Review: A Hedge Fund Tale of Reach and Grasp by Barton Biggs
Published 27/01/2011 | 05:00
Meet Mickey Cohen, a hedge-fund hero in January 2007. He's got the Gulfstream V, the New York penthouse, two exes and Vanessa, a 25-year-old girlfriend who works at Sotheby's. He even has started dabbling in Old Masters.
"I figure I'm in my Baroque period," Mickey declares one day. "Baroque is gorging, exuberantly collecting glorious women, houses, art, even wine." You know his story won't end well.
Mickey is a secondary character in Barton Biggs's new book, 'A Hedge Fund Tale of Reach and Grasp'. The moral of this fable is clear: To thrive and survive, investment pros need more than skill and tenacity, Biggs says. They also must tame their hubris and emotions that can flip from ecstasy to despair.
Biggs (78) should know. As a young analyst, he ran a model portfolio for hedge legend Alfred Winslow Jones. He went on to become chief global strategist for Morgan Stanley and co-founder of a hedge fund. He peppers the story with references to Goldman Sachs, Warren Buffett and meals at the Four Seasons and Le Bernardin in Manhattan.
Biggs is always informative. He has absorbed both the wisdom of markets and the teachings of value investor Benjamin Graham. So it pains me to report that his latest book is a damp squib.
Though his narrative traces a dramatic story, the great hedge fund gold rush and bust, it's told in the forced fictional style of David Chilton's 'The Wealthy Barber'. This approach may deter readers familiar with Biggs's quirky and original 'Hedgehogging' and 'Wealth, War and Wisdom'.
The hero of the story is Joe Hill, a good kid from an old mill town in Virginia. His father is black, his mother white. As Joe grows up, he develops a talent for football and a knack for numbers.
Though Joe makes plenty of bad decisions, as adolescents do, he eventually gives up his jock dream of playing pro ball and heads to Wall Street. Before long, he's wowing his boss at Grant & Company Asset Management with his stock picks.
Along the way, we meet character such as Tom Hadron, a hedge fund legend who got his start trading cotton -- "a good old Southern boy who likes to hunt." Then there's one "really big" manager, FAC founder Steve Brown, who has "an ice rink with its own Zamboni".
Biggs excels at explaining financial dealings in simple terms. He's no novelist, though, and his didactic narrative veers between melodrama and corniness.
"Happiness is like a snowflake," Joe reflects as it starts snowing one night. "Catch it in your hand and suddenly it is gone."
If you want an inside look at hedge funds, you might be better off with Scott Patterson's 'The Quants' or Sebastian Mallaby's 'More Money Than God'. Still, Biggs may have the makings of a Hollywood movie. (© Bloomberg)