Laundering Securities: Harbinger, Spectrum Brands, Tong Lung Metal Industry Co. Ltd, and Stanley Black and Decker

Harbinger Group Inc is nothing but a special purpose vehicle constructed for the purpose of dumping illiquid, unwanted securities held by Falcone which he manipulated higher via complex share schemes, Enron style accounting, and things like payments to Fitch Ratings..  I believe it goes one step further however, and acquisitions such as the Stanley Black and Decker, are actually intended to acquire real and synthetic exposure to certain asset classes for which certain hedge funds are looking to short. 

This is how it was done in 2007 I've come to learn in my research, and I see the exact same thing happening now.  Same lines of business, same corporate structures, same types of mergers and joint ventures, and same corporate emphasis on expanding the balance sheet with debt and equity with no regard for long term survive. The behavior of insiders, patterns in share prices, and the same public misinterpreting the actions of certain hedge funds and their 13F-HR just as we saw 5 years ago.

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Accounting Games: Spectrum Brands and Harbinger Group Inc.

It’s the same game as it was back in 2005-2008 with Falcone and the related parties in Spectrum Brands.  I went back in the fillings and charted the revenue overlayed with net income for the 2nd chart, and the 1st chart is Goodwill and Intangibles.

I’ve written in previous entities about some of the ridiculous accounting gimmicks this concern uses to inflate revenue figures (capital expenditures).  Anyways what I want to display graphically is how it played out back in 2006, 2007, and 2008 where they started writing down the Goodwill and Intangibles they had been tacking on in years prior, then how the game was up in feb 2009 when they filled for bankruptcy and wiped out equity holders.

 Here is a chart I found of the bond ratings I thought was interesting to look at with the previous two.

The mergers and acquisitions I mentioned above which resulted in bogus accounting fluff (but not before insiders sold millions in stock), I figured i'd present a couple of the timelines here.

Harbinger Group Inc, Spectrum Brands, and Philip Falcone’s next LightSquared

Harbinger Group Inc, Spectrum Brands, and Philip Falcone’s next LightSquared

I really have to say the more I look into this the more it looks to me like Falcone got his hand caught in the cookie jar.  In this report I will highlight some fillings and market assumptions I find to be a problem.  I have put in bold and underlined the relevant points in the paragraphs to save time.

I suggest you read my first write up on HGI, SPB, and F&G first.  

The Bear Case against Philip Falcone, Harbinger Group Inc, and Spectrum Brands

I’ll jump back and forth but a couple highlights scattered within:

• A fully disclosed rigged game; insiders have absolute control, motives counter to shareholders, almost zero fiduciary duty owed to equity holders, players with history of self dealing, and the comical disclosure about destroying documents.
• What could/will start the domino affect and lead to collapse of house of cards.
• Is Falcone to Fidelity and Guaranty Life like Jon Corzine was to MF Global?