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00:00HERE WITH PHIL FALCONE. GOOD TO SEE YOU TODAY. THE REASON YOU ARE SITTING HERE ROSTER ME IS THAT YOU JUST WRAPPED UP A ROUNDTABLE WITH THE VIETNAMESE PRIME MINISTER. YOU ARE LOOKING AT VIETNAM AS AN OPPORTUNITY. YOU ARE THE SINGLE BIGGEST, I BELIEVE, FOREIGN INVESTOR IN THIS RESORT. IS THAT RIGHT? PHIL: THAT ' S CORRECT. BETTY: WHAT WAS THE ROUNDTABLE LIKE TODAY? PHIL: AS PART OF OUR INVESTMENT, WE HAVE BEEN BUILDING UP THIS REAL ESTATE PROJECT FOR 10 YEARS . THIS IS COMPLETELY SEPARATE FROM MY H2 VENTURE, BUT FROM A LEGACY PERSPECTIVE -- BETTY: HARBINGER? PHIL: CORRECT. THEY ARE INTERESTED IN SEEING MORE OF OPENING UP THE MARKETS A BIT MORE AND THEY WANTED AN INTRODUCTION TO SOME PROMINENT INVESTORS OVER HERE, INCLUDING SOME DIFFERENT CORPORATIONS. SO, WE HOSTED THIS ROUNDTABLE EVENT THIS MORNING WITH THE PRIME MINISTER. BETTY: RIGHT, BECAUSE HE ' S HEADED TO REP WASHINGTON AFTER THIS TO MEET WITH THE PRESIDENT. WHAT WERE THE QUESTIONS? PHIL: THERE WERE A NUMBER OF QUESTIONS AROUND THE TELECOMMUNICATIONS PERSPECTIVE, ARE THEY OPENING UP THE MARKETPLACE, ARE THEY PLANNING ON PRIVATIZING SOME OF THE STATE OWNED ENTERPRISES THAT EXIST TODAY? BETTY: AND I THINK THE ANSWER IS YES, CORRECT? PHIL: YES, THEY CAME ACROSS AS VERY WILLING AND ABLE TO ACCOMMODATE THE INVESTOR BASE. PHIL: -- BETTY: WHENEVER THERE ' S AN OPPORTUNITY TO MAKE MONEY, WILL BE INTERESTED. WHAT GETS THEM OVER THE HURDLE FROM SAYING THAT THIS LOOKS LIKE AN INTERESTING OPPORTUNITY TO DOING WHAT YOU HAVE DONE, PUTTING MONEY TO WORK THERE. PHIL: I THINK IT ' S IMPORTANT THAT PEOPLE SEE, OUR PROJECT, WE HAVE BEEN THERE SINCE 2006, THEY ARE ACCOMMODATIVE AND COOPERATIVE WITH FOREIGN INVESTMENT. PHIL: WHAT DOES -- BETTY: WHAT DOES THAT MEAN, EXACTLY? PHIL: IT MEANS WORKING WITH THE GOVERNMENT. RIGHT NOW WE ARE FOCUSED ON GETTING A LOCALS PILOT. I THINK THAT THAT IS KEY. THAT IS IMPORTANT FOR THE PROJECT TO MOVE FORWARD IN A SUCCESSFUL MANNER AND I THINK THAT PEOPLE ARE REALLY FOCUSED ON THAT AND I THINK THAT IF WE DO GET THAT PEOPLE WILL SEE THAT, WOW, THERE REALLY IS A LEVEL PLAYING FIELD AND THE MARKETS ARE OPENING UP. PHIL: IS YOUR -- BETTY: IS YOUR INVESTMENT ONLY IN THIS FIVE-STAR RESORT, OR ARE THERE OTHERS? PHIL: ONLY IN THE RESORT. BETTY: HAVE YOU MADE MONEY ON IT? THAT WOULD BE AN INTENSE MEN -- ENTICEMENT. [LAUGHTER] PHIL: NOT YET, BUT IT ' S A MARATHON, NOT A SPRINT. BETTY: WHY VIETNAM? IT REALLY IS A FRONTIER MARKET THERE. PHIL: FROM AN INVESTMENT PERSPECTIVE I TRY TO BE CREATIVE AND GENERATE ALPHA. THAT ' S HOW I ' VE ALWAYS THOUGHT ABOUT MY INVESTING ABILITIES. WHERE I ' M LOOKING AT, IT HAPPENED TO BE AN OPPORTUNITY THAT I THOUGHT WAS VERY