Hedge fund TCI is Royal Mail's biggest shareholder

[dalesman]

http://www.telegraph.co.uk/news/uknews/ ... older.html" onclick="window.open(this.href);return false;

One of London’s most controversial hedge funds, The Children’s Investment Fund (TCI), has emerged as the biggest shareholder in Royal Mail, thwarting Vince Cable’s efforts to sell the company to institutions.

The London-based hedge fund, known for its aggressive activism, has bought a 5.8pc stake in the newly privatised delivery company, according to a regulatory announcement filed today. The filing shows that TCI bought 58.2m shares worth around £280m at today’s shareprice.
TCI, whose boss Chris Hohn was described as a “locust” by German politicians, is the first to build a disclosable stake in Royal Mail. In the carefully managed sale process two weeks ago, institutional investors were allocated stakes in the company worth 2pc each. Under stock exchange rules, shareholders do not have to declare their positions publicly until they own more than 3pc of the company.
Mr Cable who has often criticised hedge funds for being short term investors, repeatedly insisted that Royal Mail would be sold to long-term “blue chip” investors. Some 90pc of the institutional offering was allocated to institutions, including Fidelity, Standard Life, Threadneedle and BlackRock. Insiders said the Business Secretary had to be persuaded to allocate 10pc of the offering to hedge funds to ensure that the stock had enough liquidity when it listed.
Mr Hohn, who is also Britain’s biggest philanthropist having given away more than £1bn in five years, set up TCI in 2003. A proportion of the fund’s profits is given directly to CIFF, which is now Britain’s biggest foundation run by Mr Hohn’s wife, Jamie Cooper-Hohn.
Although intensely publicity shy, Mr Hohn, 46, has a reputation for being aggressive and ruthless with the management of the companies he invests in.

In 2005 he was labelled a “locust’’ when he successfully took on Deutsche Börse, scuppering its efforts to buy the London Stock Exchange. The affair made Hohn a hero in the London hedge-fund community but the scourge of many corporations.
Mr Hohn is credited with writing a letter to ABN Amro demanding its break-up, which led to the global takover battle that was won by the Royal Bank of Scotland-led consortium.

[fishtank]

http://www.newstatesman.com/business/20 ... anthropist" onclick="window.open(this.href);return false;

His TCI fund is known for buying large stakes in flagging companies and forcing radical change.

[Cichlid]

" Although intensely publicity shy, Mr Hohn, 46, has a reputation for being aggressive and ruthless with the management of the companies he invests in."

Could spell the end of the World Class gravy train.

[scirocco'r']

Surely the 1O per cent employee share holding is larger.
Perhaps with a bit of original thought our £100,000 p.a plus union leaders could become activist/locusts too.

[stephenb19578]

Moya greed will be looking over her shoulder. Its what we all said what would happen and what cable said wouldn't.

[nataddick]

For those like me that are interested in monitoring the change in shareholdings and the need for these to be filed - This information can easily be found at :-

http://www.royalmailgroup.com/investors/financial-news" onclick="window.open(this.href);return false;

Just view the documents Holding(s) in Company by date

[barbario]

Moya greed will be looking over her shoulder. Its what we all said what would happen and what cable said wouldn't.

Makes me wonder what else have we got right which Vince Cable has got wrong.

[Darren Bent]

from what I read he will put lot of pressure on management at the top. So he might be the man to force a management cull. But he is very generous man outside business.

[Danelectro]

. But he is very generous man outside business.

I am unconvinced of the philanthropist tag being applied to any hedge fund- creating child poverty with one hand and donating to charity with the other is hardly saintly as proven with the Church of England's stake in Wonga,id be surprised if there wasn't some dirt in TCIs dealings.

With only a 5.8% stake can TCI exert much influence?

[fishtank]

With only a 5.8% stake can TCI exert much influence?

As the second largest shareholder after the Government who will probably offload their share next April...Yes.
As a very influential money maker in the financial sector....very much so.
It's not just TCI's voting influence that's the issue,it's the fact that if Chris Hohn says a company should be broken up to maximise its share price and/or dividends a great deal of the other city investors will agree with him.

