The Making of Philip Falcone


What makes a man want to amass more money than God, and once he has, keep going? For each hedge-fund manager the answers are a little bit different, and a little bit the same. From today's Bloomberg Markets we believe we have identified the four primary things that motivated Harbinger Capital founder Philip Falcone (or as readers of this blog may know him, Mr. Lisa Falcone), whose fund made $11 billion betting against subprime, to become who he is today.

We begin with a sepia-tinted moment when Falcone first leaves his Minnesota hometown, all gawky of limb and Lionel Richie of hair, to seek his fortune in the big city.

Neil Sheehy, from nearby International Falls, had offered Falcone a ride to Harvard University, which had recruited both of them to play hockey for the Crimson. The car stalled in front of Falcone’s house, and Sheehy had to restart it on a hill while Falcone’s mother and one of his sisters sobbed their goodbyes.

“It’ll be all right, Mrs. Falcone; it’ll be all right,” Sheehy recalls telling Caroline Falcone as the car chugged to life and headed east.

Falcone was one of nine, and his mother still cared that he was leaving home! This is meaningful and leads us to Motivation 1: Phil can never let his mama down.

[To wit, later: "Galloway says he once set up a meeting for Falcone with a billionaire investor who was interested in Harbinger. Falcone said he couldn’t make the meeting because he had to go see his mother."]
Immediately after leaving home, life decided to punk young Philip by showing him that even when you think that things are tough, they can always get worse.

Falcone rode to Cambridge, Massachusetts, with his feet on the dashboard because Sheehy had packed a skate-sharpening machine on the floor of the front seat... Halfway there, the roof liner came loose and showered the young men with fiberglass insulation that stuck to them as they sweated in the late.

Motivation 2: The fuck he's going to go through something like that again. He is going to kick life's ass!

Then, he did not quite fit in at school.

Falcone was wide-eyed when he arrived at Harvard in 1980, says hockey teammate Greg Olson, who’s now a dentist in Minnetonka, Minnesota. “He was a deer in the headlights,” Olson says. After recovering from the initial shock, Falcone made himself something of a campus don. Hockey teammates called him “Fashion Phil” because he cared so much about his clothes, Olson says. He had a blue, three-piece suit that he wore often, and he always wore stylish shoes.

Motivation 3: Show those jerkoffs who called him a hick and a fag who the man is.

But after graduation, he was more confident.

[Wife Lisa] was working as a model when she met Phil Falcone through mutual friends at a Manhattan restaurant in the late 1980s.

Motivation 4: GIRLS!

Of course, a hot wife and incredible financial success doesn't keep the critics at bay. If anything, it just makes them worse.

“Just because a manager got the subprime trade right, it doesn’t necessarily mean he’s a skilled manager,” says Brad Balter, managing partner of Balter Capital Management LLC, a Boston-based firm that invests in hedge funds for clients. “There have been several funds that benefited from that bet in 2007 whose performance was mediocre before and continues to be mediocre today.”

Motivation 5: Show those jerkoffs who suggest he is a one-hit wonder who the man is. Then show them again. And again. Until he dies.

Falcone Losing Touch Borrowing From Funds While His Investors Denied Cash [Bloomberg]