Leucadia National Corp., run by Jefferies Group LLC Chief Executive Officer Richard Handler, reaped a 50 percent gain in less than six months on its purchase of shares in Philip Falcone’s Harbinger Group Inc.
Harbinger Group climbed 1.8 percent to $12.73 at 4:15 p.m. in New York, compared with the $8.50 that Leucadia paid in September.
Falcone’s hedge funds sold $158 million of Harbinger Group shares to Leucadia as he worked to raise cash to meet redemption requests. Falcone, 51, is focused on building the publicly traded company after reaching a settlement with U.S. regulators that bars him from the hedge-fund industry. Harbinger Group closed at $10.06 on Sept. 27, the day the Leucadia deal was announced.
“When you can get more interest in your business model and trust from the markets, you can more easily raise capital and more easily execute your plans,” said Brian Milligan, an analyst at Standard & Poor’s. “And it’s a growth plan.”
The transaction made Leucadia, through its Jefferies investment-banking unit, the second-largest holder in Harbinger Group with a stake of about 13 percent, according to data compiled by Bloomberg. Harbinger Group owns majority stakes in businesses including a life insurer and consumer-products company Spectrum Brands Holdings Inc., the maker of Rayovac batteries and George Foreman grills.
Falcone’s Harbinger Capital Partners LLC hedge fund agreed in August to meet investor redemptions under the supervision of an independent monitor as part of an $18 million settlement with the Securities and Exchange Commission. The accord bans Falcone from the hedge-fund industry for at least five years and required an admission of wrongdoing for improperly borrowing money from his funds to pay his personal income taxes.
The hedge fund sold an additional 5.1 million Harbinger Group shares to other, undisclosed investors, according to a regulatory filing in September.
Leucadia acquired Jefferies in a $3.2 billion deal in March 2013 that the companies said would help the New York-based investment bank weather market turmoil. The transaction put Handler, 52, who was running Jefferies, in charge of the combined company. Leucadia, based in New York, also has investments in industries including beef processing and timber.
Leucadia fell 2.4 percent to $26.93, extending losses this year to 5 percent.