[A-List] Barton Biggs

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Hedge Fund Skeptic Biggs Leaving Morgan Stanley for Own Fund
by Will Swarts <mailto:will.swarts@hedgefund.net>, Reporter January 20, 
2003

One of the most prominent voices warning of trouble in the hedge fund 
industry is starting his own fund management firm.

Confirming rumors circulating before the holidays, Morgan Stanley 
announced that chief global strategist Barton Biggs will retire from the 
firm and manage a hedge fund portfolio.

Biggs, a leading Wall Street figure for many of his 30 years with the 
investment bank, wrote a report in 2001 predicting the rise and ugly 
demise of a hedge fund investing bubble that attracted worldwide notice. 
In Morgan Stanleys Perspectives newsletter, Biggs, 70, cautioned: ''The 
hedge fund mania that now grips the U.S. and Europe is rapidly assuming 
all the classic characteristics of a bubble. I know it's happening, but 
I don't know how it will end or how much damage it will do. I don't 
think it's anywhere near as big or as deadly as the tech bubble, but it 
could rattle some cages in the financial world.''

That warning is being borne out, as hundreds of hedge funds around the 
world have shut their doors, but Biggs is making his second foray back 
into hedge fund management with a new firm, Traxis Partners, which will 
be seeded by Morgan Stanley, the firm announced. He will continue to 
work as a consultant for Morgan Stanley.

Narayan Ramachandran, a managing director of Morgan Stanley Investment 
Management, will become acting head of the global asset allocation group 
Biggs now runs. Ramachandran also will continue as head of MSIM's 
emerging markets equities team, the firm said.

"Morgan Stanley has been my investment home for three decades, and there 
has been no better crow's nest from which to view the world," Biggs 
said. "I look forward to retaining a close association with Morgan 
Stanley as a consultant and am excited about the firm's relationship 
with Traxis."

Traxis will run global macro funds, and Biggs will be joined by Cyril 
Moulle-Berteaux, 33, and Madhav Dhar, 41, on the management team. 
Moulle-Berteaux is currently a managing director at Morgan Stanley Asset 
Management, and Dhar was in charge of emerging markets investments there 
until he left the firm in 1999.

Prior to joining Morgan Stanley as a managing director in 1973, Biggs 
firm, Fairfield Partners, lost money on prematurely shorting the growth 
stocks of the day, according to the New York Times. He made mention of 
it in his influential report: ''As a child, yours truly was involved 
with the late 1960's-early 1970's hedge fund mania. No one wants to hear 
how that escapade ended for the hedge funds.''

While Biggs had long pondered the idea of leaving Morgan Stanley, he did 
not spare the hedge fund industry any skepticism as he observed its 
rapid growth in 2000 and early 2001.

Hedge fund strategies are not infinitely scalable, Biggs wrote. In my 
judgment, the money gush is wild, and the risks are growing as money 
flows to younger funds.

With the gimlet eye of an old pro overseeing the launch of the Traxis 
funds, investors will have reasonable confidence in the adage that age 
and guile beat youth and speed every time.