Harbinger Capital Scores Big With Bear Stearns Short; Check Out Their Long Call on AK Steel (AKS)

March 20, 2008 6:15 PM EDT

We learned today that Philip Falcone's Harbinger Capital made millions shorting Bear Stearns (NYSE: BSC) as the once mighty investment bank fell from grace. We've been tracking Harbinger for some time and today we want to look at another one of their trades - AK Steel (NYSE: AKS). Harbinger is long over 14 million shares, or 12.7%, of AKS and has been buying aggressively recently.

Harbinger Capital is a nearly $9 billion hedge fund. They are disciplined value investors with an emphasis on intensive credit research. The firm focuses on middle market companies that tend to be misunderstood or under-researched by the market.

Here are some of the reasons we like this trade from Harbinger Capital.

1. World wide steel demand is strong and prices are rising. Just today, Goldman Sachs said US steel prices will probably climb to an average $775 a ton this year and may peak at $850 a ton in the summer. Steel is currently at about $680.

2. US steel inventories are falling

3. Steel producers are passing on higher raw material costs.

4. Potential takeover target. AK Steel is one of the last independent steel companies in the US and is ripe for a takeover.

You Can Track News on Harbinger Capital Here: http://www.streetinsider.com/entities/Harbinger+Capital

[LJ]

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• Harbinger Capital
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