Valin.

Falcone agreed to sell down his Fortescue stake as part of a deal that will see Hunan Valin move to more than 18 per cent of Forrest's company.

Those who have met Falcone recently say he is undaunted by the current state of resources markets and remains a true believer in the logic of the super-demand cycle.

Certainly, yesterday's filings would seem to support that view of Falcone. It is clear, for example, that he has been an active buyer right through Fortescue's Hunan Valin process.

Since September last year, Harbinger has spent nearly $50 million adding to its Fortescue position. Of that, Harbinger spent $27 million buying 10 million shares in the three days after the selldown was announced.