Building Moats and Breaking Boards: Chris Hohn’s Playbook for Capital and Influence

I have written here before about George Soros, Stanley Druckenmiller, and Paul Singer. They are some of the figures who shaped the hedge fund industry across decades, each with a distinctive philosophy and personality. I like studying people who have spent their lives in this business, because the craft is not just about returns. It is about endurance, reinvention, and how they choose to use influence once they have it.

Chris Hohn belongs in that conversation, though I do not invest like him. My background is in private equity, which often approached investments in the way Hohn does from the public markets: concentrated bets, asset backing, and a focus on governance.

What makes him stand out to me is not simply his track record at TCI. It is his approach to spirituality and philanthropy.

In my view, his giving belongs in the same breath as Rockefeller and Carnegie. The difference is timing. Hohn did not wait until his fortune was secured to begin. He was living in New York in his early career, not yet the billionaire hedge fund manager, when he donated a $10 million bonus to charity. That money could have gone to apartments, cars, or the comforts of youth. Instead, he endowed a foundation. That act tells you more about his character than any proxy fight or financial metric.

This is why I find him inspiring, and why I call him a legend. The returns are remarkable. The campaigns are memorable. But the deeper legacy is the way he aligned capital with service from the very beginning, and how he frames giving as an expression of soul rather than strategy.

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Chris Hohn’s track record reads like a refutation of the idea that public markets force short-term thinking. Since launching The Children’s Investment Fund (TCI) in 2003, he has produced top decile long-term results by concentrating capital in a handful of advantaged franchises, staying invested for years, and acting like an owner when management drifts.

Institutions that have disclosed the figures peg TCI’s net annualized return since inception in the high-teens, far ahead of global equities. In one public pension’s diligence, TCI compounded at about 18 percent net versus roughly 7 percent for the MSCI World over the same period. In 2025, the fund was again among the industry’s leaders. It rose about 17 percent through May and later topped a 20 percent gain, powered by core holdings such as GE Aerospace GEV 0.00%↑, Microsoft MSFT 0.00%↑, and Visa V 0.00%↑. That consistency, especially after the 2008 drawdown, is the signature.

The method is simple, not easy, and it runs through everything Hohn does, including the climate accountability movement that has changed how boards think about emissions plans.

Origins

Hohn was not born into the City of London establishment. He grew up in Addlestone, Surrey, the son of a Jamaican car mechanic and a legal secretary. It was a modest household, but one that gave him an outsider’s perspective that never left. That sense of distance from the establishment, the ability to see through groupthink rather than be absorbed by it, is one of the most underappreciated traits of great investors.

He studied accounting and business economics at the University of Southampton, where fortune intervened. A visiting professor from Harvard Business School pulled him aside and told him he should apply. At first the idea seemed fanciful. HBS was the preserve of Goldman analysts, McKinsey consultants, and pedigreed scions of business families. But he applied, was accepted, and arrived in Boston determined to prove he belonged. He did more than that: he graduated in 1993 as a Baker Scholar, a distinction reserved for the top five percent of the class.

The Baker Scholar credential opened every door. Hohn tried consulting, then moved into private equity with Apax Partners. At Apax, he did something that stunned colleagues and quietly foreshadowed the life he would build. After earning a $10 million bonus, he donated it in its entirety. Most financiers wait until their forties or fifties to think about philanthropy. Hohn’s instinct was immediate: the capital could do more for children in need than it could sitting in his own account. It was not a PR gesture. Very few people even knew. But it marked the beginning of what would later become the Children’s Investment Fund Foundation, now one of the largest philanthropic organizations in the world.

The investing craft itself came into focus at Perry Capital, the New York hedge fund where he spent seven years. Richard Perry’s shop was a classic 1990s hedge fund, concentrated, event-driven, activist when necessary. Hohn was dispatched to London to set up Perry’s European office. He learned how to blend fundamental research with catalysts, how to size up when the odds were asymmetric, and how to lean on governance and balance sheet structure to unlock value. These were not just lessons in security analysis, but in attitude: act like an owner, not a passenger.

