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By Barry Cohen

Michael Hintze: The market environment is fascinating intellectually
Michael Hintze: The market environment is fascinating intellectually   (photographs by Tony Law)

MICHAEL HINTZE DOES NOT PROJECT an intimidating persona. In contrast to many hedge fund titans, the amiable Hintze comes across more like an absent-minded professor than a hard-charging deal maker. The tall, white-haired Australian speaks like the excitable engineering geek he once was, firing off ideas and themes in a rapid-fire, staccato fashion, rarely finishing a sentence before he moves on to the next one. His delivery is so manic that one former employee likens it to "driving a golf ball around a tiled bathroom."

But Hintze’s hyperactive speech patterns and affable nature belie serious investing acumen and business savvy: He is the founder and senior investment officer of CQS, a $10.5 billion hedge fund with headquarters in London and offices around the world. Over the past decade, CQS has evolved from a single-strategy business running a lone hedge fund out of one office into a global multiasset manager with 208 employees and additional offices in New York and Hong Kong, and regional offices in Sydney, the island of Jersey and Geneva. The firm now runs six hedge funds spanning numerous credit-related strategies, which collectively manage $6.3 billion in hedge funds and customized portfolios. It runs another $2.5 billion in long-only funds and related customized products and an additional $1.7 billion in collateralized loan obligations.

Getting to its current size and stature hasn’t been a smooth ride, however. Before the financial crisis of 2008, CQS managed $9.5 billion, making it one of the largest hedge funds in Europe, and the firm had racked up numerous EuroHedge Awards for strong performance. But like many credit-focused firms, CQS took a serious hit during the meltdown in the convertible bond market, which pummeled CQS’s then-largest fund. The CQS Convertible & Quantitative Strategies Fund, which at one time managed as much as $2.84 billion, lost 32.44% in 2008.

Still, Hintze made the decision not to impose any gates, suspensions or side pockets on his funds. His reward? Investors fled. The firm ended 2008 with $7.5 billion in assets, but many of the redemptions kicked in during the first two quarters of 2009 because the firm required investors to give 90 days’ notice. Though few of CQS’s other funds fared as badly as the main fund—its self-invested fund of funds lost a modest 7.12%—and performance bounced back strongly in 2009, the firm ultimately lost a third of its assets. CQS exited the crisis with $6 billion because of the unrestricted redemption run.