Brexit Donor Hintze Set to Cash In on U.K. Distress

(Bloomberg) -- Michael Hintze donated 100,000 pounds ($121,000) to the Brexit campaign in 2016. Three years later, Britain is preparing for recession -- or worse -- while the pound and U.K. stocks sink.

Hintze, the founder of $18 billion hedge fund CQS Management, is making preparations of his own to profit from the havoc Brexit is wreaking while negotiations are mired.

“Continued uncertainty surrounding the course of Brexit in the U.K. and the future path Europe will take is creating ongoing opportunities,” Hintze wrote in his mid-year review circulated this week. “Consumer and business confidence has been hit.”

He's eyeing investments in companies that have come under pressure from seemingly indiscriminate selling. “Given the backdrop, many businesses which have otherwise sound business models have come under pressure and present us with idiosyncratic opportunities,” according to the note.

Notable underperformers include Thomas Cook Group Plc, whose shares have lost more than 90% in the past year, and Boparan Holdings Ltd., a chicken producer whose bonds trade at about half their face value, according to the note. CQS has also held the distressed debt of British fashion chain New Look Retail Group.

Despite the malaise, Hintze sees some scope for newly anointed Prime Minister Boris Johnson to reach an understanding with the European Union.

“The EU have concessions ready which they did not ‘spend' on his predecessor because they did not believe Mrs. May could win over MPs,” he wrote.

In the meantime, weakness in the pound has made U.K. assets “more attractive,” according to a CQS spokesman. Britain's currency has fallen 7% against the dollar in the past six months, the most among Group of 10 nations.

Knighted for his services to charity, Hintze, a former Australian army captain, founded CQS in 1999 after having worked as a convertible-bond trader at Credit Suisse Group AG. He has supported the Conservative Party, including through donations to Johnson.

The firm's spokesman declined to comment on whether Hintze's politics inform his investment views.

CQS, which trades asset-backed securities, credit, convertibles, loans and equities, is best-known for its hedge fund strategies, though now it has more money in long-only funds. Assets under management have grown from $14.6 billion at the start of last year.

--With assistance from Tasos Vossos and Laura Benitez.

To contact the reporters on this story: Cecile Gutscher in London at cgutscher@bloomberg.net;Ksenia Galouchko in London at kgalouchko1@bloomberg.net

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net, James Hertling, Sid Verma

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