By 2003, he was ready to strike out on his own. With seed capital and his reputation from Perry, he founded The Children’s Investment Fund Management (TCI) in London. The name itself reflected the hybrid DNA: this was a fund meant to generate world-class returns, but tethered directly to a philanthropic engine. A portion of performance fees would be donated to the foundation. The structure made headlines, but it also created an unusual alignment of incentives. Every percentage point of alpha was not just an investor’s gain, but a child’s gain somewhere in the world.

The returns came fast. Within five years, TCI was one of the largest hedge funds in Europe, known for highly concentrated bets in financials, infrastructure, and exchanges. The 2008 crisis nearly destroyed it, but Hohn held on, cut exposures, and came back even stronger. What could have been a career-ending drawdown became a crucible.

In 2014, Hohn was knighted for services to philanthropy, for the billions funneled into children’s health, education, and climate initiatives.

The Spiritual Turn

Chris Hohn’s career is often analyzed through the lens of numbers and governance fights. Yet in his own telling, another force runs beneath the surface. Over the past decade he has begun to speak openly about spirituality and how it informs both his philanthropy and his approach to markets.

Hohn describes the shift as a realization that the impulse to serve is not intellectual strategy but something deeper. For most of his life he did not understand why he felt compelled to give away so much of his wealth. Only in recent years, through what he calls a more spiritual path, did he recognize that service is a natural urge of the soul. It is not the mind calculating outcomes, it is something interior and undeniable. The act of giving, he says, creates a stronger connection with the soul, which in turn reinforces the desire to serve. It is a cycle that grows more powerful the more it is exercised.

That perspective explains the scale of his philanthropy. The Children’s Investment Fund Foundation has distributed more than four billion dollars in grants, and Hohn continues to commit hundreds of millions each year. The focus on children, health, education, and climate reflects his view that humanity is not merely a collection of individuals but a connected whole. Service to children, he often notes, is service to purity itself. Service to climate is service to the soil and water that sustain every community.

The spiritual lens also colors how he interprets corporate responsibility. In Hohn’s thinking, markets are not impersonal machines but human networks shaped by choice and character. CEOs and boards are not only accountable to shareholders in a narrow financial sense. They are accountable for the externalities they create and the long-term health of the society in which they operate. His say on climate initiative, which pushes companies to disclose and reduce emissions, is an extension of this belief. If everything is connected, then emissions cannot be ignored as someone else’s problem. They belong in the center of the conversation.

This turn does not soften the edge of his activism. It reframes it. What looks like confrontation from the outside is, in his own framing, insistence on integrity. Hohn is clear that the world’s crises, whether pandemics or climate change, reveal the same truth: no person and no company stands alone. Every decision has ripple effects that eventually circle back. The investor who ignores this is not only careless but ultimately vulnerable.

Perhaps most revealing is how Hohn frames the question of meaning. When asked what advice he would give a younger version of himself, he does not talk about stock picking or capital allocation. He says the task is to figure out who you want to become, not what you want to do. At the end of a life, he argues, nobody dwells on the list of things achieved. What matters is the character of the person you became. For Hohn, wealth is not the goal. It is the instrument that allows both compounding capital and compounding service.

The spiritual turn in Chris Hohn’s story explains something that might otherwise be puzzling. How does a man known for ferocity in shareholder battles reconcile that with billions given to children’s health and climate advocacy? The answer lies in the same conviction that runs through his investing: discipline, clarity, and connection. In his worldview, markets, philanthropy, and spirit are not separate domains. They are one continuum of responsibility.

The Core Philosophy

Hohn’s framework is compact. Find a small number of truly great businesses. Size them so the wins matter and the losses are survivable. Own them for a long time so the weighing machine, not the voting machine, has the last word. Then behave like an owner.

TCI often positions single names at 10 to 15 percent of capital and historically has run even larger when conviction and liquidity allow. The fund runs a tight book, typically a dozen or so positions make up nearly all exposure. That posture explains both the compounding and the volatility in the early years. The 2008 drawdown, a loss in the 40s percent, is part of the historical record, and so is the recovery. After that stress test, TCI compounded in the teens and twenties through multiple cycles and reported no losing years for more than a decade.

