Hedgehogging by Barton Biggs

Barton Biggs is credited with predicting the .com bubble. In this book, he offers a glimpse at what happens behind closed doors in a funds management business – in particular hedge funds. Biggs is, without a doubt, a talented and engaging writer.

Whilst not a ‘How to invest in X’ type of read, the author does offer some insights into his strategies. More importantly, Biggs describes in detail some of the characters, back-stories and motivations that drove his success for 30+ years in Funds Management. This book is a mixture of high-level advice in both investment management and entrepreneurship.

Some of the key take-aways from the book are echoed in Cadence’s investment philosophy.

Biggs talks about ‘activist investing’ and actually visiting companies in person or reaching out to them to learn more about their business. Cadence visits 300-400 companies a year. Biggs also talks about being impartial to growth and value investment strategies. At Cadence we use a combination of fundamental and technical analysis.

The author points out that investing is not only about entering positions and exiting is just as important. Cadence has a disciplined approach to entering and exiting positions. Biggs also agrees with our view that you should be backing managers who are also investors in the company – not simply businessmen drawing a wage. At Cadence, the Management team invest their own money in the fund.

Some of the author’s experiences in setting up a fund, managing it, pitching it and raising money are must-read insights for any professional investor – particularly those with an entrepreneurial flare. This book is filled with entertaining stories about the industry, the people in it and the sometimes surreal decision-making situations they face. There are many lessons to be learned from this book (too many to go over all of them). Borrowing from the book, investing is as much of an art as it is a science. As such, you need a very broad skill set (and an eager disposition) to be successful. This is a highly recommended read for anyone interested in funds management.