Emotional Makeup
Hohn launched TCI and an affiliated charity, the Children’s Investment Fund Foundation, in 2004 after earning a reputation as a gifted stockpicker in the London office of Perry Capital, a New York-based hedge fund. His wife, Jamie Cooper, whom Hohn met at Harvard in the early ‘90s, ran the foundation, and they became a London power couple as TCI pumped money into the charity.

Thanks to Hohn, the foundation has $5.1 billion that it uses to fund programs such as strengthening nutrition for youngsters in deprived communities, protecting adolescents from slavery and human trafficking, and expanding pediatric HIV treatment in Africa. Hohn and Cooper regularly traded notes with Bill and Melinda Gates, and in 2012, David Cameron, then Britain’s prime minister, invited Hohn to speak at a summit on malnutrition at No. 10 Downing Street.

At TCI, the vibe was decidedly more mercenary. Hohn developed an investment strategy predicated on his own “personal, intellectual, and emotional makeup,” as he put it to Justice Jennifer Roberts, who presided over his 2014 divorce, which resulted in a £337 million settlement for Cooper. Hohn’s approach meant conducting meticulous analysis and searching for weak management teams that other investors avoid. “Think of it like the damaged goods department of a department store where you can get 80 to 90% off because most people won’t buy,” Hohn said in a video interview with Institutional Investor magazine in 2013.

When he settles on a target, Hohn takes highly concentrated stakes; a single stock can account for more than 15% of his portfolio. Then he goes to work agitating for changes in the company’s strategy. In 2005, he took a sizable stake in Deutsche Boerse in Frankfurt to stop what he called a “value-destructive acquisition” of the London Stock Exchange. Rebuffed, he called on shareholders to remove CEO Werner Seifert and kill the deal. The board acquiesced, and after Seifert left the company, he characterized Hohn and other shareholder activists as locusts.

Hohn was the catalyst for one of the most disastrous banking deals in memory. In 2007, TCI bought 1% of ABN Amro and started calling for a sale of the Dutch lender. After stockholders supported TCI, ABN Amro was sold to a consortium led by Royal Bank of Scotland Group in the biggest European banking merger ever. TCI pocketed $1 billion, but the global financial crash of 2008 poleaxed the newly combined institution and led to its nationalization by the British government.

TCI has also exploited scandals such as the 2011 crisis at Rupert Murdoch’s News Corp. The company’s U.K. newspapers had hacked mobile telephones and voice mail accounts of celebrities, royals, and a murdered 13-year-old girl. As the media giant’s stock plunged, Hohn purchased almost $1 billion in shares. After News Corp. settled lawsuits in the affair, Murdoch bought back shares and broke up the company. The stock rallied over the next two years, earning a 57% return for TCI—and, for Hohn, reinforcing his reputation as a gifted money manager.

Yet he has suffered defeats that show the limitations of his activism. In 2012, TCI sought to force Coal India, a state-controlled producer, to boost dividends and stop selling super-cheap coal to nearby power plants. But the government had little interest in seeing energy prices rise; in 2014, TCI gave up and bailed out of the stock, which had fallen 19% during the campaign. Four years later, the London Stock Exchange Group Plc spurned Hohn’s demands to oust its chairman and renew the CEO’s contract. After that effort was rebuffed, TCI sold most of its 5% stake in the company, only to see its shares almost double the following year.