Guess Who's Suddenly Bullish on New York Times Co.?

By: Mark Fitzgerald and Jennifer Saba Here's something you don't see much of in these challenging times: A once-hostile newspaper agitator turned newspaper champion.

In the past several days Harbinger Capital Partners, which holds roughly a 20% stake in the New York Times Co., has been making bets that shares of the New York Times (NYSE: NYT) will head north in the future.

According to recent documents filed with Securities and Exchange Commission (SEC) on Wednesday, Harbinger is putting on the table roughly 1.7 million "notional" Class A New York Times shares in a series of equity swaps. The reference prices range from $12.75 to $13.90.

The hedge fund has engaged an unnamed counterparty, which has agreed to pay Harbinger if stock in the New York Times rises over an unspecified time period. Harbinger would collect the difference between the reference prices and the future prices. If Harbinger's hunch turns out to be incorrect and the shares do indeed fall below the reference prices, then the hedge fund has to pay the difference to the counterparty.

At any time, Harbinger can pull out of the agreement, according to SEC filings.

As of late morning, shares of the New York Times were trading down 11 cents to $12.87 near the low end of its 52-week range of $12.08 to $22.56.

Harbinger has been making some wise bets of the course of the year. According to Portfolio.com, the hedge funds' returns for 2007 were up 116% and through the end of June it gained 40%.

The Financial Times noted that Harbinger's streak streak ended somewhat in July and the first couple of weeks in August when most of those returns were wiped out. However, the fund is still up 14% year-to-date.

Harbinger, in conjunction with Firebrand Partners, swatted at the New York Times Co. in late January disclosing it planned to nominate a slate of four Class A directors at the company's annual shareholder meeting. In a letter filed with the SEC, Firebrand's CIO Scott Galloway wrote to the board at the New York Times that they had no intention of changing the company's duel class stock structure.

"We believe," wrote Galloway, "a renewed focus on the core assets and the redeployment of capital to expedite the acquisition of digital assets affords the greatest shareholder appreciation and creates the appropriate platform to compete in today's media landscape."

The New York Times resisted the move at first, instructing shareholders to vote against the Harbinger/Firebrand slate. The company eventually acquiesced to prevent a proxy battle, expanded the board, and nominated two of the four proposed directors from the Harbinger/Firebrand slate.

Galloway and James Kohlberg, chairman of the private equity firm Kohlberg & Co., won seats on the New York Times' board in April.

For more on this listen to the latest Fitz & Jen podcast.