Michael Hintze clocked up sizable losses with the flagship fund down 33%, or approximately $1bn in value at the end of the Q1 financial market rout. 

This year, 2023, is shaping to be another very challenging year for investors on the back of sizable losses in 2022, where the turmoil in the global economy wiped out $7 trillion in market value from the large-cap stocks in the S&P 500. Moreover, the NASDAQ lost $1 trillion in market Cap, and even safe haven treasuries notched a record annual loss in 2022, triggered by inflation. 

But if investors thought 2023 would provide relief, they have been short-changed. Inflation fears, geopolitical crises, wars in the Baltic and most recently in the eastern Mediterranean, spiralling oil prices and supply chain problems are keeping markets on edge as portfolio losses compound. The market-to-market losses on long-maturity treasuries are unprecedented and triggering a credit squeeze. 

Michael Hintze’s CQS has been battered by these challenging market conditions.

“the NASDAQ lost $1 trillion in market Cap”


CQS clients were looking for answers as to how Michael Hintze clocked up sizable losses

However, investors were told on a conference call in April that the billionaire investor was unable to participate.  

So a CQS’s fund manager was left to explain $1bn in value loss to shell-shocked investors.   

Michael Hintze is known for agile trading positioning during the financial crisis, by doing so he limited losses in 2008 to single digits amid the stock market crash, then jumped on the rally in 2009 with a string of bullish bets to end the year up 56 per cent. 

“When lots of people were rabbits caught in the headlights [in 2008] . . . Hintze guided us out of it,” said one former employee.

But sailing into profits for bulls is easy when central banks are blowing QE. 

Michael Hintze’s trading profits helped to expand the billionaire’s CQS fund into Europe’s largest hedge funds, which helped him build a fortune estimated at £1.5bn by the Sunday Times Rich List. 

Michael Hintze is a major donor to the UK Conservative Party, and an adviser to the board of the Duchy of Cornwall, the Prince of Wales’s private estate.

“a CQS’s fund manager was left to explain $1bn in value loss to shell-shocked investors”


Michael Hintze clocked up sizable losses despite his high-profile hiring and ambitions for the fund  

To accelerate CQS growth, Michael Hintze hired former London Stock Exchange head Xavier Rolet at the start of 2019. Hintze and Rolet attended Saudi Arabia’s Future Investment Initiative conference last year, and the firm forged a joint venture to help sell its funds in China. Michael Hintze was planning to grow CQS’s assets under management to $100bn. The reality has been different with CQS’s assets under management dropping from a peak of approximately $20bn to $17bn.

CQS’s long-only business grew strongly, and the firm’s flagship remains Michael Hintze’s Directional Opportunities fund. Michael Hintze has raised hundreds of millions of dollars from US investors such as Texas County & District Retirement System, and before March losses, had gained an average of nearly 14 per cent a year.

“Markets should be supported because “global growth is intact [and] an imminent recession is unlikely” – Michael Hintze

Michael Hintze clocked up sizable losses entering 2020, being overly optimistic about global growth and the prospect of commodities

“Markets should be supported because “global growth is intact [and] an imminent recession is unlikely,” he wrote to investors back in 2020.

But we did not see it that way, already seeing signs of slowing global economic growth in late 2019, and saw a bubble of everything propped up with unprecedented money printing, and it was a bubble ripe to burst as soon as central banks withdrew their support.  

Michael Hintze’s cautious optimism going into 2020 resulted in funds allocated to structured credit, a more complex branch of credit where instruments such as loans or credit default swaps are then sliced up to back new debt and equity, which offered a higher yield relative to many bonds. “It’s very much a function of my view on the world, that the world was in expansion and we’d be able to generate sensible returns,” said Michael Hintze on a private investor call in early June,

Positions were often short-dated — meaning it would take an extreme and sudden event to prompt large losses. This bet is known among options traders as “selling the wings”, as it focuses on rarer, more extreme outcomes.

“The key point for me is to make your money back . . . Not just make our money back but make the money back and then some” – Michael Hintze

Michael Hintze clocked up sizable losses due to most of his structured credit bets blowing up when the Black Swan event, global lockdowns hit in 2020

Michael Hintze’s fund has not recovered since, with almost all of the fund’s roughly $1bn of losses in March. The fund’s hedges were a disaster and did little to cushion the losses, said one person familiar with the fund. Wagers on rising equity prices also hurt performance. “It was a shocking loss,” said an investor.

Michael Hintze is known for his forensic consumption of analyst research. Nevertheless, the fund’s losses were compounded by defaults, in the car rental company, Hertz. It was also hit as Chesapeake Energy bonds fell to price in an expected bankruptcy. The losses convinced Michael Hintze to turn more cautious. He responded by cutting some peripheral trading books, selling some positions, for instance, in distressed credit, which cost the fund, and trying to hedge individual credit positions to prevent further losses from defaults. “To be clear, at the moment, I’m more focused on the downside than the upside,” he said on the call in June.

Michael Hintze’s CQS sold down positions in stocks and to his fund’s detriment, missed most of the stock relief rally in April. The fund even suffered some losses as stocks were being supported by an unprecedented central bank purchase of assets, known as quantitative easing.

“I’m also running significant shorts, hedges if you like, because I believe the market will be too optimistic around the economic recovery,” Sir Michael said on the call. “Despite the QE being bullish, the weight of money that QE produces, in my view, cannot overcome the depth of the recession and the reality of company earnings and defaults.”

So Michael Hintze clocked up sizable losses and is now determined to turn it around. 

“The key point for me is to make your money back . . . Not just make our money back but make the money back and then some,” he said.