Biggs boosts bullish bets on stocks

MAR 25, 2012
Barton Biggs, the hedge fund manager who increased bets on equities before the S&P 500 rallied this year, is getting more bullish. “I've been gradually increasing, and I'm up to 90% now,” he said in a Bloomberg radio interview, referring to the proportion of his fund that benefits from higher share prices. “There is an awful lot of money that is out of stocks and in very low-yielding fixed-income instruments,” Mr. Biggs said. “I think the odds are that money is going to migrate back.” Mr. Biggs, founder of Traxis Partners LP, said last month that his net-long position, a gauge of bullish versus bearish investments, is about 75% in stocks, up from 65% in January. His optimism fluctuated along with the market, with at least eight changes in the past six months, according to interviews with Bloomberg. The S&P 500 has rallied 11% this year and is on pace for the best first quarter since 1998 amid better-than-estimated economic reports and more confidence that Europe's debt crisis won't derail the global recovery. The index was 9.9% below its October 2007 record of 1,565.15 last Tuesday. It trades at about 14.5 times reported earnings, the highest valuation level since July, while still below the average since 1954 of 16.4.

NET-LONG POSITIONS

Mr. Biggs reduced the net-long position of the Traxis Global Equity Macro Fund to about 40% at the end of September before increasing it to 65% on Oct. 17 and 80% on Oct. 31, according to interviews with Bloomberg. On Nov. 21, he cut the level to less than 40%. On Dec. 2, he boosted it to about 60%. Mr. Biggs said Dec. 12 that he was investing in Asian and U.S. stocks. At the time, he said that equities might rise or fall 20% because of concern about budget negotiations and Europe. The S&P 500 rose 14% from that day through last Tuesday, while the MSCI All-Country Asia Pacific Index advanced 11%. Mr. Biggs sees risk to the markets from tensions in the Middle East. If Israel were to “take a shot” at Iran, it “would be very, very serious for the world economy and would cause a double dip,” he said. “The "gloom crew' is looking over their shoulders at what's happened, and it certainly isn't a perfect world,” Mr. Biggs said. Although the problems in Europe haven't been solved, he said that he is encouraged by the quality of the leadership at the European Central Bank and the International Monetary Fund, and in Italy.

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