Chris Hohn with a current wealth of a reported $6.7 billion is in 365 place on the Forbes billionaires list. He also took 9th place in the category of highest-earning hedge fund managers in 2018. He is currently managing The Children’s Investment Fund with a $33 billion portfolio. Chris Hohn’s portfolio is highly concentrated into 9 big holdings.
The biggest holding is General Electric, followed by Canadian National Railway, and Canadian Pacific Kansas City. Although he manages a small number of holdings prone to concentration risk, on the plus side he diversified the portfolio among different industry sectors.
Chris Hohn started the TCI fund in 2003 with the intent to donate 50% of the management fee to charity. This lasted until the 2008 world economic crisis, and after that, the donations were done on a discretionary basis. Understanding how Hohn is managing his investment is a good lesson for every investor due to his constantly high returns averaging 21% annually since inception.
Key Sectors
Since The Children’s Investment Fund currently has 9 holdings in its portfolio, the importance of sector diversification becomes even more crucial. Chris Hohn has divided his investments into these sectors:
- Consumer Discretionary with 30% of the portfolio valued at $9.8 billion
- Finance with 25.1% of the portfolio valued at $8.21 billion
- Technology with 21.7% of the portfolio valued at $7.08 billion
- Industrials with 17.6% of the portfolio valued at $5.74 billion
- Healthcare with 5.4% of the portfolio valued at $1.76 billion
- Real Estate with 0.3% of the portfolio valued at $93.1 million.
Current Holdings
- General Electric (NYSE:GE) with 17.55% of the portfolio
A new holding in Chris Hohn’s portfolio dating to Q1 2023. During Q1 and Q2 he bought 41.7 million shares and invested $3.77 billion. Through the rest of the year, the price continued to rise, reaching $137.71. When we compare the price to just one year before when Hohn bought it for $84.13 and $101.47 this seems like a good deal. For only a year, Hohn netted a return of 52%.
- Canadian National Railway (NYSE:CNI) with 15.81% of the portfolio
John has been trading this railway giant since 2018 and has had solid success. The stake in the company cost him $4.05 billion, while its current value is $5.17 billion, resulting in a gain of 28%. Since 2021 he has been increasing his position in the company. He bought on three occasions a total of 20 million shares, raising his stake to 40.9 million shares.
- Canadian Pacific Kansas City Ltd (TSE:CP) with 14.18% of the portfolio
Another railway giant is a part of Hohn’s portfolio, also dating back to 2018. Between 2018 and 2020 he accumulated a total of 56 million shares, making just one minor sale. He invested $2.25 billion into the holding, while his stake is now valued at $4.63 billion. This is for now proving to be a winning pick for Hohn creating 106% gains so far.
- Visa Inc Class A (NYSE:V) with 14.16% of the portfolio
Chris Hohn has been trading Visa stocks since 2019. He now owns 16.8 million Visa Class A stocks, making him the biggest stakeholder in the company. During 2023 he has been trimming this position by selling stocks on three occasions. He sold over 3 million stocks while the price was still rising. Hohn invested in Visa stocks a total of $3.41 billion, while its current stake is worth $4.63 billion. This translates into modest gains of 36% so far.
- Moody’s Corp (NYSE:MCO) with 12.63% of the portfolio
Moody’s stocks are a regular part of Hohn’s portfolio, and he has been regularly trading them since 2015. Since 2022 he has been stacking up Moody’s stocks, reaching a total number of 10.5 million. In Q3 2023 he sold 149 thousand shares at an average of $34.16, while the price continued to rise. The current stock value is $398 and the value of Hohn’s stake is $4.13 billion. Hohn invested a total of $1.88 billion, making this a very profitable investment with a gain of 119%.
- S&P Global Inc (NYSE:SPGI) with 12.56% of the portfolio
Hohn has been regularly trading S&P Global stocks since 2017 and he now owns 9.06 million stocks. He is the biggest stakeholder in the company and his stake is worth $4.11 billion. He invested in the company $2.94 billion resulting in a gain of 40% so far. During 2023 he sold and bought on one occasion. The price of stock has been on the rise since the beginning of 2023, and it moved from $335 to $453.
