The Children’s Investment Fund, the activist hedge fund, has suffered another setback with the resignation of John Ho, director in Asia
Chris Hohn, TCI founding partner, told investors in a letter this week, that Mr Ho, 32, would leave the fund for personal reasons.
Mr Ho’s departure comes at a difficult time for TCI, which suffered a decline of more than 40 per cent in the value of its global investments in 2008 and has lost three senior members already this year.
In the past four months, James Wilk, the fund’s operations manager, has resigned, as have co-founders Snehal Amin, head of US investing, and Patrick Degorce, who was in charge of investments in Europe and the financial sector but fell ill.
The departures highlight the turbulence that has hit the hedge fund industry, with many funds battered by poor returns and a wave of redemptions.
There has long been speculation in Japan that Mr Ho and Mr Hohn disagreed over investment strategy following the fund’s controversial attempt to raise its stake in J-Power, the Japanese electricity wholesaler.
One fund manager who knows both men and who has seen TCI’s letters to investors, said: “John probably didn’t want to go through with the [fight over] J-Power … and I assume the results in Asia have been driving [Chris] ape-shit,”.
TCI became a household name in Japan after the fund acquired 9.9 per cent in J-Power and attempted to double its stake against the clear opposition and discomfort of the Japanese government.
Mr Ho became the face of TCI in high-profile battles with regulators in Japan over J-Power and he also led a widely followed campaign to force through changes aimed at increasing J-Power’s corporate value.
The bid was blocked by the government on national security grounds, raising concerns about protectionism, while TCI’s attempts in a proxy battle last year to force J-Power’s management to improve shareholder returns were defeated.
J-Power eventually bought back TCI’s stake at a 30 per cent premium to the current share price, which cost it more than it would have had to spend to increase its dividend as demanded by the hedge fund.
TCI, which has $9.5bn under management, first made its name as an activist fund when it successfully thwarted Deutsche Börse’s £1.4bn bid for the London Stock Exchange in 2005.
Its activism also put Dutch bank, ABN Amro, in play, leading to its ill-fated purchase by Royal Bank of Scotland.
But the activist fund, after a long run of double-digit gains, has had a difficult time amid the financial crisis, suffering a decline of more than 40 per cent last year.
It had problems in all three regions, as it bowed out of J-Power, had shares in CSX, a US railroad with which it fought a painful battle, halve from their peak and, earlier this month, finally bowed out of its five-year-long holding in the Börse.
Mr Hohn was not available to comment and Mr Ho declined to comment.