UNIQUE, FROM A PILOT PROJECT. GETTING A GAMING LICENSE IN VIETNAM, THE POPULATION THERE IS COMING ON 100 MILLION PEOPLE THAT -- RIGHT NOW. THERE ' S A DEFINITE INTEREST IN GAMING. WE KIND OF LOOKED AT IT YEARS AGO AS ONE OF THESE FRONTIER MARKETS TO REALLY BUILD, HOPEFULLY, ANOTHER MACAU. PHIL: -- BETTY: IT SEEMS THAT WAY. I KNOW YOU HAVE PARTNERED WITH MULTIPLE COMPANIES THROUGH THIS RESORT. WHEN YOU PUT YOUR MONEY IN HERE, FOR WHAT IS THE ENDGAME FOR YOU? WHAT WOULD YOU LIKE TO SEE AS THE BENCHMARK FOR SUCCESS? PHIL: THEY ARE REALLY ALLOWING US TO GO OUT AND CONTINUE BUILDING UP THE OPERATION. RIGHT NOW WE HAVE ONE TOWER OF 500 ROOMS, LIVING ON ANOTHER TOWER, A WORLD-CLASS GOLF COURSE. WE REALLY TRYING TO MAKE IT A FAMILY ORIENTED, INTEGRATED RESORT, POTENTIALLY BUILDING OUT ALONG THE ENTIRE BEACHFRONT. WHICH THEY HAVE ALLOCATED TO OUR PROPERTY. I WOULDN ' T SAY THAT THERE IS AN ENDGAME. I WOULD SAY THAT THE STEP OF LOCAL GAMING COULD BE A BIG STEP TO BRINGING IN PARTNERS, FOREIGN PARTNERS, IN CONTINUING TO BUILD OUT THE ENTIRE PROPERTY. PHIL: -- BETTY: EVERYONE IS LOOKING FOR THE NEXT MACAU. VIETNAM, SINGAPORE, JAPAN, WHEREVER ELSE. ARE YOU LOOKING AT OTHER AREAS? > > NO, WE ARE VERY VIETNAM SUCH RICK -- VIETNAM CENTRIC. I THINK WE HAVE A TREMENDOUS OPPORTUNITY AND IT HAS TAKEN A LOT LONGER THAN I EXPECTED BUT WE ARE VERY EXCITED ABOUT THE PROSPECTS THERE. BETTY: THIS IS ONE OF YOUR LEGACY INVESTMENTS FROM HARBINGER. HOW DO USE YOUR GAME? WHAT IS YOUR LIFE LIKE RIGHT NOW? PHIL: THE BULK OF MY TIME IS ON THE PUBLIC COMPANY. THE PERMANENT CAPITAL PLATFORM. I DID THIS ONCE BEFORE WITH A COMPANY CALLED HARBINGER GROUP, WHICH WAS THEN RENAMED AND THAT WAS A NICE SUCCESS. I LOOK AT THIS VEHICLE AS AN OPPORTUNITY TO CONTINUE ON WITH WHAT WE DID AT HR G AND REALLY BUILD OUT THE PLATFORM AND TAKE CONTROL OF OPERATING THE COMPANY AND WE HAVE DONE A NICE JOB WITH THAT OVER THE LAST COUPLE OF YEARS. BETTY: YOU HAVE ASSETS IN SO MANY DIFFERENT INDUSTRIES. IS THERE ANY KIND OF RHYME OR REASON HERE IN THE PORTFOLIO COMPANY THAT YOU HAVE? PHIL: WE WILL BE OPPORTUNISTIC. WE WILL GO WHERE THERE ARE GROWTH PROSPECTS, TACKING ON ACQUISITIONS, REALLY BUILDING THESE VARIOUS PLATFORMS. WE DO HAVE A DIVERSE PORTFOLIO RIGHT NOW AND WILL CONTINUE TO GET MORE DIVERSE, BUT IT ALSO GIVES THE HOLDING COMPANY A VERY GOOD BALANCE, WHERE YOU DON ' T HAVE TO JUST FOCUS ON BUILDING YOUR STEEL COMPANY. YOU CAN FOCUS IN THE TELECOMMUNICATIONS AREA. WE ' VE GOT AN EXCITING PLATFORM IN THE LIFE SCIENCES THAT I THINK IS REALLY INTERESTING, WHAT WE ARE DOING THERE. BETTY: LIFE INSURANCE IS ALSO A BIG PART OF YOUR PORTFOLIO? PHIL: WE BOUGHT 100% OF A LONG-TERM CARE BUSINESS IN RUNOFF. WE BOUGHT THE ENTIRE PLATFORM