- Alphabet Inc Class C (NASDAQ:GOOG) with 7.51% of the portfolio
Investment into Class C Alphabet stocks has proven to be one of the best Hohn’s decisions in the last couple of years. He timed both buys and sells perfectly, managing to sell at price peaks, while he managed to increase his stake when the stock value fell. He now owns 16.9 million shares valued at $2.45 billion. His investment in this holding is $977 million netting him a gain of 151%.
- Thermo Fisher Scientific Inc. (NYSE:TMO) with 5.39% of the portfolio
A newer addition to Hohn’s portfolio, Thermo Fisher has yet to prove its worth. Between Q4 2022 and Q3 2023, he bought on 4 occasions, raising his stake to 3.19 million shares. Hahn invested $1.74 billion, while the price of stocks remained almost the same, resulting in 1.2% gains so far.
- Ferguson Plc (NYSE:FERG) with 0.29% of the portfolio
The smallest holding in Hohn’s portfolio is also a recent one. In Q2 2023 he bought 491 thousand shares at an average $142.42, for an estimated $69.9 million. Since then the price rose to $192.82 so the current value of the holding is $94.6 million. In the short term, this trade has brought a gain of 35%.
Chris Hohn Investment Philosophy and Strategies
Chris Hohn is known for using his often unconventional and controversial tactics. He uses some of the key principles of value investing that he picked up from Warren Buffett and combines them with activist campaigns.
His first task is to understand what he is investing in. He goes through the company’s business model, and checks if it is sustainable in the long run. He prefers a long-term investment horizon, and that is why he puts so much value into companies’ fundamentals.
Hohn’s team has members with a deep understanding of specific industry sectors. That generates an edge over other funds because that often hard-to-get info can be crucial when making investment decisions.
The perspective of the industry sector, its competitive landscape, and understanding of unique values that the target company can bring to the portfolio, is often the main difference between a successful and failed investment decision.
Take A Look At Chris Hohn explains His Investment Strategy:
Hohn’s fund aims to concentrate a portfolio that goes against the mainstream approach of other funds. He explains it by liking to have a smaller number of good ideas around him. Since he puts a lot of thought into every acquisition, he avoids spreading out and losing sight of details of his holdings.
Although Hohn likes to keep his portfolio concentrated, he wants to have geographical diversification. He often invests in companies from markets that are overlooked or undervalued.
Also, the pinnacle of his strategy is to conduct activist campaigns and persuade companies to make strategic shifts. The goal is to make a set of changes necessary to push their operations upwards and to bring positive returns.
A notable example of this approach was with Tokyo-based utility company J-Power. Hahn’s goal was to push the top management to double the company’s dividends, add independent directors to their board, and reduce their cross-shareholding with other Japanese companies. To do so, Hahn increased his stake in the company from 9% to 20% but still failed on this occasion.
FAQs
What Are the Top Holdings of TCI Fund?
The top Holdings of the TCI fund are:
- General Electric with 17.55% of the portfolio
- Canadian National Railway with 15.81% of the portfolio
- Canadian Pacific Kansas City Ltd with 14.18% of the portfolio
- Visa Inc Class A with 14.16% of the portfolio
- Moody’s Corp with 12.63% of the portfolio.
Who Owns TCI Fund Management?
The founder and majority shareholder of TCI fund management is Chris Hohn. He shares the ownership with the investors who are a mix of individual and institutional investors.
Final Thoughts
Hohn is known as one of the most successful hedge fund managers coming from Europe. His mix of activist and value investing principles could be an answer to a struggling hedge fund landscape in recent years.
Although TCI fund management delivered impressive 18% annual returns since its inception it went through a recent rough patch. In Q3 2023 they reported a -5.29% annual return. In February 2023 they reported a profit of $370 million dating last February. When we compare it with $714 million in the year before, it shows a drop of 48%.
Some of his crucial holdings like General Electric and Visa increased their performance in 2023, and when we are looking at Q4 2023 and 2024 data, we can see that most of his holdings are doing good. That may show some promise to this England-based activist guru.
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