The Hedgehog

“The fox knows many things, but the hedgehog knows one big thing.” If the originator of that ancient saying had known Barton Biggs, author of the new book HedgeHogging, he might have put it a little differently: “The fox knows many things, but the hedgehog is shorting the fox’s position.”

Why leave the security of 30 years at Morgan Stanley for the extreme unpredictability of a start-up hedge fund? As far as Barton Biggs was concerned back in 2003, why not? He knew the business from his initial foray in the late 1960s as co-founder of the hedge fund Fairfield Partners. At Morgan Stanley, he had already accomplished everything he could have hoped for, and he wasn’t particularly enamored of a retired, take-it-easy, lots-of-golf lifestyle.

So, he decided to make a fresh start. Since Traxis Partners was launched by Biggs and his two partners just under three years ago, the hedge fund’s assets under management have grown to US$1.5 billion (an increase of 55 percent from inception). It hasn’t been all roses— see, for instance, the chapter in HedgeHogging called “Short Selling Is Not for Sissies”— but Biggs is back to doing what he most loves: pure, hands-on money management.

Though he was born with a “silver investment spoon” in his mouth, Barton Biggs didn’t get interested in investing until he found himself at loose ends a few years out of college. His father told him to read Benjamin Graham’s Security Analysis once and then again. He was hooked, finished at the top of his business school class, and went to work as an analyst at EF Hutton in 1961.

Just four years later, he launched a hedge fund, Fairfield Partners, which he left in 1973 to become a managing director and general partner at Morgan Stanley. Biggs spent the next 30 years at Morgan Stanley.

He was the firm’s first research director. He also established Morgan Stanley Investment Management in 1975 and served as its chairman for 30 years. Institutional Investor magazine named him to its All-America Research Team 10 times, and from 1996 to 2003, he was voted the top-ranked global strategist.

By the mid-1990s, Morgan Stanley Asset Management was annually adding more new institutional accounts than any of its competitors. Biggs also was a member of the five-man executive committee that ran Morgan Stanley until its merger with Dean Witter in 1996.

In June 2003, Biggs left Morgan Stanley. He and two colleagues, Cyril Moulle- Berteaux and Madhav Dhar, formed Traxis Partners—the largest new hedge fund of 2003. Traxis now has more than US$1 billion in assets under management.