Christopher Hohn is a British billionaire and hedge fund manager known for his charitable work and huge donations, as well as his brutal activist campaigns. Hohn founded The Children's Investment Fund Management (TCI) in 2003. Hohn had pledged to donate 50 basis points of the management fee to The Children’s Investment Fund Foundation, a charitable fund founded by Hohn and his ex-wife Jamie Cooper-Hohn. The foundation’s primary goal is to transform the lives of children and adolescents. It’s also working for several other causes, including climate, sexual & reproductive health and to improve the lives of girls all over the world.
In addition to his charity, what sets Hohn apart from other hedge fund managers is his laser-focused and often stubborn approach in activist investing. TCI Fund Management posted profits for 13-straight years through 2021. The fund lost money in 2022 as it fell by 18%, according to a Bloomberg report. The report, which cited a person with knowledge of the matter, said the fund lost money due to its huge bets on Alphabet and Microsoft. Shares of major tech companies fell in 2022 as investors fled growth stocks and found refuge in value and dividend plays.
Chris Hohn's Latest Activist Campaigns
Unlike several other major hedge funds, Hohn’s fund is highly concentrated in a few stocks. This makes the hedge fund vulnerable when the overall market declines. Despite this, Hohn has been relentless in pushing companies to make fundamental changes and improve their performance. One of his recent targets is Alphabet. Back in November, Hohn penned a letter to Alphabet Inc. (NASDAQ:GOOG) CEO Sundar Pichai, asking the executive to take “aggressive action” to cut back on expenses and reduce headcount.
What makes this letter interesting is that it was written before Alphabet Inc. (NASDAQ:GOOG) came under immense pressure amid the AI threats following the launch of ChatGPT and before analysts and investors started openly criticizing the company for over-hiring. Ultimately, Alphabet Inc. (NASDAQ:GOOG) had to accept the reality as the company announced to lay off thousands of jobs earlier this year.
However, Chris Hohn is still not happy.
In another letter to Sundar Pichai on January 20, Hohn said that while he likes that Alphabet Inc. (NASDAQ:GOOG)’s management is finally doing something to right size the company’s overgrown size and costs, the 12,000 job cuts “do not even reverse the very strong headcount growth of 2022.”
Hohn said that Alphabet Inc. (NASDAQ:GOOG)’s management will “ultimately need to go further.”
Hohn also said that the median salary at Alphabet Inc. (NASDAQ:GOOG) is too high and he believes the company is now in a position to decrease its salaries since the competition for talent in the industry has fallen significantly.
Earlier in February, billionaire Hohn wrote a letter to Airbus (AIR.PA), in which TCI has a $4.3 billion stake. The billionaire said he was writing to “urge you to immediately terminate" negotiations with Atos over the purchase of a minority stake in Evidian. Hohn said that investing in Evidian would be “value destructive” and he believes Evidian “is a low-quality, highly levered company, with 60,000 employees, operating in an extremely competitive market.”
That’s not the first time Hohn used the word “value destructive” in his letter. In 2021, the hedge fund manager had asked Canadian National Railway (NYSE:CNI) to drop its bid for Kansas City Southern. Hohn said that the deal faced significant regulatory hurdles and a decision to create a voting trust “would be hugely value destructive”.
The company went ahead with the deal that ultimately fell apart amid regulatory hurdles, just as Hohn had warned in his letter. Giving in to the huge pressure from Hohn, Canadian National announced in October 2021 that its CEO Jean-Jacques Ruest will leave the company as soon as January.
Best Stocks To Buy Now According To Billionaire Chris Hohn
Chris Hohn Hohn's Climate Activism
Chris Hohn’s activism also addresses the climate change problem. And unlike other fund managers who are happy with just publishing yearly climate reports and talking ESG scores, Hohn has a no non-sense approach when it comes to ESG as he believes most of the activism in the climate space is not producing any results.
Hohn, who donates to Extinction Rebellion, said at the Bloomberg Intelligence ESG Investment Forum in London in May 2022 that ESG engagement is not producing any meaningful results.
“We should stop pretending and just be honest. The acid test is actual emissions, are they falling or are they rising? And they’re rising. And that’s where the rubber hits the road.”
We picked the top 10 stocks from Chris Hohn’s fourth quarter of 2022 portfolio for this article.
Best Stocks To Buy Now According To Billionaire Chris Hohn
Chris Hohn sold over 5 million shares of Union Pacific Corporation (NYSE:UNP) during the fourth quarter of 2022, ending the period with just 5,191 shares of the company, which were worth about $1.1 million. As of the end of the fourth quarter of 2022, 83 hedge funds reported owning stakes in Union Pacific Corporation (NYSE:UNP), down from 74 funds in the previous quarter.
Here is what Diamond Hill Capital Management specifically said about Union Pacific Corporation (NYSE:UNP) in its Q2 2022 investor letter:
“Union Pacific Corporation (NYSE:UNP) is a large railroad company that carries freight across the western US and between Canada and Mexico. It transports a variety of industrial goods, raw materials and containerized freight between major US ports, industrial hubs and international gateways. The goods that Union Pacific and other railroads transport are fundamental inputs in the economy and are resilient to long-term trends in the business cycle. We believe Union Pacific offers a compelling investment opportunity as its substantial infrastructure investments, relative cost advantages, limited leverage and the essential nature of the products it delivers provides the company with what we believe is one of the widest moats in the transportation sector. We also like that Union Pacific has a shareholder-oriented management team that is focused on growing earnings while returning capital to shareholders.”
