TCI Fund Management saw a 15 percent gain in 2024. However, the hedge fund headed by Chris Hohn significantly underperformed the S&P 500, which surged 25 percent, including dividends.
For perspective, in a chart seen by Institutional Investor and contained in the firm’s fourth-quarter letter, TCI emphasizes that the S&P 500, excluding the eighth-largest technology, media, and telecommunications stock, was up just 13 percent last year.
TCI, for its part, does own two of those companies’ stocks — Microsoft and Alphabet — which combined accounted for about 20 percent of U.S.-listed assets. The firm had posted a 33 percent gain in 2023, enabling Hohn to top II’s annual Rich List as the highest-earning hedge fund manager, with $2.9 billion. TCI declined to comment.
Hohn typically runs a concentrated mostly long portfolio. His $44 billion U.S. stock portfolio held just ten stocks as of the end of the third quarter, whereas the firm held a handful of additional positions traded outside the U.S. Hohn has long been known as an activist, but in an interview with II several years ago, he stressed, “Activism is now more opportunistic rather than fundamental for us.”
One of TCI’s biggest winners last year was GE Aerospace, the largest U.S.-listed long, accounting for about 21 percent of U.S. longs as of September 30. It is the surviving entity of General Electric after its major restructuring. The stock was up more than 65 percent in 2024. TCI had boosted its stake by more than 6.5 million shares in the first quarter of 2024, to nearly 59 million, but then unloaded more than 10 million shares the following quarter.
TCI also did well with its investment in Safran, a French multinational aerospace, defense, and security company. The stock was up about 23 percent last year. Safran is a long-held activist position for TCI.
Most of TCI’s other U.S.-listed long positions also were profitable in 2024.
For example, shares of credit rating company Moody’s, the second-largest U.S.-listed long, rose more than 20 percent last year. Financial information giant S&P Global, the third-largest U.S. long, gained more than 13 percent. Shares of cloud computing giant Microsoft, the fourth-largest U.S.-listed long, were up nearly 12 percent.
TCI had fully unloaded a large stake in Microsoft in the third quarter of 2023. But it began rebuilding a big stake in the stock the following quarter.
Shares of No. 6 long, Visa, the payments giant, rose more than 21 percent last year, and TCI’s small positions in each of the two classes of Alphabet’s shares were up about 35 percent.
On the other hand, TCI lost a small amount on Canadian Pacific Kansas City, a merger of two giant railroads. TCI had an activist position in Canadian Pacific before the deal.