Alphabet Is TCI’s Riskiest Bet, Says Chris Hohn

Alphabet is “maybe our most risky investment,” according to Chris Hohn, founder of The Children’s Investment Fund (TCI). Despite its strengths in YouTube and cloud services, Hohn cautioned that Alphabet faces significant risks — particularly the potential fragmentation of its core search business. It’s also the smallest U.S.-listed holding in TCI’s latest 13-F filing.

Hohn, who was knighted in the U.K. and recently hailed as “Europe’s best investor” by Norway’s sovereign wealth fund chief Nicolai Tangen, shared his views during an interview and a conference hosted by the fund.

TCI’s top U.S. holding is GE Aerospace, a business Hohn favors for its exceptionally high barriers to entry. The firm also holds a stake in Safran, GE’s French partner in jet engine manufacturing, which doesn’t appear in the U.S. filing due to its foreign listing.

“We like that space because it’s extremely hard to enter,” Hohn said. “It’s so complex that there have been no new competitors for 50 years. And the real profits come from spare parts, not the engines themselves.”

Hohn also pointed to Visa and Meta Platforms as companies benefiting from strong network effects, calling them key holdings. TCI also increased its position in Microsoft, its second-largest U.S. investment, by 24% in the first quarter. Hohn noted Microsoft’s ability to bundle services, such as Teams, gave it an edge over competitors like Zoom, even if the rival’s product was technically better.

Long-term holding is another core part of TCI’s strategy. The average investment remains in the portfolio for eight years — far longer than most institutional funds. Hohn cited Moody’s, which he has owned off and on since the financial crisis, as a prime example of a company that compounds value over time. “If you have a great company, it will grow intrinsic value,” he said. “Multiples matter less than growth over the long run.”

TCI also holds both Moody’s and S&P Global, citing their stable, recurring revenue from credit ratings — a critical financial service.

Despite his focus on strong, growing businesses, Hohn isn’t afraid to avoid sectors he sees as flawed. The airline industry, he noted, has suffered from “profitless growth” for over a century due to low barriers to entry.