TCI’s John Ho Said to Leave U.K. Fund for New Venture

John Ho, Asia chief of The Children’s Investment Fund Management UK LLP, will leave the hedge fund after disagreement with the firm’s founder on the investment strategy in the region, according to a person familiar with the matter.
Ho plans to start a new fund focused on Asian equities, the person said, declining to be identified because the information is not public. Ho joined the London-based fund, known as TCI, in 2004 and opened the Hong Kong office after working for Chicago- based Citadel Investments Group LLC. Ho, 32, declined to comment when contacted by phone.
Ho’s departure follows that of co-founders Snehal Amin and Patrick Degorce, who left the firm this year. Christopher Cooper-Hohn remains the only founding partner at the $9.5 billion hedge fund. At least 11 executives have resigned from TCI since the fund started in 2003, according to U.K. filings.
Returns by TCI, which gives a portion of its profits to children’s charities, fell 43 percent in 2008. It had average gains of 42 percent a year from 2003 to 2007. TCI spokesman Rahul Moodgal in London couldn’t immediately be reached.
TCI focuses its investments on infrastructure assets such as airports, ports and utility firms. The fund makes long-term investments, tying up clients’ capital for three to five years while TCI builds relationships with management.
Proxy Battle
Ho made a name for himself in Japan last year when TCI sought a number of changes at the Japanese utility Electric Power Development Co., including doubling dividends. The fund sold its 9.9 percent stake back to the utility, known as J-Power, for 63.2 billion yen ($640 million) in October, after losing a proxy battle in June.
TCI’s request to double its stake in J-Power was seen as a litmus test for Japan’s openness to foreign investments that touch on national security. The Japanese government blocked TCI’s purchase on national-security grounds, invoking for the first time a Foreign Exchange and Foreign Trade Control Law.
TCI has held about $1.1 billion worth of short positions this year in 13 Japanese stocks, including Toshiba Corp. and Mizuho Financial Group Inc., data based on exchange filings compiled by Bloomberg show.
Elsewhere in Asia, TCI has made investments in Link Real Estate Investment Trust, Hong Kong’s biggest property trust. Ho was appointed a non-executive director in July 2006 as part of the fund’s efforts to boost monitoring as a shareholder. TCI is pushing for the trust to accelerate rent increases to boost returns from a property boom in the city.
Short Squeeze
In an appearance before a U.K. House of Commons committee meeting on Jan. 27, Cooper-Hohn said hedge funds like his didn’t profit from stock-market declines.
“It has been obvious from industry figures that all Asia, not just Japan, has been difficult for hedge funds to make money,” said Scott McGlashan, a London-based fund manager who oversees Japanese stocks at J.O. Hambro Capital Management Ltd. “If hedge funds withdraw, shorts will be squeezed and markets could go higher.”
Hedge funds had their worst year in two decades, dropping an average 19 percent in 2008, according to data compiled by Chicago-based Hedge Fund Research Inc.