Many fund managers have struggled to beat the red-hot S&P 500 in recent years. However, Sir Chris Hohn handily outperformed the index in 2025, with a reported net return of more than 27% versus the S&P 500’s 18% total return.
Incredibly, the British billionaire earned an estimated $18.9bn in net gains for those invested in his TCI Fund Management. This was the biggest single-year gain on record for a hedge fund!
With an annualised return of roughly 18% since 2004, TCI is now fifth on the list of the most profitable hedge funds of all time.
How has Hohn achieved this? And what can investors learn from it?
Wide-moat strategy
The money manager’s strategy is notoriously concentrated – often just nine or 10 stocks – and he looks specifically for natural monopolies. These are businesses with extremely strong competitive advantages (what Warren Buffett would call deep moats).
TCI’s largest holding, engine maker GE Aerospace, surged roughly 85% in 2025. Gains also came from longstanding positions in Microsoft, Visa, Moody’s, and infrastructure firm Ferrovial.
Meanwhile, Google parent Alphabet jumped 65%!
What stands out to me is that these businesses operate in industries where the barriers to entry are very high. For example, once an airline buys a GE engine, it’s essentially locked in for 20+ years of high-margin servicing and parts.
Meanwhile, Microsoft’s annual capital expenditure is currently $140bn-$150bn. This is the entry price to play in the hyperscale cloud computing sandbox, limiting competition to a small handful of players.
Visa is one-half of a global duopoly in payments, while holdings Canadian Pacific Kansas City and Canadian National Railway operate irreplaceable rail networks.
Focus on the long term
So, what can investors learn from this? One takeaway could be to focus on hard-to-replace companies in industries with high barriers to entry.
Crucially, Hohn is a long-term investor. TCI’s average holding period is around eight years, with some positions held for over 13 years. So he lets high-conviction winners run as large positions.
Wealth is built by finding high-quality companies trading at fair prices, then letting compounding work its magic over years and decades.
A stock to consider
A smaller holding that also did well for TCI last year was Airbus (ENXT:AIR). Shares of the plane maker rose about 40%.
Airbus has many of the qualities already discussed. In the wide-body and narrow-body aircraft market, it operates a global duopoly with Boeing. It’s nearly impossible for a new competitor to succeed due to the extreme capital requirements and technical complexity.
Hohn likes businesses that have essential products with long-term, predictable demand. Airbus certainly ticks this box, having ended 2025 with a record backlog of about 8,754 aircraft waiting to be delivered.
That’s a 10-year wait for certain models!
That said, production bottlenecks are a constant challenge. Last year, the plane manufacturer lowered its target to 790 jets from around 820. So supply chain problems are a key risk.
Nevertheless, an additional 1.5bn people are expected to join the middle classes globally by 2044, according to Airbus. And this stock is arguably the ultimate play on global travel growth.
Airbus is trading at 21 times next year’s forecast earnings, which strikes me as reasonable for a deep-moat company like this. As such, I reckon it’s worth considering for long-term investors.