The edge is not “growth at any price.” It is advantaged economics with durability. Hohn looks for moats that do not evaporate under competitive assault, and he places a premium on hard-to-replicate assets, regulated scale, and installed bases that monetize through services. He is explicit about avoiding areas where the pace of disruption creates fat-tail risk that equity markets chronically underprice. That view pushes him toward infrastructure, cash-generative industrial technology, and network businesses such as data and index oligopolies. The names change over time, the pattern does not.

Case Study: Aena and the Power of Asset Backing

Aena, Spain’s airports operator, is the quintessential Hohn investment. In 2014 and 2015, Madrid partially privatized the company and listed it. Aena controlled a monopoly network of Spanish airports with underused capacity and significant room to improve commercial monetization. The asset base was irreplaceable, and the free cash flow yield on the IPO math ran deep into the double digits. TCI took a large stake, Hohn joined the board for a period, and the fund helped crystallize an owner’s approach to capital. Aena committed to an 80 percent payout policy, and the equity rerated as traffic and commercial revenues grew while the operator proved it could run the airports harder and smarter.

The investment worked because the edge was structural. Spain could not rebuild Madrid Barajas or Barcelona El Prat somewhere else. The commercial side of airports is unregulated and high margin. Over time, Aena’s disclosures show a steady climb in commercial income per passenger, and external coverage regularly highlights how retail, food and beverage, parking and duty-free rents have driven growth. The monopoly airport operator dynamic is visible in both the margins and the bargaining leverage.

The deeper lesson is Hohn’s comfort with tangible asset backing. You can get valuation wrong. You cannot easily lose a major airport. That asymmetry matters when you are willing to hold for years, through cycles, and focus on cash returned rather than quarterly beats.

Case Study: Safran versus Zodiac and Why Engagement Matters

Aircraft engines are Hohn’s preferred example of intellectual property moats that actually persist. There have been no new large civil aero engine entrants in decades. The business model improves with scale because spare parts and services over a long equipment life generate the returns. TCI is a long-time investor in Safran, the French aero champion that co-makes the best-selling LEAP engine with GE. When Safran pursued a stretched acquisition of Zodiac in 2017, combining high price with shares that TCI viewed as undervalued currency, Hohn went to the mat. The outcome is a case study in constructive pressure. Safran cut the price by about 15 percent and switched to all cash, and the deal went through on terms that preserved value for existing owners. Reports at the time documented the price cut and the change in consideration.

Activism can feel abstract. Here it changed the cost of a major transaction and, by extension, the forward return’s starting point. It also telegraphed to management that capital discipline would be enforced by informed, long-term holders. The broader point is not that every transaction should be blocked. It is that the owner’s job is to insist that reinvestment risk remains controlled.

The Activist Playbook: Two Early Signature Campaigns

The Deutsche Börse campaign in 2005 announced Hohn to Europe’s corporate establishment. TCI opposed chief executive Werner Seifert’s bid for the London Stock Exchange, arguing it was value destructive. Backed by other institutions, TCI forced management to withdraw the offer. Seifert resigned in May, and the chairman later stepped down. The episode is often cited as the moment modern hedge fund activism arrived in Germany.

Two years later, TCI catalyzed the breakup sale of ABN AMRO. In February 2007 the fund wrote a blunt letter to the board arguing the bank was undervalued and should be sold or split. The letter set off one of the largest banking battles in history, culminating in a consortium led by RBS acquiring the company for roughly €70 billion in October. The takeover helped set the stage for RBS’s collapse during the financial crisis, but the activist objective at ABN was clear. It was to force a reckoning with poor capital allocation and underperformance that the board had refused to confront.

There is a narrower but important U.S. coda. In 2008, TCI and 3G won four seats in a contested CSX proxy fight, but a federal court found that their use of cash-settled total return swaps and a late group disclosure violated Section 13(d). The appeals court later left some issues unresolved, but the case remains a landmark in the disclosure rules around derivatives and activism. It was a costly lesson in process that influenced how TCI engages in the U.S. market.

