Eye on Leadership: Phil Falcone

We wanted to highlight Phil Faclone’s testimony in front of Congress yesterday. While Keith and I may be biased since we come from small town, blue collar roots and are former college hockey players (sorry Phil we had a winning record against Harvard when we played at Yale), his is a track record that is difficult to disparage. Phil has built one of the most impressive hedge funds in history.

The path from Chisholm, Minnesota was a not easy one, no doubt, and as Phil outlines below, he has suffered his share of bumps along the way. But at the end of the day, his hard work, integrity, and a process have led him to incredible success. We also have the pleasure of knowing a few of Phil’s colleagues and it is pretty obvious that success hasn’t changed the man. As they say, you can take the man out of Chisholm, but you can’t take the Chisholm out the man. Indeed.

Daryl G. Jones
Managing Director

“I would like to take just a moment to tell you a bit about myself. I currently reside in
New York City with my wife of 11 years and two children. By way of background, I was
born in Chisholm, Minnesota, population 5,000, on the Iron Range in Northern
Minnesota. I was the youngest of nine kids who grew up in a three-bedroom home in a
working class neighborhood. My father was a utility superintendent and never made
more than $14,000 per year, while my mother worked in the local shirt factory. I take
great pride in my upbringing, and it is important for the Committee and the public to
know that not everyone who runs a hedge fund was born on 5th Avenue - that is the
beauty of America.

I attended Chisholm Senior High and went on to Harvard University, where I received an
A.B. in Economics in 1984. After college, I pursued my first love, hockey, although an
injury cut short a professional hockey career abroad. I then moved to New York and
began working as a high-yield bond trader at Kidder, Peabody. A few years later, at the
age of 28, I teamed up with a friend to complete a leveraged buyout of a small company
based in Newark, New Jersey. Unfortunately, the recession in the early 1990's made that
venture quite difficult. As a result, by 1994, I was so 'financially challenged' that the
power in my apartment was shut off because I could not afford to pay the electric bill.
That experience, as painful as it was, stayed with me over the years and taught me several
valuable lessons that have had a profound impact upon my success as a hedge fund
manager.


Through hard work, and perhaps a little bit of luck, Harbinger Capital Partners has been
able to generate substantial returns for our investors since 2001. Our investment
philosophy is very simple; we study, often for months, the fundamentals of companies to
identify those that are undervalued or overvalued, and we act decisively when
opportunities present themselves. We are not momentum traders, nor are we day traders;
we are investors. It is not magic. My analysts perform thorough due diligence, rather
than relying on ratings agencies or other research reports -- like many of the reports that
improperly valued securitized mortgage products over the past few years.”

Philip A. Falcone
Senior Managing Director and co-founder of Harbinger Capital Partners
Testimony to Congress
November 13, 2008

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