Hedge Fund Hell: CSX Could Derail

The public battle with CSX has only made matters worse for Hohn, who is reported to be publicity-shy and prefers to maintain a low profile. In May, TCI's founder was grilled in a New York court regarding his fund's investment in CSX. In September, after seeing four of his five picks finally seated on CSX's board, Hohn told Alpha Magazine that he was rethinking his aggressive activist strategy.

"It has been very profitable for us, but it is unpredictable and expensive," Hohn said in the interview. "Just look at CSX. We've already spent over a year trying to effect change and paid out more than $10 million in legal fees on the proxy fight."

As part of the discovery process related to the court case, emails between Hohn and TCI co-founder Patrick Degorce showed that Hohn was contemplating the need for more capital, but ultimately decided that the move "may damage [TCI's] long-term franchise."

The CSX saga became more expensive for TCI on Wednesday, after CSX announced that it joined a settlement with all parties to a civil action brought by Deborah Donoghue, a shareholder of CSX. Donoghue had sought to recover so-called "short-swing" profits alleged to have been realized by TCI and 3G Capital in connection with their alleged purchases and sales of CSX securities. The settlement, subject to approval by the court, will cost TCI another $10 million.

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