| Christopher Hohn, manager and founder of The Children’s Investment Fund (Photo credit: Andreas Scholz/Bloomberg News). |
Christopher Hohn continues to roll.The head of London-based the Children’s Investment Fund Management, or TCI, led all activist hedge funds in the first quarter in what was generally a mixed period for the strategy. On average, activist hedge funds posted a 3.3 percent gain in the quarter, according to data provider Preqin.
TCI was among several high-profile funds that fared much better than the average. Hohn’s fund was up 11.1 percent in the first quarter after gaining 13.5 percent last year, when it was one of the best-performing activists. The concentrated fund continues to benefit from several of its older holdings. For example, shares of cable and broadband giant Charter Communications surged 21 percent, Yahoo was up 20 percent, and European aircraft maker Airbus Group rose 16 percent.
Meanwhile, TCI is engaged in an active campaign to block Safran’s planned $9 billion acquisition of Zodiac Aerospace, which makes interiors for airplanes. Hohn asserts Safran, which makes interiors for airplanes is “overpaying” for a “troubled” business. Hohn, who owns 4 percent of the shares, said in a letter back in February he would oppose the deal and launch a campaign to convince other shareholders to vote no. The hedge fund manager figures Zodiac is worth one-third less than Safran is proposing to pay.
Tosca Opportunity, a much smaller UK-based fund headed by Martin Hughes, was up 8.8 percent in the first quarter. It was led by two of its older holdings: Esure, a UK internet-based insurance company, and IWG, formerly called Regus, which is a Brussels-based provider of office space and services. According to Hughes, both companies are headed by their founders, who each hold sizable stakes of nearly one-quarter of their companies. Both companies had strong growth in 2016 “and had the confidence to announce expected strong growth for 2017,” according to Hughes.
As we earlier reported, Jeffrey Ubben’s ValueAct Capital posted a 5.44 percent gain in the first quarter even though it still owns a sizable stake in the infirm drug company Valeant Pharmaceuticals International. ValueAct’s sizable stake in London-based aircraft engine maker Rolls-Royce surged 15 percent last quarter. In March 2016 the company named Bradley Singer, ValueAct’s chief operating officer, to the board of directors. As we reported earlier in the week, the San Francisco firm told investors it is returning some capital in the second quarter.
Otherwise, most activists lagged the Standard & Poor’s 500 stock index, which was up 6.1 percent in the first quarter.
For example, Clifton Robbins’s Blue Harbour Group was up 2.1 percent in its main hedge fund after gaining 15.5 percent last year. It was led by BWX Technologies, a supplier of nuclear components and fuel to the U.S. government. The hedge fund sold nearly half its position in the stock in early March. It also benefited from farm equipment manufacturer AGCO Corp. It cut its stake in the stock in February. Blue Harbour also made money from Allscripts Healthcare Solutions.
Elsewhere, Richard “Mick” McGuire III’s Marcato International was up 3.2 percent in the first quarter. Keith Meister’s Corvex Management was up 1.8 percent. And Nelson Peltz’s Trian Partners was flat in the first quarter.
