The Children's Investment Fund Management

Charity

Main article: The Children's Investment Fund Foundation

TCI derives its name from the Children's Investment Fund Foundation (CIFF), a charitable foundation set up by Chris Hohn and his ex-wife, Jamie Cooper-Hohn. In an example of "venture philanthropy", CIFF initially received a portion of TCI's profits and other donations. CIFF focuses on improving the lives of children living in poverty in developing countries, and has grown to be one of the largest charities in the United Kingdom. After suffering a 43% loss during the 2008 calendar year, as of July 2009 the previous financial year had seen a rebound of over 70% profit and revenue for TCI.

Through changes set in motion in 2012, the fund and foundation were split up. The fund no longer donates money to the foundation on a contractual basis, though it has done so on a discretionary basis.

Investor activism

TCI has a reputation for aggressive shareholder activism. TCI has been a major shareholder of the German stock exchange Deutsche Börse where it forced the resignation of the CEO after he refused to abandon his plan to take over the London Stock Exchange.

In 2007, after acquiring 1% of the shares of major Dutch bank ABN AMRO, TCI led an attack demanding the bank split up or sell to the highest bidder to produce shareholder value. ABN was ultimately split and sold to Royal Bank of Scotland (RBS), Fortis, and Banco Santander and was a major contributing factor in the downfall of both RBS and Fortis. In June 2007, TCI failed in its attempt to get the Japanese utility J-Power, in which it had acquired a 10% stake, to boost its dividend. The general meeting of shareholders rejected the proposal, prompting a severe selloff in the stock.

In 2006, as a shareholder of both Mittal Steel Company and Arcelor, TCI supported Mittal Steel in the company's unsolicited takeover offer for Arcelor.

TCI initiated legal action against the Government of India using provisions in the bilateral trade treaty between United Kingdom and India regarding the under pricing of coal by Coal India Limited, in which TCI holds a 1% stake.

In 2008 the US railroad company CSX won a court case against the Children's Investment Fund and 3G Capital Partners, another hedge fund, after the funds announced that they had acquired about 20% of CSX's stock. TCI succeeded in electing four of its five directors to the CSX board, but CSX shares declined by about 50 percent after the meeting. TCI declared defeat and sold its shares, taking its directors off the board. Chris Hohn, the founder of TCI vowed to abandon shareholder activism as an investing strategy. When the case was appealed, the judge gave limited support for the original finding.

In 2008 the company was suffering from heavy losses but recovered very well and assets under management reportedly stood around $6 billion. At the end of 2010, the company recorded a loss of 80% in profits as a result of reduced investment performance. By 2020 the hedge fund was managing more than $30 billion. It recorded a 41% gain in 2019 after gaining just 0.9% in 2018.

In November 2022, Chris Hohn on behalf of TCI wrote an open letter to Sundar Pichai, CEO of Alphabet and Google. In the letter, Hohn stated that Google's headcount was too high and should be reduced. He also stated that there should be more effort to reduce losses in its self-driving unit Waymo. On 20 January 2023 Alphabet cut 12,000 jobs which was 6% of its workforce. On the same day, Hohn issued another letter to Pichai stating that there should be further job cuts with a target of 20%.

Awards

The fund won Eurohedge's European Hedge Fund of the Year award in 2004, 2005, and 2013.

References

References

1. (16 September 2019). "Chris Hohn’s hedge fund TCI beats markets with 33% gain". Financial Times.
2. (17 January 2022). "Extinction Rebellion donor leads world's top-performing hedge fund". The Guardian.
3. Opalesque. (3 July 2009). "TCI sees big rebound in 2009".
4. (18 June 2014). "TCI Hedge Fund in Britain Ends Ties to Charitable Arm".
5. [https://web.archive.org/web/20060126204603/http://businessweek.com/magazine/content/05_21/b3934161_mz035.htm ''Businessweek''—A Little Fund With Big Demands]
6. NRC Handelsblad (Dutch Newspaper), February 22, 2007
7. Staff, Correspondence. "TCI Fund Management Ltd – 13F Holdings – Fintel.io". FinTel.
8. BS Reporter. (29 March 2012). "TCI starts legal action against Indian govt under UK, Cyprus treaties".
9. (19 July 2011). "Anticlimax in long-running CSX court case".
10. (28 April 2009). "Hedge fund dumps stake in CSX".
11. "TCI sees profits fall 80%".
12. (8 January 2020). "Billionaire Hohn's TCI Fund Surges 41% in Best Year Since 2013".
13. Kruppa, Miles. (15 November 2022). "Activist Investor TCI Calls on Google Parent Alphabet to Slash Costs". Wall Street Journal.
14. (2022-11-15). "Investor TCI urges Alphabet to cut excessive headcount, costs". Reuters.
15. (2023-01-23). "Christopher Hohn wants Alphabet to lay off 20% of its staff and cut employee pay {{!}} Fortune".
16. "Chris Hohn – Childrens Investment Fund – 2020 13F Holdings, Performance, and AUM – Insider Monkey".
17. [https://web.archive.org/web/20130823033958/http://www.hedgefundintelligence.com/Product/17249/Forthcoming-Events-Details/EuroHedge-Awards-2013.html TCI, Jabre, Toscafund, VR lead EuroHedge Awards 2013 winners]