Good Companies Stay Good: TCI’s Hohn On Building Eight-Year Positions And Avoiding Shorts

In a discussion that moved from the mechanics of public-market investing to the ethics of giving money away, Sir Chris Hohn, founder of TCI Fund Management and the Children’s Investment Fund Foundation (CIFF), laid out a disciplined philosophy built on risk control, durable business models and a long time horizon. Speaking with an interviewer at the Money Maze Allocator Summit in London, he repeatedly returned to a simple idea: capital, whether in markets or philanthropy, is a tool for service.

Hohn’s framework rests on fundamental analysis and an insistence on predictability. In both investing and philanthropy he tries to strip decisions down to the few things that really matter, avoid noise and short-term volatility, and focus on outcomes that can be reasonably forecast years ahead.

Defining Investment Success through Risk Management

Hohn starts from risk, not return. “Investing is all about risk and return and the vast majority of investors focus on return,” he said, noting that most allocators are fixated on one question: “What’s your return?” By contrast, he has “focused actually on risk firstly” throughout his career. His working definition of risk, borrowed from George Soros, is “not knowing what you’re doing”. In practice, that means understanding what truly drives value and being willing to ignore most other information.

As he put it, drawing on a spiritual teaching, “very few things matter and most things don’t matter at all,” and that “could also apply to investing”. What matters most, in his view, is competition and disruption. “I hate competition,” he said, because too much competition erodes profits and can mean “you don’t make any money at all”. It also makes “predictability and valuation impossible”. Growth by itself is not enough if the industry structure is fragile or easily attacked.

That long horizon is deliberate. TCI looks for companies that can still be strong “in 20 or 30 years”, because “that’s where the value if you do an NPV model really is”. He noted that TCI’s average holding period for a stock is about eight years, and that the firm has held some names for 10, 12 or even 13 years. “That’s like starting to get into private equity land of duration of investment,” he said, and it only works “if you’re right on the first point about the quality of the company and the barriers to entry”. In simple terms, his observation is that “good companies stay good and bad companies stay bad”.

He also stressed the importance of staying within a clear circle of competence. If an idea is not relatively obvious after deep work, he would rather pass. There is no obligation, he suggested, to have a view on every sector or theme simply because others are discussing it. “If it’s not obvious you probably just leave it alone,” he said, echoing Buffett’s advice to stay within one’s sphere of competence.