Institutional Investor's Alpha Magazine - September 2008 - (Page 3)

Letter from the editor Moral Compass EDITOR Michael Carroll EDITOR Michael Carroll EXECUTIVE EDITOR Michael Peltz MANAGING EDITOR David Schutt INTERNATIONAL EDITOR Tom Buerkle U.S. EDITOR Jeffrey Kutler EDITOR-AT-LARGE Firth Calhoun ART DIRECTOR Nathan Sinclair ART DIRECTOR Irene Ledwith ASSISTANT MANAGING EDITORS Tom Johnson ASSISTANT MANAGING EDITORS Lewis Knox (Research), William Loob (Editorial Production), (Research), Jeffrey(Director, ResearchTechnologyGroup), Sathya Rajavelu Kutler (Global Operations and Steve Rosenbush (Wall Street, Corporate Finance), Banking), Deborah F. McClellan (Editorial Tracy Tjaden (International) (Money ManageProduction), Barbara Rudolph BUREAU CHIEF Loch Adamson (London), ment) Allen T. Cheng (Asia) EUROPEAN EDITOR Tom Buerkle (London) SENIOR EDITORS Steven Brull (Los Angeles), BUREAUCates, Jane B.Hamlin (Hong Kong) Karl CHIEF Kevin Kenney (Editorial Research), Jo Wrighton (Paris) SENIOR EDITORS Steven Brull (Los Angeles), SENIOR WRITERS Frances Denmark, Michael Shari Andrew Capon (London), Jane B. Kenney STAFF WRITERS David Lanchner (Paris), (Editorial Research) SENIOR WRITERS Deepak Gopinath, Justin SENIOR ASSOCIATE EDITOR Tucker Ewing ASSOCIATE EDITORS Sivert Hagen, STAFF WRITERS(Research Specialist), WeiQing Lu Julia Leikin Rich Blake, David Lanchner (Research Specialist), Carolynn B. Tetro (Paris) COPY CHIEF David Wray SENIOR ASSOCIATE EDITOR Tucker Ewing SENIOR CONTRIBUTING EDITORS Fran Hawthorne, ASSOCIATE EDITORS Emily Fleckner, Sivert CONTRIBUTING WRITERS Imogen Rose-Smith, Julie Segal Schack Harvey D. Shapiro, Stephen Taub Hagen Pam Abramowitz, Danielle David Wray COPY CHIEF Beurteaux, Phil Davis, Katie Gilbert, Udayan Gupta, Scott Martin, Neil O’Hara, Nick Rockel, Jaye Scholl, Irwin Speizer, Hal Lux, Harvey D. Henry Scott Stokes Shapiro, Charles Smith (Tokyo), Stephen Deputy Copy Chief: COPY DEPARTMENTTaub, Joan Warner Bill Christophersen; CONTRIBUTING EDITORS Colin Barraclough, Copy Editors: Ingrid Accardi, Ruth Hamel Lucy Conger (Mexico City), Jonathan Kandell, ASSISTANT TO THE EDITOR Elizabeth Simroe Lois Madison Reamy, Kazuhiko Shimizu ART DEPARTMENT Deputy Art Director: Diana Panﬁl; (Beijing), Leah Nathans Spiro Associate Art Director: Anthony Scerri; COPY DEPARTMENT H.Wilson; Chief: Jeff CranSenior Designer: Lee Deputy Copy Associate: Sabrina Henley; Photo Editor: Katie Constans; mer Acting Associate Photo Editor: Frannie Ruch; ASSISTANT TO THE EDITOR Elizabeth Simroe Color Imaging Manager: John Miliczenko CHAIRMAN & CEO Deputy Mueller Patrizia ART DEPARTMENT Gary Art Director: SENIOR CONTRIBUTING EDITORS Fran Hawthorne, Bove; GROUP PUBLISHER Christine Cavolina Associate Art Director: Stephanie Lora; Photo Editor: PUBLISHER Joy DeSanto Anastasia Pleasant; Color Imaging Manager: PUBLISHER, INTERNATIONAL Spencer Wicks John Miliczenko PUBLISHER, ASIA Wendy Gallagher ONLINE SALES DIRECTOR Chris DeAngelis PRESIDENT & CEO Christopher R. Brown EXECUTIVE DIRECTOR OF MARKETING Louis Cassetta PUBLISHER Christine Cavolina PRODUCTION DIRECTOR Brian Gill PUBLISHER, INTERNATIONALRobert Tonchuk DIRECTOR OF FULFILLMENT Lisa Traeger CHIEF OPERATING OFFICER David E. Antin PRODUCTION DIRECTOR Brian Gill Institutional Investor’s AlphaTM and AlphaTM, 225 Park Avenue South, MANAGING 10003; (212) 224-3300; Fax: (212)PRODUCTS New York, NY DIRECTOR OF RESEARCH 224-3171. Denise Murrell © 2008 Institutional Investor, Inc. No statement in this magazine is to be construed as a recommendation to buy or sell securities. DIRECTOR OF FINANCE AND OPERATIONS Neither this publication nor any part of it may be reproduced or transmitted in any form or by any means, electronic or mechaniDavid E. Antin cal, including photocopying, recording or by any information storage