| Christopher Hohn, TCI (Photo Credit: Andreas Scholz/Bloomberg News). |
The Children’s Investment Fund is off to another strong year. Chris Hohn’s TCI was the top-performing large activist fund in the first half of a mixed year for high-profile investors in the industry. In the second quarter, the London-based fund was up nearly 8 percent, bringing its gain for the first half of the year to 19 percent. That compares with a 13.5 percent return last year and a 14.4 percent gain in 2015.
Hohn, who typically holds a handful of stocks, tends to maintain a much lower profile than many of the other activists, partly because he’s in Europe. His gains in the second quarter were led by Aena, a Spanish airport owner and operator privatized by the government, whose shares were up 18 percent.
Other big gains came from its activist position in Safran, which was up 16 percent in the quarter. The hedge fund is currently engaged in a campaign to block the Paris-based company’s planned $9 billion acquisition of Zodiac Aerospace, which makes interiors for airplanes. Hohn asserts Safran is “overpaying” for a “troubled” business. He even created a website, www.astrongersafran.com, to make his case to shareholders.
Hohn, who owns 4 percent of Safran’s shares, said in a letter in February that 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. In May, he opposed a revised, lower offer.
TCI, which typically runs a very concentrated portfolio, also has large positions in two U.S. cable and media giants: Charter Communications and Comcast. In the second quarter, both stocks were up slightly. And in the first half of the year, Charter was up about 17 percent while Comcast was up nearly 13 percent.
Elsewhere, only one other activist fund appeared to generate a double-digit gain in the first half of the year. The Tosca Opportunity fund, headed by Martin Hughes, was up 6.3 percent in the second quarter and 14.3 percent for the year.
As we earlier reported, the London-based fund was driven by gains from Esure, the U.K. auto insurer, and GoCompare, which provides online price comparisons for a variety of U.K. products. GoCompare was spun off from Esure in November.
We also reported earlier reported that Jeff Ubben’s ValueAct Capital was up 1.9 percent in the second quarter and 7.5 percent in the first half. Second quarter gains were driven by Rolls Royce, the London-based aircraft engine maker, and to a lesser extent software and cloud computing company Microsoft, consultancy Willis Towers Watson, real estate giant CBRE Group and Alliance Data, a marketer of private-label credit cards.
Mick McGuire III’s Marcato International was up 7.7 percent in the first half while Barry Rosenstein’s JANA Partners rose 5.8 percent. Keith Meister’s Corvex, which was up about 1.5 percent in June, is up in the mid-single digits for the year.
Other activists did not fare as well in the first half of the year. For example, Nelson Peltz’s Trian Partners was up 2.1 percent. It recently took a sizable stake in Procter & Gamble.
Several funds are even in the red.
One fund managed by Bill Ackman’s Pershing Square Capital Management is down 0.40 percent, while another is off about 2 percent. And Cliff Robbins’s Blue Harbour Active Ownership Partners was off by 1 percent. However, it is said to have rebounded this month, and is up about 2 percent after WebMD — its fifth largest holding at the end of the first quarter — agreed to be acquired by private-equity firm KKR & Co.
