Barton Biggs, the hedge fund manager who bought stocks when the market bottomed in 2009, boosted bullish bets on equities in his Traxis Global Equity Macro Fund after European leaders took action to contain the debt crisis.
The fund’s net long position has risen to 80 percent, Biggs, the founder of Traxis Partners LP, said in an interview with Betty Liu on Bloomberg Television’s “In the Loop” program. That compares with 65 percent on Oct. 17 and 40 percent about a month before that, and near 85 percent six months prior.
The Standard & Poor’s 500 Index is surging the most in a month since 1987, advancing 12 percent amid speculation European leaders will solve the crisis, after slumping from May through September. Investors remain too pessimistic, meaning the rally will continue as they change their mind, he said.
“There’s a tremendous amount of money that’s trapped out of stocks,” Biggs said today. The rally is “going to continue for a while.”
Stocks gained last week after the European rescue fund was boosted to 1 trillion euros ($1.4 trillion) and investors agreed to a voluntary writedown of 50 percent on Greek debt. Today, Italian and Spanish bonds fell, while global stocks retreated from a three-month high on concern European leaders will struggle to raise funds to contain the crisis.
“This morning, all of the wise men of Europe and the economists are very negative about this European deal that was worked out last week,” Biggs said. “The general feeling is that the right thing to do is to cut back on risk and that it is going to be a flop, and that all they did was kick the can not very far down the road again.”
“I am inclined to feel differently,” Biggs said.
The investor said he likes technology stocks such as Apple Inc., Cisco Systems Inc., Intel Corp. and Microsoft Corp., which he called “incredibly cheap and undervalued.” He also favors industrial companies such as Caterpillar Inc., Deere & Co., Emerson Electric Co. and General Electric Co.
Biggs said that while he’s not buying European stocks, he is drawn to their valuations.
“I must admit I don’t own hardly any European stocks, but I’m intrigued by them because they are so cheap, and because it would certainly be a contrarian trade,” he said.