Reviews
"...a real glimpse of the investing world...by telling individuals' stories, Biggs...reveals far more about the ups and downs of hedge fund investing than the usual numbers-heavy dissertations...reveals just what a whacky world many hedgers occupy" ( Daily Telegraph , 29 December 2005) It seems Barton Biggs, the former chief investment strategist for Morgan Stanley who has been off running a hedge fund for the past two years, is about to become the Samuel Pepys of the investing world. Biggs has been quietly writing a tell-all diary of his investing adventures that is likely to put a few noses out of joint and also - since he uses only first names and has occasionally changed even those names - will keep a lot of people guessing. Who is Richard, a man who Biggs describes "as slick and slimy as they come, although he has a smooth, cultured Harvard veneer, wears fancy suits and talks with a hint of a Boston accent"? Richard used to show up at Triangle Club dinners-New York gatherings of hedge fund managers - where he was suspected of being a sandbagger (someone who talks a stock up to fellow fund managers while quietly selling it). In case that and various anecdotes, including details of his propensity to cheat at tennis, isn't enough to identify Richard, Biggs also reports that the man insisted on being called Richard and not Dick. Clearly a novelist manque , Biggs tells several instructive stories about how people he knows made and lost money and gives a no-holds-barred description of setting up his own fund, Traxis. There is a memorable account of Morgan Stanley's huge annual hedge fund conference at The Breakers in Palm Beach ("Germans with bulging eurobellies from family offices mingle with bloated Arabs in pale suits . . . their handshakes as cool and clammy as snakeskin. Former investment bankers exchange lies with portly ex-diplomats, permanently deformed by self-importance". All this left poor Barton feeling "estranged and disoriented"). He drops a few investing tips along the way - among other things, that he believes the next hot and potentially crazy market will be emerging markets equities, especially Africa and the Middle East. The book, HedgeHogging , appears far more useful than the thousands of how-to-invest-and-get-rich books that pour out every year. But will Biggs ever eat lunch in this town again? ( The Financial Times , November 30, 2005) "...an intelligent book on a serious subject that is also a joy to read." ( Professional Investor , April 2006) "...evokes the 'agony and ecstasy' of the frenetic and highly competitive world of hedge funds...funny and sobering" ( The Mail on Sunday , May 2006) "...a reassuring tale for ordinary mortals..." (Financial World, May 2006) "...legendary..." ( Futures Magazine Group , July 2006) "...is punchy, entertaining and insightful." ( Money Week, December 2006) "...a real page turner... an extremely well written, funny and fascinating book..." ( The Technical Analyst, January 2007), " ... a real glimpse of the investing world... by telling individuals' stories, Biggs...reveals far more about the ups and downs of hedge fund investing than the usual numbers-heavy dissertations... reveals just what a whacky world many hedgers occupy" ("Daily Telegraph," 29 December 2005) About 10 years ago, I was sitting at lunch with Morgan Stanley's respected U.S. equity strategist Byron Wien and a number of other analysts. The bulls were running, and the media would routinely fixate on one or another rising young Wall Street strategist only to watch him burn out on a bad call or a bad year. Wall Street is notoriously a young man's game, yet year in and year out Wien and Morgan Stanley's global strategist Barton Biggs, both veterans in their 60s, werevoted the tops in their field. An analyst asked: "Byron, why do you suppose you and Barton seem to always be running ahead of your competitors, even though they're 20 years or more your junior?" Wien, usually not at a loss for words, paused for a few seconds. "I think it's because we love our jobs, and they hate theirs." In 2003, Barton Biggs went on to demonstrate the point. Long past the point of needing the money, the glory or the fame, Biggs and a couple of partners left Morgan Stanley and launched a global macro hedge fund, Traxis Partners. Being a venerated Wall Street figure did not spare Biggs the indignities of hedge-fund start-ups before him. He put on the dog and pony shows, trying to drum up capital. He suffered false promises and rejection. Hedge-fund managers' performance is typically a closely-guarded secret -- the Securities and Exchange Commission does not allow marketing orbragging -- but I can report from inside the business that Traxis has enjoyed very favorable returns in its young life. Biggs can most certainly walk the walk. Hedgehogging, his account of his hedge fund and Wall Street years, is evidence that Biggs is still at his best when he is talking the talk. Throughout his 40-plus-year career, Biggs (whom I never had the pleasure of meeting during my four years at Morgan Stanley as a research analyst) has been an innovator on both the "buy" and "sell" side of the Street. Back in the 1970s, he managed one of the early hedge funds; he later founded Morgan Stanley's equity-research department and then served as its global strategist, and was for a time a member of the Barron's Roundtable. Hedgehogging offers us telling glimpses of the characters that populate the hedge-fund world, and the unremitting daily pressure of running a marked-to-market hedge fund. We read about "Richard," a successful manager who had a bad habit of touting his stocks to other managers while selling as they bought, and "Grinning Gilbert" a red-hot hedge-fund manager in the go-go 1990s, whose wife "reinvested" his earnings in a share in Netjets, an expensive Greenwich home with a 5,000-bottle wine cellar, the requisite Scottish nanny and the usual charities. When Gilbert's fund flamed out, he became paralyzed with depression, closed the curtains and refused to leave his bed. Wife Sharon was left to tell his team of 12 that they no longer had jobs, and to liquidate the firm. Maybe I've been thinking about James Frey too much, but I should add that after reading more than a half dozen of these anonymous manager profiles, I did want to scream: "Who are thesefriggin' people?" As it happens, it has become something of a hedge-fund parlor game to try to figure out who is whom. Personally, I suspect one character, the likeable Greg, is based on Omega Capital's Leon Cooperman. Other hedge-fund luminaries, such as Mark Kingdon, Stanley Druckenmiller, Art Samberg, Richard Chilton and George Soros, also appear to make cameos, although the "fudge factor" in Biggs' composite sketches may be huge. Most writers realize they can improve sales by naming names, but Biggs is a businessman first, and making enemies does nothing to help his business. Biggs