Hedge Fund Intelligence Sir Michael Hintze interview | Página 6

interview

Q

  he crash of 2008 triggered many consequences such as
T
investor behaviour, flaws in the hedge fund industry and
liquidity issues. Do you think people have learned important
lessons from that crisis?

MH I think it’s hard for people to learn lessons when a certain amount
of moral hazard remains in the system and where governments are
still prepared to launch bail-outs. Having said that, perhaps there is a
gain from having these crises. Remember that Canada had a banking
crisis in the 1990s but they didn’t have one in 2007 because they
remembered the previous one. The Asian banking crisis took place
in the late 1990s; they didn’t have one in 2008 or 2009. I think it’s still
too early to tell whether we have really learned the lessons; this will
come with the next crisis.
There were a number of firms that didn’t take care of the operational side and we have many examples of what happens when things
go wrong. It wasn’t due to bad people; rather, I just think they didn’t
have a sense of the importance of operational risk.

Q

  ow do you see the public acceptance of hedge funds? Over
H
the years, so much notoriety has been attached to the industry.
Do you think hedge funds emerged badly from the crash of
2008 or does the public more readily accept them now?

MH I think less badly than the banks. People wouldn’t have been
surprised if hedge funds were the problem, but they were not. The
last time they ever came close to being the problem was with Long
Term Capital Management. But that wasn’t repeated in 2008/9
because LTCM had already happened. And those hedge funds that
did fail did not create systemic issues.
You do need rules, sensible rules, and I question whether the amount
of regulation is appropriate, but you do need to have transparency.
Hedge funds now run substantial portions of pension fund assets and so it goes back to the institutionalisation theme. Frankly,
when people look at the problems some firms have faced, they realise it concerns individuals – not the industry. Yet, we have to acknowledge that we must become much more effective at communicating the role of hedge funds. The public doesn’t necessarily
differentiate between bankers, private equity and hedge funds in
the way they should.

Q

  ow do you think your personal history has shaped your
H
outlook on life and influenced your views on markets?

MH Simplistically, my grandparents were displaced by the Russian
revolution and my parents by China’s revolution. I myself was born in
Harbin, China, and when I was still an infant we moved to Australia;
so yes, that does shape you. What is clear to me is that government
matters; it can be bad as well as create enormous good. But what is
also clear to me is one shouldn’t expect the status quo to necessarily
remain intact. This makes me more cautious and ready to diversify
risk. It has also made me more focused on geopolitical risk.
For example, one of the things that concerns me in the context of
the Eurozone is expropriation. Cyprus was a bail-in, with depositors’
savings taken away to make up for the shortfall and it was done at the
direction of government. This now seems to be the new template.

© HedgeFund Intelligence

Q

 Philanthropy plays an important part in your life and you

have often said it was necessary to give something back.
So I suppose your philanthropic activities are as strong as ever?

MH Exactly, they are. It’s more fundamental in the sense that giving
back is incredibly important to me; it’s an obligation to give back.
It’s also immensely rewarding at a personal level. Although we did
spread our activities pretty widely when the charitable foundation
was established, we’ve become more focused.
We are concentrating on the arts through support for the Old Vic,
the National Gallery and the Victoria & Albert Museum. We are also
active in the areas of education, health and religion. Our sustainable
urbanism work with The Prince’s Foundation for Building Community is especially important as 50% of the world’s population is located
in cities and still growing. We help communities understand that the
environment in which you work has a major impact on people’s lives.

Q

  his is the kind of question you might get if we were conducting
T
an interview on BBC Radio 4: what causes you to lie awake at
night or gives you the most satisfaction?

MH The sense of obligation to our investors. There is also the
obligation to our employees and their families. We have around 260
people in the firm. And, obviously, there are obligations to society.

Q

  ou must frequently be confronted with the succession issue?
Y

MH Yes, it’s a question that comes up a fair bit. The reality is that I
have a real passion for what I do, for the business and for trading.
We’re also a young business – coming up to our 15th year – and there
is still much more to do. I certainly expect to be managing money
and running the business for a long time to come. We have had
consultants look at the business and they have helped us think about
how we are shaping our business. We are institutionalising and have a
strong and broad management team le d by the executive committee.
We have stronger processes and we are empowering people. I still
get into the office early, work out and I do a regular investment risk
review with my head of investment risk at 8am and then trade.

Q

  ou still seem quite energised by your role?
Y

MH Yah! Exactly. People say: what are you going to do with your time?
I feel like I have already retired because I’m doing what I want to do.

Q

  ou are very much regarded as one of the most high-profile
Y
Australians in London, where you have spent most of your
career. What do you feel about your relationship to the UK?

MH Britain has been incredibly good to me and this is reflected by the
knighthood which I recently received. I’ve also became a member of
the Order of Australia, and I think I’m probably known in Australia
because of what I’ve achieved here in London. Thatcher’s Britain has
allowed me to really fly. Looking back, there is no question that when
I came here in 1984, it was a very different country.

Autumn 2013 Global Review 39