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About 10 years ago, I was sitting at lunch with Morgan Stanley'srespected U.S. equity strategist Byron Wien and a number of otheranalysts. The bulls were running, and the media would routinelyfixate on one or another rising young Wall Street strategist onlyto watch him burn out on a bad call or a bad year. Wall Street isnotoriously a young man's game, yet year in and year out Wien andMorgan Stanley's global strategist Barton Biggs, both veterans intheir 60s, werevoted the tops in their field.
An analyst asked: "Byron, why do you suppose you and Barton seem toalways be running ahead of your competitors, even though they're 20years or more your junior?"
Wien, usually not at a loss for words, paused for a few seconds. "Ithink it's because we love our jobs, and they hate theirs."
In 2003, Barton Biggs went on to demonstrate the point. Long pastthe point of needing the money, the glory or the fame, Biggs and acouple of partners left Morgan Stanley and launched a global macrohedge fund, Traxis Partners.
Being a venerated Wall Street figure did not spare Biggs theindignities of hedge-fund start-ups before him. He put on the dogand pony shows, trying to drum up capital. He suffered falsepromises and rejection. Hedge-fund managers' performance istypically a closely-guarded secret -- the Securities and ExchangeCommission does not allow marketing or bragging -- but I can reportfrom inside the business that Traxis has enjoyed very favorablereturns in its young life. Biggs can most certainly walk thewalk.
Hedgehogging, his account of his hedge fund and Wall Street years,is evidence that Biggs is still at his best when he is talking thetalk.
Throughout his 40-plus-year career, Biggs (whom I never had thepleasure of meeting during my four years at Morgan Stanley as aresearch analyst) has been an innovator on both the "buy" and"sell" side of the Street. Back in the 1970s, he managed one of theearly hedge funds; he later founded Morgan Stanley'sequity-research department and then served as its globalstrategist, and was for a time a member of the Barron'sRoundtable.
Hedgehogging offers us telling glimpses of the characters thatpopulate the hedge-fund world, and the unremitting daily pressureof running a marked-to-market hedge fund.
We read about "Richard," a successful manager who had a bad habitof touting his stocks to other managers while selling as theybought, and "Grinning Gilbert" a red-hot hedge-fund manager in thego-go 1990s, whose wife "reinvested" his earnings in a share inNetjets, an expensive Greenwich home with a 5,000-bottle winecellar, the requisite Scottish nanny and the usual charities. WhenGilbert's fund flamed out, he became paralyzed with depression,closed the curtains and refused to leave his bed. Wife Sharon wasleft to tell his team of 12 that they no longer had jobs, and toliquidate the firm.
Maybe I've been thinking about James Frey too much, but I shouldadd that after reading more than a half dozen of these anonymousmanager profiles, I did want to scream: "Who are these friggin'people?" As it happens, it has become something of a hedge-fundparlor game to try to figure out who is whom. Personally, I suspectone character, the likeable Greg, is based on Omega Capital's LeonCooperman. Other hedge-fund luminaries, such as Mark Kingdon,Stanley Druckenmiller, Art Samberg, Richard Chilton and GeorgeSoros, also appear to make cameos, although the "fudge factor" inBiggs' composite sketches may be huge. Most writers realize theycan improve sales by naming names, but Biggs is a businessmanfirst, and making enemies does nothing to help his business.
Biggs is at his best when he describes the misery of a manager whosuffers through bad performance. Like the game of poker, managing ahedge fund requires a high level of skill, but during any giventime period, a high degree of randomness can creep into one'sperformance.
I know, I know: Pity the plight of the poor hedge-fund manager withhis ridiculous performance fees. Over the past 25 years, I havebeen a reporter, a research analyst and a hedge-fund manager. Whileall professions have their share of pressure and pain, there issimply nothing professionally that compares with the vise-like gripthat takes hold of a manager's stomach when things are going badly.No one has done a better job of describing this visceral pain thanBiggs:
"Winston Churchill, whose career had its up and downs and also wasplagued with bouts of depression, spoke of the huge, foul-smellingblack dog with breath like the sewer, which appeared uninvited andsat heavily on his chest pinning him down," Biggs writes. "There isan investment black dog, and when you are doing badly, it comes andsits on your chest in the middle of the night, and on Saturdaymornings, and on sunny spring afternoons in the office. It's almostimpossible to banish the black dog when he gets on you."