Thermo Fisher Scientific Inc. (NYSE:TMO) is one of the best stocks to buy according to billionaire Chris Hohn. At the end of the fourth quarter of 2022, TCI Fund Management reported owning about $35.12 million worth of stake in Thermo Fisher Scientific Inc. (NYSE:TMO) via 67,770 shares. In February, Thermo Fisher Scientific Inc. (NYSE:TMO) declared a quarterly dividend of $0.35 per share, which was a 16.7% increase from the previous dividend. The dividend is payable on April 14 to shareholders of record as of March 15.
Polen Capital made the following comment about Thermo Fisher Scientific Inc. (NYSE:TMO) in its Q4 2022 investor letter:
“Thermo Fisher Scientific Inc. (NYSE:TMO) is a leader in attractive end markets with a skilled management team who has demonstrated the ability to consistently and wisely allocate capital. It is the world leader in serving science. It is a globally scaled supplier serving more than 400,000 customers working within pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, research institutions, and government agencies. Thermo provides many of the products and services that companies in these industries, particularly pharma and biotech, need to operate and drive science forward. The company manufactures and sells instruments, reagents, and consumables used for a wide range of applications in labs.
Chris Hohn owns about 15.9 million Alphabet Inc. (NASDAQ:GOOGL) shares as of the end of the fourth quarter of 2022. Overall, 209 hedge funds out of the 943 hedge funds tracked by Insider Monkey reported owning stakes in Alphabet Inc. (NASDAQ:GOOGL) as of the end of the fourth quarter of 2022.
In February, Wells Fargo analyst Brian Fitzgerald said in an interview on CNBC that he believes the AI hype has created opportunities for Alphabet Inc. (NASDAQ:GOOGL). The analyst acknowledged that Alphabet Inc. (NASDAQ:GOOGL) is facing some threats in the market and the launch of its chatbot was underwhelming but he still believes the AI deployment is possible without disrupting Google's core business.
Artisan Value Fund made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q4 2022 investor letter:
“Our biggest detractors in Q4 included communication services sector holdings Alphabet Inc. (NASDAQ:GOOG) and Warner Bros Discovery (WBD). For Alphabet, Google’s parent company, growth has decelerated as advertisers have pulled back on digital ad spend following a COVID-driven acceleration as well as due to economic uncertainties. Longer term, Alphabet remains well positioned to win in multiple ways, whether in search, online video or in the cloud. We continue to see large profit pools for Alphabet in the early stages of monetization, along with the migration of advertising dollars away from traditional mediums, like TV, to online search and video. These factors give us confidence Alphabet continues to have a long runway to grow revenue and profits. Additionally, management has returned capital to shareholders— another lever that can be used to increase the per share value of the business. We view Alphabet as one of the best businesses in the world, capable of expanding revenues at an above-average rate for years to come, with a bulletproof balance sheet and an average asking price. It’s a name we’ve held since 2015, and we believe Alphabet will continue to be a strong compounder of value in the future.”
Moody's Corporation (NYSE:MCO)’s shares have gained about 6% year to date. For the fourth quarter, Moody's Corporation (NYSE:MCO) posted adjusted EPS of $1.60, beating estimates by $0.13. Revenue in the quarter fell 16.2% on a YoY basis to $1.29 billion but beat estimates by $20 million. For 2023, Moody's Corporation (NYSE:MCO) expects its revenue to increase in the mid-to-high-single-digit percent range. Adjusted EPS is expected to come in the range of $9 to $9.50 versus the consensus of $9.28.
Chris Hohn’s TCI Fund Management owns a $2.5 billion stake in Moody's Corporation (NYSE:MCO)’s as of the end of the fourth quarter of 2022, as the hedge fund upped its stake in the company by 12% in the period. Overall, out of the 943 hedge funds tracked by Insider Monkey, 55 hedge funds reported owning stakes in Moody's Corporation (NYSE:MCO), down from 63 hedge funds in the previous quarter.
S&P Global Inc. (NYSE:SPGI) is one of the best stocks to buy according to billionaire Chris Hohn. Recently, S&P Global Inc. (NYSE:SPGI) posted its Q4 results that beat analyst estimates. Adjusted EPS in the quarter came in at $2.54, beating Wall Street estimate of $2.48. Reported revenue in the period came in at $2.94 billion, crushing past the analyst estimate of $2.88 billion.
As of the end of the fourth quarter of 2022, 97 hedge funds tracked by Insider Monkey reported owning stakes in S&P Global Inc. (NYSE:SPGI). The total value of these stakes was $7.8 billion. Chris Hohn is the biggest stakeholder of S&P Global Inc. (NYSE:SPGI), followed by William Von Mueffling's Cantillon Capital Management which owns a $696 million stake in the firm.
Andvari Associates made the following comment about S&P Global Inc. (NYSE:SPGI) in its Q4 2022 investor letter:
“S&P Global Inc. (NYSE:SPGI) is another company we own that is part of a duopoly in the business of credit rating. S&P and Moody’s have roughly equal market shares and rate more than 90% of all bonds worldwide. The service provides high value for the cost. A company that chooses to issue debt without a rating will pay an interest rate that could be higher by half of a percent. The cost of a higher interest rate far exceeds any savings gained by not using the services of S&P.
