July 2 (Bloomberg) -- Barton Biggs, whose decision to buy stocks in March 2009 gave his Traxis Partners LLC a 38 percent return last year, said concern the economy is about to contract spurred him to sell almost all his U.S. technology shares.
Biggs said he reduced the proportion of bullish bets in his hedge fund by up to 40 percentage points on speculation the withdrawal of government spending will turn a “soft patch” into a recession. On June 29, Biggs said long investments made up 70 percent of his fund’s holdings.
Stocks in the U.S. fell for the ninth time in 10 days today after data on jobs and factory orders added to concern the economic rebound is slowing. Speaking in a Bloomberg Television interview today, Biggs said “policy mistakes” by the U.S. government could curb the expansion in gross domestic product that’s forecast by economists to be 3.2 percent in 2010. The S&P 500 has retreated 16 percent since April 23.
“I’m worried that we could have not just a soft patch but a double dip which lasts two or three quarters and where nominal GDP is only up 2 or 3 percent and that’ll have a big effect on profits,” he said. “It’ll scare everybody and I’m afraid the market goes down another 10 or 15 percent if that happens.”
The 77-year-old money manager said he’s pared back investments in the U.S.
“I sold stocks pretty aggressively in the U.S. and we had a lot in tech,” Biggs said. “I’ve taken basically all of it out in the U.S. and we had a broader exposure to consumer stocks and just, in general, I’ve reduced my net long position by about 30 or 40 percentage points.”
Grandpa: You gotta love these Wall Street "Night of the Living Dead"....it sems like only a month ago when I read....
By Shani Raja and Susan Li
May 27 (Bloomberg) -- U.S. stock markets are oversold and may rally strongly in the next few days, said investor Barton Biggs, who runs New York-based hedge fund Traxis Partners LP.
“I think they’re going to stabilize in this general area, and then we’re going to have a significant move to the upside,” Biggs, whose flagship fund returned three times the industry average last year, said in a Bloomberg Television interview.
Biggs recommended buying U.S. stocks last year when benchmark indexes sank to the lowest levels since the 1990s. The Standard & Poor’s 500 Index rallied 23 percent in 2009 as governments worldwide mounted stimulus programs to counter a recession. On March 22 this year, Biggs told Bloomberg TV U.S. stocks had the potential to rally a further 10 percent. The S&P 500 has since declined 8.4 percent.
The gauge is down 10 percent in May, poised for its worst month since February 2009, as credit-ratings downgrades of Greece, Portugal and Spain add to concern some European nations will struggle to fund deficits. Futures on the S&P 500 gained 1.9 percent to 1,080.90 as of 9 a.m. in London today. The gauge closed at 1,067.95 yesterday.
“The market is very, very oversold, and I think we’re going to have a big pop to the upside some time in the next couple of days,” said Biggs. “I wouldn’t be surprised to see us go to a new recovery high, just to make everybody squirm.”
Beginning of Collapse?
His views are at odds with Eric Sprott, manager of the best-performing Canadian mutual fund with at least $1 billion in assets in the past 10 years. The S&P 500’s month-long slump is the beginning of a collapse that will drive the measure below its weakest level of 2009 in the next year, Sprott said.
The $1 trillion European rescue package announced May 10 has failed to stop the global equity slump, indicating investors are skeptical that efforts to address the debt crisis will work, said Sprott, who manages the Sprott Canadian Equity Fund. He’s buying gold and betting against stocks.
“The European concerns are serious, and I take them seriously,” Biggs said. “I just don’t think that the worst is going to happen.”
Templeton Asset Management Ltd.’s Mark Mobius said yesterday he’s been buying stocks in Brazil, Russia, India and China in the past month and called the slump in emerging-economy shares a “correction” in a bull market.
“Despite the fact that a lot of people think that we are entering into a bear market, we don’t believe so,” Mobius, who oversees about $34 billion in emerging markets as Templeton’s Singapore-based executive chairman, said in an interview in Cairo. “When the time comes, emerging markets will recover faster and in a big way.”
Dow on May 27, 2010: 10,259
Dow on July 2, 2010: 9,686 (down 573 points/5.6%)
Thanks from Barton Biggs May 2010
Do Not Expect a Thank You Card.
Nicely done Barton...
and people listen to you because....??
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