The LSE Battle and the Limits of Owner Influence

By 2017, Chris Hohn was no longer the “new face of activism” from the Deutsche Börse days. He had a 14-year track record of double-digit returns, billions under management, and a reputation for sharp governance fights. That year, the battleground again became a European exchange, this time, the London Stock Exchange itself.

The catalyst was the abrupt announcement that LSE chief executive Xavier Rolet, who had presided over a period of strong performance and expansion, would step down. Hohn and TCI argued that the board, led by chairman Donald Brydon, had forced Rolet out without explanation and in a way that destroyed shareholder value. TCI called for an extraordinary general meeting to remove Brydon and reinstate Rolet.

The campaign became one of the City of London’s most high-profile governance fights. UK regulators, including the Bank of England and the Financial Conduct Authority, were pulled into the dispute. Press coverage turned it into a spectacle, the hedge fund manager versus the board, with the fate of a cornerstone financial institution at stake.

The resolution was messy. Rolet departed immediately, not on the extended timeline Hohn had argued for. Brydon, however, survived the vote and stayed on until 2019. On the surface, TCI lost: it did not succeed in ousting the chairman. But the deeper takeaway was more subtle.

The LSE battle also revealed the structural limits of activism. In highly liquid public markets, you cannot simply buy control at will. But with sufficient conviction, you can mobilize other shareholders, raise the cost of opacity, and make boards behave differently. Even when you “lose” the formal vote, you alter the decision-making environment for future boards. That is the reflexivity Hohn consistently points to: market actors don’t just price assets, they reshape the behavior of companies themselves.

Recent Engagements

TCI’s more recent campaigns pair economics with culture and sustainability. In late 2022, Hohn wrote to Alphabet’s board urging cost cuts, a leaner headcount, discipline on Other Bets, and clarity on returns in cloud and YouTube. The letter was specific about margin potential and stated that employee productivity had to revert to pre-pandemic levels. Within months, Alphabet announced layoffs and a sharper cost focus.

On climate, Hohn launched the Say on Climate initiative through his foundation and his fund. The idea is simple. Companies disclose emissions in a TCFD-consistent framework, publish a plan to manage them, and put an annual advisory vote on the plan and progress at the AGM. Aena was an early adopter and received overwhelming support. Multinationals including Unilever, Glencore, Moody’s, and Shell later adopted variants. The mechanism is about disclosure, comparability, and accountability. That triad shifts incentives in boardrooms in a way one-off NGO pressure rarely does.

Not every board plays along. Charter Communications, a long-standing TCI holding, resisted Hohn’s proposal and faced a contested vote. Hohn’s point in these fights is financial. Carbon will be priced more widely, green issuers will get lower costs of capital, and customers and regulators will penalize laggards. Owners need to know the plan to underwrite the next decade of cash flows.

Philanthropy as Operating System

CIFF, the foundation Hohn endowed with his fund’s profits, is now among the world’s largest private philanthropies focused on children’s health, education, and climate. Public reporting and the foundation’s own materials put lifetime grantmaking above $4 billion, with an endowment around the mid single digit billions and annual grants running in the hundreds of millions. Hohn’s personal ranking on philanthropy scorecards reflects that scale, and he has been explicit that climate is a first-order risk multiplier for the poorest children. That is why CIFF helped incubate Say on Climate and continues to fund policy work that improves disclosure and accountability.

India is a major focus area because governments there have the capacity to scale what works. The foundation supported safe childbirth checklist programs and maternal and neonatal initiatives that improved adherence to critical practices. Independent evaluations have been mixed at the national trial level, but state programs have shown meaningful gains, and the broader lesson is that checklists plus training plus follow-up can move outcomes. CIFF and partners also helped launch one of the world’s first large skills impact bonds to boost workforce participation by young women, and they fund energy transition work around electric mobility and charging infrastructure. The common thread is targeted technical assistance, evidence, and a path to state or national scale.

The personal motivation is not corporate branding. Hohn has described seeing poverty as a 20-year-old on a summer placement in the Philippines and deciding that if he ever had the means, he would try to solve root-cause problems rather than salve symptoms. That is why CIFF tends to back programs that change systems rather than one-off relief.

