TCI Up 9%, Still Looking Up At High-Water Mark

Apr 12 2011 | 4:53am ET

More than two years after posting huge losses, The Children’s Investment Fund is steadily moving towards making them up.

The London-based activist is up more than 9% in the first quarter, more than six times as much as the average hedge fund and more than it returned all last year, Financial News reports. But the firm is still below its 2008 high-water mark—it lost some 43% at the height of the financial crisis.

TCI might well have already exceeded its high-water mark if not for firm founder Christopher Hohn’s decision to liquidate his portfolio after suffering the 2008 losses. In doing so, he missed out on 2009’s market rally, which pushed the average hedge fund up by about 20%; TCI had to settle for “low double figures.”

While still unable to charge performance fees to investors who were with the firm in 2008, TCI has stabilized its asset base, which stood at $6 billion last summer. The firm had managed more than $10 billion before the financial crisis struck.

This year, TCI has profited handsomely from its investment in contingent convertible bonds. The firm bought in on the recommendation of hedge fund Algebris Investments, in which it owns a minority stake.


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