The Financial Review has run an interesting interview with billionaire hedge fund manager, Sir Michael Hintze, who has made his $1.98 billion fortune making calculations and betting on the fallout from major geopolitical events, and from agribusiness investments.
Hintze’s family arrived in Australia as stateless refugees from China after his grandparents fled Russia during the Bolshevik revolution. After university (degrees in physics and electrical engineering from the University of Sydney), Hintze joined the Australian Army and quickly became a captain.
The China-born Hintze (his mother spoke Russian), Australian-raised British resident (who still calls Australia home), is arguably Australia’s most successful expatriate investor. “When I was a young bloke, I used to do a lot of bushwalking. We would sit down and plan it: work out how many places you are going to, work out how long it will take, how many calories you are going to burn.
“You work it out and then you calculate it for three, four, five days. Not too many people did that”, Sir Michael told BOSS magazine in an exclusive interview in Melbourne.
These analytical skills were to come in handy later in his business career, after he attended Harvard Business School in 1982, which was the path to founding the $20 billion hedge fund CQS.
The Harvard MBA led to jobs at Salomon Brothers in New York and then Goldman Sachs and Credit Suisse. He left Goldman after being passed over for a partnership – but he impressed Credit Suisse’s Brady Dougan (a future chief executive) so much that he secured $US200 million from the Swiss bank in 1999 to set up his own business, then known as Convertible and Quantitative Strategies, the hedge fund now called CQS.
When asked if he would have done anything differently, the 64-year- old singles out the importance of science and maths, which he says are the keys to many things in the world. Hintze bought Deltroit Station in 2016, in the productive Mundarlo region of the south-west slopes of NSW. He bought the Cheviot Hills property near Penshurst in Victoria’s Western Districts for more than $10 million last year. Hintze has bought more than 30 cattle farms and rural properties in Australia through his MH Premium Farms and is betting heavily on the agriculture and agritech sector.
“The population is getting bigger and they are going to eat more. I’ve bought a lot of stuff, it’s diversified, I have significant holdings in sheep, meat and wool. Significant holdings in arable, obviously cotton and sugar.
“We’re well positioned to benefit from growing demand, as the world’s population grows from 7 billion to 9 billion, with exciting developments in agritech. I’m personally convinced of this and have invested heavily.
“In today’s world, the biggest challenge is that knowledge has become a commodity,” he says. “You start with noise – a plethora of prices, news and events – you have to structure that into data sets to create information and do more work on it to create knowledge. The problem is that because of education and data services, many can get to that knowledge.
“True Alpha [active return on investment] lies in insight and the only way to create insight from knowledge is through imagination.” Right now, a lot of brain power is being consumed by a potential global trade war triggered by US President Donald Trump’s steel tariffs.
“China is the biggest trader globally and if they don’t have to trade with the US it won’t be happy days but they will be OK,” Hintze says. “If the US becomes protectionist then the biggest winner of that will be China. China is the biggest trader and the point is they are not just trading with the US, they are trading with the rest of the world.”