Biggs Sees Bubble in Private Equity

In light of those solid returns, the private equity world has been on fire, raising more than $160 billion from investors this year alone. Yet despite a number of megadeals such as the proposed buyouts of HCA(HCA), Harrah's(HET) and Freescale(FSL), only a fraction of that newly raised money has been put to work.

Cynics like Biggs worry that with private equity firms sitting on so much money, they'll be forced to spend it on ever bigger and bigger deals. The fear is that some of these debt-laden transactions will end up going bust, or the acquired businesses will prove too difficult and costly to slim down and turn around.

Yet despite his worries about the looming private equity bubble, Biggs says he's bullish on the market. He says many hedge funds and institutional investors have shied away from stocks, looking for better returns elsewhere. But with the equity markets performing strongly the past few months, he expects institutional investors to scramble back into stocks.

"I'm very bullish here," says Biggs. "You could have mutual funds and hedge funds scramble to get aggressive."

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