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Good afternoon Rebels!
How is everybody? Feels like the summer is starting to wind down now, doesn’t it? Sad day.
Anywho, my partner and I have been doing a bunch of research on big fund managers and I have to say I was pretty impressed with Cathie Wood.
You really used to never hear her name and now it seems like she’s everywhere.
Today, we’re going to break down how a rebel can rise on Wall Street.
Let’s start at the beginning.
1980
Cathie started out working for Jennison Associates.
She remained there for 18 years showing extreme loyalty and determination – two essential traits of successful individuals in my opinion – and slowly worked her way up.
Cathie got her start as an analyst, and perfected her craft, which provided opportunities for advancement.
After years of hard work she wound up being the CIO and Chief Economist for JA.
Phase II
Eventually Cathie decided it would be in her best interest to launch a her own venture.
So, in 1998 she co-founded a hedge fund called Tupelo Capital Management.
Though by Wall Street standards, it wasn’t one of the behemoths that she was familiar with, she still oversaw more than $800M.
However, after just three short years of working there her path twisted again.
Wood decided it was in her best interest to leave the fund and start anew once again.
This brings us to her time at Alliance Bernstein.
Not much is known about exactly why she decided to abandon ship so early on with Tupelo, but it motivator was likely the opportunity of managing about $5B for Alliance Bernstein.
After making this transition, Cathie reverted back to her consistent self and remained with the company for over 12 years, when she decided to leave the company and seriously contemplated retirement in 2014 at the age of 57.
Phase III
Though her repuation was still very much intact, Cathie had taken some serious blows throughout her time at AB.
She was criticized for her management style.
As the CIO she was considered to be much too bullish on her trades and suffered major loses when the market crashed.
And thus ARK was born.
I’m not saying it was to shut up the haters, but hey, who else takes a major gamble starting an ETF fund when they’re 57 lolz.
What is an ETF you may ask?
Well per Investopedia,
An exchange traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same way a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities. ETFs can even be structured to track specific investment strategies.
ETFs tend to be more passively managed, but Wood really pioneered a different style of ETF, which featured a much more hands on approach.
Thanks to this bold strategy she could justify a greater management fee, which generated ARK more capital.
To put it in perspective your typical ETF has a management fee of around .1-.3%, whereas a mutual fund is around 1-2%.
However, Cathie was able to charge right in the middle at .7%.
Genius.
Conclusion
Cathie is one heck of a Wall Street player.
From starting as an analyst to working her way up to founding and managing ARK capital, which currently manages nearly $53B.
Side note – that is a truly incredible part of the whole story – is that for the first three years of ARKs existence, she self-funded the venture.
To me, Cathie is THE definition Wall Street Rebel.
All the best everybody,
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DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.
