Billionaire hedge fund manager Michael Hintze says the world is more dangerous than he has ever seen, artificial intelligence is stifling people’s ability to learn and process information – and it’s getting harder to invest in what are confusing times.
Considered Australia’s most successful hedge fund manager, the London-based Mr Hintze says he can’t out-trade machines any more as passive investing continues its inexorable rise, but he reckons he can still out-invest them.
At 72 and after more than four decades in the industry, he retains his optimism and imagination, his curiosity about geopolitics and the impact it has on markets and, crucially, his investment performance after striking out on his own again two years ago.
Mr Hintze is managing about $2.3bn at the Deltroit Asset Management firm he set up two years ago, after selling the $20bn credit-focused hedge fund CQS where he made his name and fortune to Canadian giant Manulife.
Named after his Wagga Wagga farm, Deltroit has a Directional Opportunities Fund that Mr Hintze took with him after the Manulife deal was finalised. It focuses on research-driven credit strategies with a bottom-up fundamental approach, supplemented and balanced by top-down geopolitical and macro analysis.
“For me, I just love doing it. I have a good portion of my liquid net worth in the fund, so anybody who is investing in this comes alongside me – which is great. But it is a bit back to the future,” Mr Hintze tells The Australian ahead of his return to Australia next month.
His fund has returned about 7.8 per cent from January 1 to the end of August, 17.2 per cent in the 2024 calendar year and 6.7 per cent the year before.
Mr Hintze manages the fund with a small team in London, and is appearing at the annual Sohn Hearts & Minds conference in Sydney on November 14. This year marks 10 years of the conference, which has so far raised $84m for medical research.
He will share his insights on market movements – the opportunities for credit as an asset class, European credit market trends, and the impact of geopolitics on the market.
“The big deal is how do you make money? You make it through insight. The value chain is, you start out with noise, and you try to put it into a dataset,” Mr Hintze explains about his investing style.
“Do some work and then get some information and you dig down and get knowledge. But it is really hard to make money out of knowledge; you make it out of insight. How do you get there? Imagination. For me, how do you have the imagination but not the fantasy to make that effective? For me, you have the fundamentals, the geoeconomics and geopolitics.”
Mr Hintze, now Lord Hintze after joining the House of Lords in 2022, says geopolitics is a “really, really big deal” that has marked his life. He was born in the Chinese city of Harbin after his family fled the Bolshevik revolution in Russia and were later forced to move again as Communism took hold, this time to Sydney.
He is of the firm belief there are now two major powers in the world, the US and China, is intrigued about the “incredible impressive, very thoughtful” younger generation of leaders in the United Arab Emirates, but says “the world is, in my view, probably more dangerous than I’ve ever seen”.
He’s concerned about US President Donald Trump’s “sledgehammer” use of tariffs and other mechanisms and the three things that made America so strong – “security, access to markets and innovation” – could be being eroded.
The rise of AI, Mr Hintze says, will cost jobs and he also worries, in an echo of the recent Keith Murdoch Oration by Jonathan Mills, that it is also “taking our ability to learn and process. People are losing their ability to think and to have critical thought”.
Mr Hintze earned degrees in physics and engineering in Sydney and was a captain in the Australian Army before stints at Salomon Brothers, Goldman Sachs and Credit Suisse First Boston, before forming CQS in 1999.
He also owns MH Premium Farms in Australia, which has more than $500m in agricultural assets across NSW, Victoria and Queensland, comprising 16 properties over 59,500 hectares.
“I think there’s more to do. I’m investing. I’ve committed to it. The key is to do it well. The money is made in operating these things. The bottom 10 per cent of operators will probably go bust, and the top 20 per cent will mostly do well. We want to be in that top 20 per cent, and we genuinely are.”
This article was originally posted by The Australian here.
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Beyond Wall Street, The Mooch is better known for his cutting takes on US politics in the popular podcast The Rest is Politics: US, which he hosts with BBC’s long-term North American correspondent Katty Kay.
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