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Biggs Cuts Bullish Stock Bets on Higher Odds of Recession

Hedge Fund Manager Barton Biggs
Traxis Partners co-founder Barton Biggs. Photographer: Jin Lee/Bloomberg

Nov. 21 (Bloomberg) -- Barton Biggs, the hedge fund manager who reduced U.S. equity investments in September before the biggest monthly rally since 1991, cut bullish bets again on concern the odds of a U.S. recession have increased.

The Traxis Global Equity Macro Fund’s net long position has been lowered to less than 40 percent, and may be reduced another 15 percentage points, Biggs said during an interview on Bloomberg Television “In the Loop” with Betty Liu today.

“It’s a much more bearish environment than I anticipated,” he said. “We are going to have a decline at least back to the lows of last summer. God forbid, maybe even testing the lows of 2008 and 2009.”

The money manager’s optimism on U.S. stocks has shifted along with the market. He raised the Traxis Global fund’s long equity position to 65 percent after slashing it to 40 percent in September, he said in an Oct. 17 interview. Biggs then boosted the figure to 80 percent, he said two weeks later. The Standard & Poor’s 500 Index dropped five straight months through September before surging 11 percent in October.

Biggs said today the chance of a recession in the first half of 2012 has risen to between 60 percent and 70 percent. The S&P 500 fell the most in two months last week on concern Europe’s debt crisis will trigger a contraction. It slumped 1.9 percent to 1,192.98 today after a Democratic aide said U.S. lawmakers failed to agree on budget cuts.

“I’m very disappointed,” Biggs said of the U.S. deficit-cutting congressional supercommittee’s failure to agree on $1.2 trillion in federal budget savings. “It’s pathetic that they haven’t come to a deal. It shows our political system is really dysfunctional. I’ve been wrong in being too optimistic about the outcome in the U.S.”

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Betty Liu in New York at bliu17@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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