WITH SOME PEOPLE COMING ON FROM A REGULATORY PERSPECTIVE TO REALLY TILDE ON THAT. WE THINK THAT THERE ' S AN OPPORTUNITY THERE. WE DID THAT IN ACQUIRING FIDELITY AND GUARANTEEING WHEN I WAS AT THE HARBINGER GROUP, IT WAS AN OPPORTUNITY THAT WE THINK IS PRESENTING ITSELF IN A PRETTY UNIQUE WAY IN THE MARKETPLACE, ESPECIALLY IN THE INSURANCE AREA, WHERE TYPICALLY YOU ARE PAYING 1.5 TIMES TIMES -- 1.5 TIMES BOOK, WE GOT THIS AT A SUBSTANTIAL DISCOUNT. BETTY: AND YOUR STOCK IS TRADING AT A BIG DISCOUNT? PHIL: VERY BIG, UNFORTUNATELY. TIME WILL TELL, BUT AS WE PROVE OUT THIS MODEL AND THE SUCCESS OF THE UNDERLYING SUBSIDIARIES, IT WILL CATCH UP. IT ' S JUST A MATTER OF TIME. BETTY: WAS THE BIGGEST DIFFERENCE BETWEEN MANAGING PERMANENT CAPITAL VERSUS HARBINGER, THE HEDGE FUND? PHIL: DEALING WITH REDEMPTIONS IN THE INVESTOR COMMUNITY IS ALWAYS A BIT DIFFERENT. I ' VE ALWAYS BEEN OF THE MINDSET THAT WHEN LOOKING AT THE DIFFERENT INVESTMENTS I ' VE HAD OVER THE YEARS, THE MOST SUCCESS I HAVE HAD IS BUYING THINGS THAT HAVE TAKEN A LONG TIME THAT YOU CAN INCUBATE, HELP TO NURTURE AND GROW, TWIST AND TURN. THAT IS TOUGH TO DO IN THE HEDGE FUND MODEL. YOU CAN DO IT IN THE PRIVATE EQUITY MODEL, BUT IT ' S STILL A LITTLE BIT DIFFERENT. THIS STRUCTURE GIVES US THE FLEXIBILITY THAT WE NEED AND REALLY GIVES US THE OPPORTUNITY TO HOPEFULLY NEVER HAVE TO SELL ANY OF THESE COMPANIES THAT WE CONTROL. BETTY: YOU WANT TO FASHION IT I CAN MINIATURE BERKSHIRE HATHAWAY? PHIL: THAT ' S THE ULTIMATE MODEL. IF WE CAN GET A CERTAIN PERCENTAGE OF THAT SUCCESS THAT THEY HAVE HAD, THAT ' S CLEARLY WHAT WE WOULD HAVE LIKED TO DO OR WOULD LIKE TO DO. BETTY: WOULD YOU GO BACK TO MANAGING, SUBSTANTIALLY, FUND CAPITAL? PHIL: THEY SAY NEVER SAY NEVER, BUT IT ' S HIGHLY UNLIKELY. IS NOT REALLY WHAT I WANT TO DO IN THE LONG TERM. I HAVE HAD SOME GOOD SUCCESS IN THE PREVIOUS ENTITY THAT WE BUILT AND NOW I FEEL LIKE THIS IS -- WE HAVE GOT THE MODEL KIND OF TWEAKED THE RIGHT WAY TO ALLOW US TO BE FLEXIBLE YET GIVE US CONTROL, DO WHAT I THINK ME AND MY TEAM DO BEST. KEVIN: -- BETTY: DOES IT MAKE YOU THINK YOU SHOULD HAVE DONE IT EARLIER? PHIL: YES, CONSIDERING THE REDEMPTIONS, YOU CAN ' T SECOND-GUESS IT, THE HEDGE FUND STRUCTURE FOR ME WAS WORKING OUT VERY WELL. IT WAS A GOOD PLATFORM, I THINK, FOR THIS KIND OF SECOND STAGE. BETTY: YOU THINK THAT THE HEDGE FUND INDUSTRY IS IN A PERMANENT DECLINE? PHIL: I DON ' T. I THINK IT ' S TOUGHER FOR THE SMALLER GUYS, THE BUSINESS HAS BECOME MUCH MORE INSTITUTIONALIZED. I THINK THE FEE STRUCTURE MAY HAVE TO CHANGE A BIT. BUT THERE ' S ALWAYS GOING TO BE THE NEED FOR HIGH-QUALITY INVESTORS, NO WESTON ABOUT IT. BETTY: WHAT DO YOU MEAN BY THAT? PHIL: YOU PAY TO OR 24 A FUND THAT