Hohn Calls Alphabet His Firm’s Riskiest Holding
Chris Hohn, the billionaire investor and founder of The Children’s Investment Fund (TCI), recently described Alphabet as “maybe our most risky investment.” Despite being the smallest U.S.-listed holding in TCI’s latest 13-F filing, Alphabet remains in the portfolio, though Hohn expressed concerns about potential fragmentation in its core search business. He acknowledged the company’s strengths in YouTube and cloud services, but noted these only partially offset the risks.
Hohn, who was knighted in the U.K. and was recently praised by Nicolai Tangen — head of Norway’s sovereign wealth fund — as “the best investor Europe has ever had,” shared his views in an interview and at a conference hosted by Norway’s fund.
According to the SEC filing released Thursday, TCI’s largest U.S. holding is GE Aerospace, a company Hohn favors due to the exceptionally high barriers to entry in jet engine manufacturing. TCI also owns Safran, GE’s French partner in the space, though it does not appear in the 13-F as it’s not U.S.-listed.
“We like that space because it’s incredibly complex,” Hohn explained. “There haven’t been new entrants for 50 years. The intellectual property requirements are enormous, and once the engines are installed, the real profits come from spare parts.”
Hohn also highlighted companies with strong network effects, citing Visa and Meta Platforms, two more of TCI’s top U.S. holdings. He emphasized the competitive advantage of incumbency when discussing Microsoft, TCI’s second-largest U.S. position, which the fund increased by 24% in Q1.
“Zoom may be the better product,” Hohn said, “but Microsoft won with Teams because it already had the customer base. It bundled its services effectively, leveraging its dominance.”
Hohn’s long-term investment approach stands out. The average holding period in TCI’s portfolio is eight years — far longer than the sub-one-year average for most institutional investors. As an example, he cited Moody’s, which TCI initially bought after the 2008 financial crisis, sold, and later repurchased. Moody’s, he noted, has delivered an average revenue growth rate of 10% for over a century.
“If you own a great company, it will grow its intrinsic value,” Hohn said. “Valuation multiples matter less than long-term growth.”
That same philosophy applies to TCI’s stakes in both Moody’s and S&P Global, which he values for their stable, recurring revenues and critical role in financial markets.
Interestingly, Hohn is not strictly focused on growth. He pointed to the airline industry as an example of “profitless growth,” suffering from low barriers to entry despite high consumer demand.