and retrieval system, without the prior written permission Institutional Investor’s magazine. and reprints contact Dewey of Institutional Investor Alpha TM For Alpha,TM 225 Park AvPalmieri (212) York, NY 10003; (212) 224-3563; e-mail: enue South, New 224-3675; Fax: (212) 224-3300; Fax: (212) dpalmieri@institutionalinvestor.com. Subscription hotline: 224-3171. (800) 437-9997; Overseas: (44 -20) 7779 8999 ON MONDAY, SEPTEMBER 15, at 1:42 in the afternoon, Treasury Secretary Henry Paulson Jr. strode to the podium in the small White House press room with a singular mission: to calm the markets. Stock prices were in free fall on the news that Lehman Brothers had ﬁ led for bankruptcy and insurer American International Group was desperately seeking a bridge loan to avoid following the 158-year-old investment bank into oblivion. Paulson, known for his candor, spoke for a couple of minutes and then ﬁelded questions. When asked whether the federal government would get involved in more rescues like those of Fannie Mae, Freddie Mac and Bear Stearns, he brought up the concept of moral hazard, saying it “is something I don’t take lightly.” “Moral hazard” is the term coined by economists to describe the reckless actions that individuals or companies take when they believe the government will bail them out. During his press conference, Paulson made it clear that he never once considered putting taxpayer money on the line to help Lehman — in effect warning ﬁ nancial ﬁ rms and their managements that they will be held accountable for their actions. So much for accountability. The following evening the Federal Reserve Board announced that it was throwing AIG a lifeline, lending the insurance giant $85 billion to avoid the global ﬁnancial disaster that might have resulted if the company were forced to ﬁle for bankruptcy. Paulson supported the Fed action, saying it would “mitigate broader disruptions and at the same time protect the taxpayers.” For Christopher Hohn, the subject of this month’s cover story, accountability is a serious issue. As founder and managing partner of the Children’s Investment Fund Management (UK) in London, Hohn has taken CEOs and their boards of directors to task for not acting in the best interests of shareholders. In 2005 he blocked Deutsche Börse’s bid to buy the London Stock Exchange, and last year he single-handedly sparked the sale of Dutch banking giant ABN Amro. But as London Bureau Chief Loch Adamson reports in “Rethinking Chris Hohn” (page 30), Europe’s most feared activist investor is feeling the strain from his recent pitched battles with U.S. railway company CSX and Japanese energy wholesaler J-Power. And for the ﬁrst time since launching his ﬁrm in 2004, Hohn is in the unaccustomed position of losing money; his TCI Master Fund was down 12 percent this year through June. In an extensive and rare series of interviews with Alpha starting last spring, Hohn spoke about his growing frustration and revealed that he is considering scaling back his activism. MICHAEL PELTZ EXECUTIVE EDITOR mpeltz@iimagazine.com SEPTEMBER 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 00 FEBRUARY 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 3

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - September 2008

Institutional Investor's Alpha Magazine - September 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Culling the Herd The Good Guys: Ending the Cycle Interview: Press Credentials Cover Story: Rethinking Chris Hohn Strategies: At the Edge of the Earth Profile: Alpha Femals Strategies: Tails, You Lose Research Center: The Top Equity Trading Firms Alpha Bytes: The Light Is On Unhedged: Commentary: Not-So-Dire Diagnosis

Institutional Investor's Alpha Magazine - September 2008

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