MATCHES WHAT ' S HAPPENING IN THE S & P? BETTY: SHOULD ANY FUND BE CHARGING TWO AND 20? PHIL: THERE HAS TO BE SOME FLEXIBILITY GOING FORWARD IN THAT FEE STRUCTURE. THAT IT ' S VERY TOUGH FOR INVESTORS TO LOOK AT IT AND SAY -- I ' M GOING TO PAY TWO AND 20, AND YET YOU ARE BARELY BEATING THE S & P. IS THAT WORTH TWO AND 20? I DON ' T THINK SO, BUT YOU HAVE TO THINK THAT THERE ARE PEOPLE OUT THERE, FUNDS OUT THERE, QUALITY, TALENTED PEOPLE WHO DESERVE THE TWO AND THE 20. BETTY: SPEAKING OF THE HEDGE FUND WORLD, WE JUST GOT THE NEWS THIS MORNING ABOUT STEVE, AND AND IN ANTICIPATION OF THE VAN BEING LIFTED, HE ' S RAISING OUTSIDE MONEY, ABOUT $10 BILLION OR SO. 10 BILLION IN THIS DAY AND AGE, YOU JUST MENTIONED THERE IS SO MUCH CASH OUT THERE. IS THAT TOO MUCH? PHIL: LOOK, I DON ' T KNOW, YOU KNOW STEVE ' S ABILITIES AND CAPABILITIES, THERE ' S NO QUESTION THAT HE CAN MANAGE THAT MONEY, IT IS A SUBSTANTIAL AMOUNT, BUT I THINK THAT HIS STRUCTURE PROBABLY WORKS FOR THAT TYPE OF CAPITAL, BUT I DON ' T KNOW, EXACTLY ALL THE DETAILS BEHIND IT. BETTY: I KNOW I ASKED THIS BEFORE, BUT WOULD YOU IN THAT POSITION WANT TO BE MANAGING THAT MUCH MONEY? PHIL: NO, I ' M VERY HAPPY DOING WHAT I ' M DOING AND ULTIMATELY I LOOK AT IT AS OUR MARKET CAP WILL GET AT OR CLOSE TO THAT. THAT ' S MY ULTIMATE GOAL. BETTY: I ' M SURE A LOT OF PEOPLE WATCHING THIS WANT TO KNOW, PERSONALLY, WHAT HAVE YOU LEARNED? HOW DO YOU FEEL? YOU ARE NEAR FIVE YEARS. FIVE YEARS FROM THE FCC THAN. -- BAN. IT ' S ABOUT TO BE LIFTED. WHAT HAVE YOU LEARNED? PHIL: IT WAS A VERY DIFFICULT TIME, I WOULDN ' T WISH THAT ON MY WORST ENEMY, BUT PUTTING IT PAST AND MOVING FORWARD IS THE BEST THING YOU CAN DO. I WISH I HAD DONE THAT SOONER RATHER THAN TRYING TO FIGHT. IT WAS MORE CHALLENGING AND IT WAS TOUGH, NO QUESTION ABOUT IT. BETTY: WOULD YOU HAVE DONE ANYTHING DIFFERENTLY? PHIL: I WOULD HAVE LOOKED TO MOVE ON SOONER RATHER THAN LATER. DAVID: -- BETTY: YOUR GOOD FRIEND, LEE COOPERMAN, HE SETTLED WITH THE FCC. WHEN YOU SAW THAT DID YOU SAY -- LEE, YOU DID THE RIGHT THING THERE? PHIL: THERE ' S NO QUESTION. LEE IS A SUPER GUY, ONE OF THE MOST HONORABLE PEOPLE I ' VE MET ON THE STREET. I WAS HAPPY TO SEE HIM PUT THIS BEHIND HIM. HE AND I TALKED A LITTLE WHILE AGO. IT ' S VERY CHALLENGING BUT IT ' S NICE TO SEE THAT HE IS KIND OF

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Falcone on Vietnam Investment, Hedge Funds, Steven Cohen

Philip Falcone, HC2 Holdings Inc. chairman and chief executive officer, discusses investing in Vietnam's Grand Ho Tram resort and the state of the hedge fund industry with Bloomberg's Betty Liu on "Bloomberg Markets." (Source: Bloomberg)

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