MW The best investor Europe's ever had on why he likes GE Aerospace, Microsoft and rating agencies

By Steve Goldstein

Hohn says Alphabet is the riskiest stock that the firm owns

Chris Hohn, knighted in the U.K. and founder of The Children's Investment Fund, was called the best investor Europe has ever had by Nicolai Tangen, head of Norway's sovereign wealth fund, in an interview released this week.

The most important factor in finding a good company is identifying high barriers to entry, Hohn said. A 13-F filing to the Securities and Exchange Commission released Thursday shows his top holding - of the U.S.-listed stocks he holds - is GE Aerospace $(GE)$. His firm also owns France's Safran (FR:SAF), GE's partner in aircraft-engine making, which as a company without a U.S. listing doesn't show up in the 13-F filing.

"We like that space because the barriers to entry are extremely high, in terms of intellectual property-it's so complicated to make this product that there have been no new entrants for 50 years," Hohn said at an investment conference that Norway's fund held. "Not only is it very complicated, you make the money in the spare parts, so once you've got this installed base, the new engines are only a small percentage, and the airframers only want one or two engines-it's too complicated otherwise."

Network effects also are important barriers to entry, pointing to Visa (V)- TCI's fourth-largest U.S. holding - and Meta Platforms $(META)$, Hohn told Tangen.

TCI boosted its second-largest U.S. holding, Microsoft $(MSFT)$, by some 24% in the first quarter, the SEC filing shows. Hohn talked about the power of incumbency, and said one of Microsoft's barriers to entry is bundling.

"So, Zoom came out with video conferencing," said Hohn. "And they could have potentially added all the things Microsoft does to that. So, Microsoft had to respond and they launched Teams." While Zoom (ZM) may be the better product, Microsoft won the battle because they had the installed base, he said.

Hohn said Alphabet $(GOOGL)$ is "maybe our most risky investment" and it is the smallest holding identified in the 13-F. The company does have some level of protection because of businesses like YouTube and cloud, but there's a risk of search fragmenting, he said.

Another advantage his firm has is long-termism, Hohn said. The average holding in TCI's portfolio has been there for eight years, which compares to under a year by the typical institutional investor. He pointed to Moody's $(MCO)$ - a stock he bought after the global financial crisis, sold, and then bought again - which he said has had an average revenue growth rate of 10% over a hundred years.

"If you have a great company, it will grow intrinsic value," said Hohn. "Here's the thing about the multiples, they matter less than the growth when you look at it over a longer period."

TCI, whose charitable foundation gives away hundreds of millions of dollars each year, owns both Moody's and its rival, S&P Global $(SPGI)$, because the rating agencies have recurring and predictable revenue streams of an essential product, he said.

Hohn said he is not wedded to finding growing companies. In fact, he notes, the airline industry over 100 years has had profitless growth because they have low barriers to entry.

The markets

U.S. stock futures (ES00) (NQ00) were tilting higher, after four consecutive gains for the S&P 500 SPX. Gold (GC00) continued to weaken. The yield on the 10-year Treasury BX:TMUBMUSD10Y is easing.

   Key asset performance                                                Last       5d      1m      YTD      1y 
   S&P 500                                                              5916.93    4.47%   12.01%  0.60%    11.70% 
   Nasdaq Composite                                                     19,112.32  6.61%   17.35%  -1.03%   14.46% 
   10-year Treasury                                                     4.405      1.60    7.50    -17.10   -2.10 
   Gold                                                                 3212.4     -2.96%  -3.86%  21.71%   34.92% 
   Oil                                                                  61.58      0.85%   -3.40%  -14.32%  -22.56% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Chip-equipment maker Applied Materials $(AMAT)$ missed sales growth estimates.

Virgin Galactic $(SPCE)$ said it would restart commercial spaceflights.

Take-Two Interactive $(TTWO)$, which earlier in the month announced it was delaying the release of Grand Theft Auto VI, forecasted revenue below Wall Street estimates.

The economics calendar includes import prices, housing starts, and at 10 a.m. Eastern, the University of Michigan's consumer sentiment.

There are some $3.4 trillion worth of options contracts expiring on Friday.

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The chart

UnitedHealth $(UNH)$, in the wake of its CEO exiting and a reported criminal investigation, now has a relative strength index reading of 12 on a scale of 0 to 100, where readings under 30 are considered oversold. The account Cheddar Flow on X highlighted the reading, pointing out a Dow industrials component is "crashing like a penny stock after a pump and dump."

Top tickers

Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   GME     GameStop 
   UNH     UnitedHealth 
   PLTR    Palantir Technologies 
   AAPL    Apple 
   AMD     Advanced Micro Devices 
   AMZN    Amazon.com 
   SMCI    Super Micro Computer 
   TSM     Taiwan Semiconductor Manufacturing 

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-Steve Goldstein

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May 16, 2025 06:53 ET (10:53 GMT)

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