His involvement is worrying.
The guaranteed 6% dividends are very low for what a hedge fund looks to make so unless he's looking for a safe place to park some money I can't see that being enough for the likes of him.

[Darren Bent]

well if he keep buying shares then the prices go up. So when he stop buying them there should be other investers. But the key is what the prices will be in October 2018 It could be 5+ grand if we are very very lucky. But it will go up and down. Think there will be big jump when there is agreement

[LinChong]

"TCI goes where other funds fear to tread
By Sam Jones 8 Feb 2012

TCI’s strategy of late has been to buy into companies it considers to have been heavily discounted because of concerns over their governance structures.
Three such situations in particular have paid off: big stakes in Australian railway company QR National, Japan Tobacco and News Corp.

“We have an investment philosophy that looks for strong companies and we are not afraid to be in situations that make others a little nauseous,” says Mr Hohn.

For example, TCI took a $830m holding in News Corp after the stock had slumped following the revelations of phone hacking linked to the company’s UK subsidiary News International.

News Corp’s stock has rallied 20 per cent since TCI made its investment. “The fear of bad governance” had driven shares down in spite of the company’s growing cable business and strong pricing power, says Mr Hohn.

JT, the world’s second biggest cigarette company, which TCI has held for three years, has also been an unconventional but successful investment.
Many thought TCI was foolish to return to Japan after being badly burnt there in 2008. But JT now looks poised to buy back shares and double its dividend."

http://www.ft.com" onclick="window.open(this.href);return false;

"Among Activist Investors, a New Hesitancy
By ZACHERY KOUWE
Published: March 25, 2009

LAST summer, Christopher Hohn’s powerful hedge fund, the Children’s Investment Fund, got just what it wanted.

The fund, known as T.C.I., had prevailed in a bitter proxy battle with the railroad giant CSX Corporation, winning Mr. Hohn and three allies seats on the CSX board and beating back a CSX suit that accused T.C.I. of securities violations.

The victory was short-lived. Shares of CSX plummeted, contributing to a 43 percent loss in T.C.I.’s main fund in 2008. Mr. Hohn announced that he would not seek re-election to the CSX board this year, making it easier for him to sell off T.C.I.’s stake, though Mr. Hohn said in a telephone interview that there was no connection between the two decisions.

He added that T.C.I. expected to remain a shareholder in CSX and that T.C.I.’s position in CSX had been significantly hedged with bets against other railroad companies.

Like many activist investors — those who buy stakes in underperforming companies and press for actions that they hope will increase the stock price — Mr. Hohn has been humbled by the global financial crisis.

“Quite frankly, activism is hard,” Mr. Hohn said in an interview last year in Institutional Investor’s Alpha magazine. As recently as a year ago, a fund could buy a stake in a company, demand a sale or a spinoff and watch the stock price rise. Such tactics do not work nearly as well in a credit-starved world where buyers are scarce and share prices have fallen to new depths."

http://www.nytimes.com" onclick="window.open(this.href);return false;

[freelunch]

With only a 5.8% stake can TCI exert much influence?

That's enough of a stake to make significant changes, hence the regulatory need to report the stake. You can effectively ignore the UK government stake, one reason for privatisation is the "hands off" approach, business is better run without political interference theory. TCI will canvas support and offer to represent other major shareholders, take a seat or 2 on the board then begin to exert their plans to plunder, pour cash into the pockets of stakeholders and load the company with loans.

[Chimps_tea_party]

With only a 5.8% stake can TCI exert much influence?

"...business is better run without political interference theory."

A shame Michael Gove doesn't apply that to education.

[LinChong]

Hohn is a risk taker who doesn't always win. Winning isn't the main thing for him, he gets his kick out of fighting and so long as he wins more than he loses, his fund has the finance available to allow him to fight new opponents. Hohn's arrival has pushed the CMA closer to the CWU and given the Government a scapegoat when the share price goes down.