No wonder a private-equity firm was trying to seize control of Cathie Wood’s Ark Investment Management.
Anyone could see her triple-digit returns, count the money pouring into her exchange-traded funds and witness her growing popularity on Twitter. Except Ark is much bigger and more profitable than it appears.
“We’re up to $50 billion,” Wood, Ark’s chief executive officer, said in a Bloomberg “Front Row” interview. “Our business is very profitable.”
In addition to the $30.5 billion of assets in its seven ETFs, Ark manages accounts for retail and institutional clients as well as funds in non-U.S. markets. Its ETF revenue alone adds up to at least $225 million a year.
That puts Ark, founded in 2014, in a league with long-established firms such as Mario Gabelli’s Gamco Investors Inc. and underscores the stakes in Wood’s fight with Resolute Investment Managers. A month ago, she seemed helpless to stop Resolute and the private-equity firm behind it, Kelso & Co., from acquiring a majority stake in Ark. Now their dispute is headed toward an amicable resolution that leaves Wood in control.
“That has quieted down and we are in negotiations,” she said. “We wanted to be fair and square with our partner, and I think things will work out.”
A representative for Resolute declined to comment.
The uncertainty hasn’t stopped Wood from posting some of the best numbers in the history of money management. Her $16.4 billion Ark Innovation ETF has returned 152% in 2020. Three other ETFs have more than doubled.
Most ETFs passively track an index or market. Ark’s are actively managed. Wood, 65, founded the firm expressly to invest in disruptive innovation. She and her 25-person team analyze trends and pick stocks according to five themes: artificial intelligence, robotics, energy storage, DNA sequencing and blockchain technology.
In August 2018, when the Innovation ETF had less than $2 billion of assets, Wood drew widespread skepticism as well as scorn on social media by suggesting Tesla Inc. shares could hit $4,000 in five years. The stock has since surged more than 10-fold and split 5-to-1, giving Wood the aura of a market guru. While Tesla remains her top holding, health-focused stocks collectively comprise the largest bet in the Innovation ETF.