Thus Biggs describes, with good-natured candor, his bad betshorting oil -- including his sense that his friends were lookingat him strangely at the country club. He even heard criticism fromhis own daughter.
Biggs takes us to places far beyond the realm of the modern-dayhedge fund, as he regales us with short snippets of MargaretThatcher, the Internet bubble, coin collecting and the folly ofinvesting in art. Some of his diversions, such as the fable of theman who could read tomorrow's Wall Street Journal, seem a littleforced. Others, such as his chapter on the life of Lord JohnMaynard Keynes, hit the mark.
My grandmother was not a stock-market maven, but she did have afavorite expression: "Live forever, learn forever." While we allwould like to follow the first part, only a lucky few will wind uplike Biggs, with an open and fertile mind through our 70s. Thereinmust lie the secret of his passion and success -- even with theoccasional foul-smelling black dog, and oil bets gone awry.
—Reviewed By Neil Barsky (Barron's, February 4-10,2006)
"...an intelligent book on a serious subject that is also a joyto read." (Professional Investor, April 2006)
"...evokes the 'agony and ecstasy' of the frenetic and highlycompetitive world of hedge funds...funny and sobering" ( TheMail on Sunday, May 2006)
"...a reassuring tale for ordinary mortals..." (FinancialWorld, 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, January2007)
"highly amusing."--Financial Times
The book tells of the successes and the failures of these menand women. It unveils the moral code that they live by, anddescribes their different life styles and operating patterns. Italso relates the adventures and travails of these incrediblyintense and obsessed investment personalities, their peculiarities,and the stresses they experience. Hedgehogs are strange, insecure,but fascinating characters, preying on each other and otherinvestors in the battle for investment survival.
Biggs was an English and Creative Writing major at Yale whostudied under Robert Penn Warren. His book is populated with amixture of real identifiable people and real disguised people aswell as with occasional fiction. There is no exaggeration.Everything except for one whimsical tale, which is completelyfictional, actually happened. Stories of investment adventures andindividual journeys, both triumphs and disasters, are related, butthere are no answers, only retrospective wisdom.
The book is not an investment primer nor does it tell how tostart a hedge fund, although it does recount some of Biggs'sexperiences in the formation of his fund. However, there arechapters that describe the way othersranging from Count Ottovon Bismarck to the Yale Endowmenthave dealt with the battlefor investment survival, and it provides a model of how hedge fundsmight be employed in a modern portfolio. Inevitably some of Biggs'sinvestment biases surface.
Hands-on experience is an unparalleled teacher, and Barton Biggshas seen and experienced the highs and lows of Wall Street as fewothers have. Now, Biggs has written about the professionalinvestment world in general and hedgehogs in particular. Asengaging, blunt, and intellectually provocative as its author,Hedgehogging pulls back the curtain to provide a rare insider'slook at what actually goes on, both in Wall Street's corneroffices, at dinner meetings, and in the highly competitive,lucrative world of hedge fund management.
Many commenters who gave below 3-star ratings talked about the lack of "true" knowledge. But this book is not about that. It is a book of gossips, but gossips that are useful. Read morePublished 3 months ago by Leopold
Barton Biggs was a talented writer and investment strategist to boot! He was taken away much too early.
The book Hedge Hogging is entertaining AND enlightening. Read more
Not much to say, but it outdated and not very much informative in terms of the techicals of the functioning of this industry. Read morePublished 15 months ago by R. Koch
Particularly interesting to read in the context of being updated on the cusp of financial system and housing pricing collapse, as he frankly relates discussion after discussion... Read morePublished 17 months ago by M. Terretta
it was interesting to hear about the growth of hedge fund from a blue blood vantage point, but a lot of this was just a hedge fund vet telling nice stories about his friends. Read morePublished 17 months ago by used book buyer
I purchased this book for my son. He said it is a good book, personally it is not my cup of tea, but he enjoyed it. Based on his comments, I recommend it.Published on December 19, 2012 by Diver Ed
Well-written book mostly about the world of hedge funds. Written in the mid-2000s it is still relevant. The author basically tells stories about what he has experienced. Read morePublished on November 22, 2012 by Jackal
it's like what it is. this is a interesting book, i like because it's like a novel and like a real storyPublished on October 14, 2012 by tim