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After more than 30 years on Wall Street, she wants to know again: Cathie Wood
founded the investment company Ark Investment at the age of 57
Photo: Alex Flynn / Bloomberg via Getty Images
Cathie Wood
exudes an almost prophetic certainty about the future. "I've never met someone who is so convinced,"
Sig Segalas
, a former head of Wood, recently described the nature of the 65-year-old star investor to the "New York Times". This self-confidence is no coincidence. The economist who graduated from the University of Southern California is a deeply religious Christian. According to her, she was inspired by the Holy Spirit to start her investment company Ark Investment.
At an age when others are either retiring or at least preoccupied with it, Wood really got going again after more than 30 years on Wall Street.
As a result of the global financial crisis, she came up with the idea of structuring portfolios of innovative companies as ETFs (Exchange Traded Funds, i.e. exchange-traded index funds that track the performance of a stock market index).
Because her employer at the time, the asset manager Alliance Bernstein, rejected her idea, she founded her own investment fund in 2014 at the age of 57.
"Most of my friends told me I was crazy and yet I didn't listen to them. I knew that I had to do God's will for myself," she told a Christian organization in 2016.
Breakthrough with Tesla
Wood did not make the breakthrough until 2018, when she invested 10 percent of her total fund assets in the shares of the electric car manufacturer Tesla. She thought the paper was completely undervalued. As we know today, she should be proved right. Of course, that
did not go unnoticed
by Tesla founder
Elon Musk
(50). The two began a lively exchange on Twitter, which made the American better and better known.
The divorced mother of three, who describes herself politically and economically as conservative and, for example, supported
Donald Trump
(75) in his election campaign, continued the
strategy of investing in disruptive companies or innovative financial investments
. She wants to invest in companies that "shape the future of the world", as she herself once said. In addition to Tesla, Netflix, Square and the crypto currency Bitcoin were also in their portfolio. The Ark Innovation ETF, Ark Investment's main fund, performed better and better. Wood had the right instinct to invest in the right company at the right time.
In the Corona year, Wood finally benefited from the high demand for innovative products, but also from the hype on the stock markets, because, among other things, more and more private investors were spending their time investing on the stock exchange in the wake of the lockdowns.
The Ark Innovation ETF grew by a staggering 150 percent in 2020.
By comparison, the S&P 500 only rose 16 percent over the same period.
The billionaire now manages assets of 85 billion US dollars, according to the New York Times.
An unusual woman
Wood is unusual in many ways, not only because she only dared to take the plunge into self-employment when she was old. She prevailed in an industry that is predominantly male-dominated. It focuses on companies that are considered the domain of the young. In addition, it informs the public almost daily about changes in its funds. Most hedge funds go out of their way to keep their strategies secret and to only inform investors of their investment strategies once a quarter. Wood, on the other hand, uses all social media channels as well as his own website to get in touch with her followers.
All of this has given her a broad fan base among the small investors who have recently arrived due to the Corona crisis. Cathie "The Queen" Wood is adored like a pop star, and you can even buy merchandise with her hedge fund's logo on it.
The US online broker Robinhood recently showed how great their influence is on investors.
The company's stock market debut at the end of July was anything but successful.
When Wood made an investment in the trading app a few days later, her fans grabbed it and catapulted the share price by 65 percent.
The company, which is used by many small investors to push stocks in a targeted manner, has now itself become the target of this so-called crowd speculation.
Even if small investors in particular tend to buy more shares than invest in the funds themselves due to the transparency of the Ark funds, Wood benefits indirectly from the rising prices.
The risks increase
But Wood's strategy also carries enormous risks.
Your investment style can be copied at any time thanks to the transparency of Ark Investment.
Blackrock and Goldman Sachs' asset management company already have similar offerings on the market.
And the asset management company JP Morgan Chase even wants to convert four of their funds into active, transparent ETFs, according to the "New York Times".
Another problem for the investment company is that many investors focus on Wood himself.
Should she suddenly become ill or even die, the investors could withdraw money faster than the remaining management would like.
There are now even bets that the fund will write losses. For example, the investor
Michael Burry
publicly opposed her and bet on the crash of her hedge fund. And after the lockdowns are over, many investors are back to traditional industries because they believe they will benefit from the economic recovery. This is also reflected in the performance of the Ark Innovation ETF: This year it was already 7 percent down on the previous year.
By the way, Wood shares the same belief with her friend
Bill Hwang
(57), who caused severe turbulence in the financial industry in March of this year with the default of his US hedge fund Archegos Capital.
Hopefully they won't share the bankruptcy experience anytime soon.
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