Phil Falcone Made A Killing In Distressed Debt Last Year

philip falcone harbinger

Last year, Phil Falcone started Credit Distressed Blue Line Overseas Fund, a division of his $8 billion hedge fund, Harbinger.

The new fund’s focus is distressed debt, which did pretty well last year in general, the big winner being David Tepper.

Turns out Blue Line killed it in its first year, returning 63.9% in 2009. The assets under management are apparently now more like $650 million.

Now he’s planning on an investment in Emigrant Bancorp’s distressed debt (with a 6 1/4 coupon, maturity of 2014) to boost Blue Line’s future returns. Falcone is taking a position in the senior portion of the note at 30 cents on the dollar, which means he’s taking a long view on Emigrant – and getting a higher yield.

Basically, he’s betting that value of the bond will increase and the bank will rebound and go back to being worth like 90 cents on the dollar.

He thinks it will bring in the big return for Blue Line in 2010.

(By the way, he named the fund for the blue line between the centre line and the goal on a hockey rink – it’s his favourite sport.)

Read more at the Greenwich Time.

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