Summer Reading
Barton Biggs' new book, "Hedge Hogging" is a great book. He was chief strategist and Director of Research, among other things, at Morgan Stanley for a number of years before leaving to start up a Hedge Fund in 03. For those not working at UBS or otherwise working 90 hours a week, it is a worthwile read.
posted by Odoacer at
11:16 AM
4 Comments:
I had to copy and paste this article. Personally, I have no opinion on this book but seeing Tamerlane's post reminded me of this book review.
Barton Biggs’s new Wall Street memoir, Hedgehogging, is so bad, in so many ways, and on so many levels, that I doubt I have the literary gifts to do justice to its awfulness in under 800 words. But I'll try!
Let me start, if I must, with Biggs’s discussion of his “investment philosophy.” Here’s a man, remember, who for years was the chief strategist at Morgan Stanley, arguably the most prominent investment bank on Wall Street. He’s dealt with a lot of smart people for a long time. You’d think he’d have picked up some interesting insights to share.
But based on what his book has to say, you’d be wrong! On the available evidence, Barton Biggs doesn’t have a coherent investment philosophy, in my view. At one point, for instance, Biggs makes himself sound like a value-oriented, bottom-up type. Fine. But elsewhere, he’s strictly macro, as with his famous, bearish bet on oil in 2004. For awhile, he talks up momentum investing. Then there’s the chapter on Fibonacci numbers. (Don’t ask.) “The money game is played in the third and fourth dimensions,” he writes. That happens to be literally true, of course, but I don’t think that’s what Biggs means. I think he means the game is played in the fifth and sixth dimensions--in which case, I haven’t a clue as to what he’s talking about. By page 111, even Biggs himself seems confused. “My real theory is that the investment superstars have some special magic with markets that enables them to do the right things most of the time.”
Oh-kay. Thus we receive the accumulated wisdom of forty years on Wall Street: “special magic.” In Biggs’s mode of analysis, managers have “hot streaks” and then “go cold as ice.” Performance is all that matters, he writes. Well, yes. As to a discussion of what process he believes will most reliably generate superior performance, you’ll be in the dark. The investment philosophy he describes will work just as well selecting lottery numbers as it will for picking stocks.
If Biggs the strategist is confused, meanwhile, Biggs the man is . . . well, let’s just say he’s not a lot of laughs at parties. Biggs seems intent to make the point early on that he is the opposite of what Sue Anne Nivens used to call, on the old Mary Tyler Moore Show, a “people person.” Here he is describing the attendees at Morgan Stanley’s hedge fund conference at The Breakers in Palm Beach, the year that he pitched his hedge fund there:
There are many tribes at the conference. First, there are the professionals, who come from the big funds of funds, foundations, endowments, and pension funds. They have bored, cynical stares and limp handshakes. . . . The American men wear suits and have sweaty armpits. The women are tall and plain. By contrast, some of the Royal and Ancients from the big London FOFs have striped blue shirts with white collars and double-barrelled named and chins. . .
Then there is the rest of the crowd, the amateurs, mostly individuals and small, wannabe funds of funds. Germans with bulging eurobellies from family offices mingle with bloated Arabs in pale suits and white shirts, their handshakes as cool and clammy as snakeskin. Former investment bankers exchange distinguished lies with portly ex-diplomats, permanently deformed by self-importance. Wrecked old Texans with faces like road maps sour breath, and fitted Hawaiian shirts . . .
“Bored, cynical stares and limp handshakes.”? Ex-bankers “deformed by self-importance.”? These are the people, don’t forget, that Biggs hopes to sign up as customers. The other fund managers at the conference aren’t up to the Biggsian standard, either, by the way. They are “twerps.”
But for all Hedgehogging’s snootiness and investment vacuity, the worst thing about the book is its incoherence. In particular, Hedgehogging consists of a) a long complaint about what a pain in the neck it is to raise money in the hedge-fund business (you don’t say!), b) a series of descriptions of money managers, identified by first names only (why, I don’t know), who Biggs says he admires, apparently because their recent numbers have been strong, and c) a bunch of filler, including, among other things, discussions of the fine-art market, the Kondratieff wave, John Maynard Keynes’s sex life, and a description of a dinner with Margaret Thatcher. All of this, I scarcely need to add, is 100% insight-free.
As I say, Hedgehogging is dreadful. If I have prevented you from buying it, I believe I have done you a personal favor. You are very, very welcome.
Some of the critiques made by this reviewer are valid. However, many of Biggs' observations about the industry are amusing and dead on. Ultimately this is just one person's reflection on their recent experience and thoughts which I found interesting, entertaining and useful. For example, with regards to his critique about the Biggs' investment philosophy accurate but perhaps an educated mind can infer their own piece of wisdom this rather than rely on it being spoonfed. Maybe the reviewer is bitter that Biggs did not share the secret magic to investing. I found it a good, light read - it only took about 6 hours to read. Take the opposing views and do with them as you will.
My favorite part of that review?
"what a pain in the neck it is to raise money in the hedge-fund business (you don’t say!)"
That was my one major complaint on Running Money also (which is a very good book in its own right). Everyone knows its tough. Stop whining.
Raising money is tough huh? Is that why we are all not making 2/20?
I bet it is real tough for Lampert and others who shut their funds. Maybe Barton should be a baller and then not worry about it.
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