What Failed and What Changed

Like any investor I look up to, Chris Hohn’s track record is not a straight line of victories. If you want clean heroes, look elsewhere. The CSX campaign in 2008, for instance, ended up as a cautionary tale. TCI and 3G won board seats, but the federal court’s ruling created a precedent on disclosure of cash-settled swaps and group formation under Section 13(d). It forced Hohn to rethink how he operated in the U.S.

The 2017 London Stock Exchange battle was equally bruising. It pitted Hohn against the board and regulators in a public, acrimonious fight. Xavier Rolet left immediately, Donald Brydon survived as chairman, and the narrative in the City of London was divided. Some investors saw Hohn as overreaching, others as exposing a governance black box. Either way, the episode showed that even if you can marshal shareholder support, you cannot script outcomes. You can only change the behavior of boards forced into daylight.

The 2008 financial crisis tested TCI in a different way. Early in its life, the fund carried exposure to cyclicals, including financials and transport, with leverage that magnified downside. When markets seized, performance collapsed and redemptions surged. That stress was existential. Hohn had to cut positions and rebuild credibility. The fund survived, but survival left a scar. The later pivot toward high-quality compounders, tangible assets, and monopolistic structures was not cosmetic branding. It reflected the lived experience of staring down fund mortality. Quality became a risk management choice, not a style label.

There is also a subtler pattern in TCI’s exits. Hohn has shown discipline in walking away from industries when the structural economics turn. Cable in the United States is the clearest example. For years, Charter Communications and Time Warner Cable delivered outsized returns as subscriber growth and pricing power made them cash flow machines. But as overbuild and wireless substitution gathered pace, the economics shifted. Rather than milk shrinking cash flows, Hohn sold. The point was not about timing the last dollar. It was about preserving the integrity of the strategy, which is premised on advantaged capital deployment through time.

What failed and what changed are not separate categories in Hohn’s career. They are the same story. Failures in activism forced refinement of tactics. Failures in process forced attention to disclosure and structure. Failures in portfolio management pushed the fund away from cyclical leverage and toward durable moats. Each scar is visible in today’s portfolio. The edge is adaptive… born out of stress, loss, and survival.

Lessons for Young Investors

Concentration is a feature, not a bug. Diversification covers ignorance. If you know what you own, size it so that the outcome changes your portfolio. Just recognize that this cuts both ways. The only antidote is to keep the error rate low and the exit discipline high. That is process and temperament.

Define risk correctly. Volatility is noise. Permanent impairment is the thing. That is why Hohn fixates on non-replicable assets, switching costs, regulation that protects rather than capriciously confiscates, and installed bases that monetize over decades. It is also why he is wary of sectors where unknown unknowns are the base rate.

Hold longer than the model. Most sell-side models stop at two or three years. If a business can sustain high returns on invested capital for 20 years, the fair value math changes completely. Hohn’s 13-year hold in Safran, involvement in Aena since listing, and persistent positions in data toll roads are examples, not outliers. The free lunch is paying a fair price for endurance and letting time do the compounding.

Act like an owner. When management proposes something that destroys value, stop it. When there is a better capital return policy, propose it and build a coalition. Owner behavior is not about aggression. It is about arguments that other shareholders accept because they improve the economics. Safran and Aena are practical examples.

Use liquidity to your advantage, not as an ideology. Public markets give you a bid when you are wrong. Private markets give you control at a price. Hohn appreciates the ability to leave when the thesis breaks. He also buys public assets where control at auction would command a premium, and he aims to capture that private market value while keeping the liquidity coupon.

Integrate sustainability as a financial variable. The Say on Climate agenda is not values marketing. It is underwriting. Carbon prices, supply chain constraints, consumer preferences, and ratings agencies all touch the cash flow. Owners who do not know the plan are guessing. Owners who vote for weak plans are underwriting transition risk without being paid.

Keep the temperament. Hohn says the real difficulty in investing is temperament. That shows up in sticking with winners when critics call for novelty, in speaking up when boards drift, and in making the hard sells when structures change.