Editor’s note: In recent years, the well-known Ark Fund has attracted many investors due to its outstanding performance. It is called “female Buffett” and “bull market”. Cathie Wood, the founder of “Queen”, also became a star fund manager. However, in the recent volatility of the stock market, the Ark Fund, which has heavily stocked popular stocks such as Tesla, quickly fell back. On March 9, the flagship fund Ark Innovation (ARKK) rebounded sharply by 10%, setting the largest one-day gain in history. Wood said that the recent sell-off of technology stocks has created a buying opportunity for her fund.
“Barron’s Weekly” recently wrote an article to sort out Wood’s investment career and philosophy. The germination of some of her important ideas actually planted the seeds 30 years ago. Wood also firmly believes that these ideas will continue to blossom and bear fruit. Barron (ID:: barronschina) This article from the micro-channel public number , Author: Liu Yi Wei, Leslie ·P·Norton, editor: Guo Liqun, translation: Xiaocai, head picture from: provided by the author
The 65-year-old product promotion engineer Andrew Michel (Andrew Michel) made a bold move last June—many people will Said it was a reckless move. Michelle, who has always been conservative, invested two-thirds of his retirement savings in two hot ARK Ark ETFs, which had been invested in large-cap index funds before. In just a few months, he made enough down payment to buy a second house in sunny Tampa, Florida. Michelle told “Barron’s Weekly”, “I checked her information and everything looked pretty good. Three days later, I started to invest with Ark.”
The “she” mentioned by Michelle is Kay, who founded Ark Investment Management Company (ARK Investment Management ) seven years ago. West Wood(Cathie Wood), the 65-year-old Wood was named one of the 100 most influential women in American finance this year by Barron’s.
The pursuit of investors such as Michelle made Ark a household name, and Wood became famous for it. Although she seems to have suddenly become popular, she actually has many years of investment experience as the foundation. Wood has been involved in multiple investment themes early on: when the investment began to be linked to the index, she chose to adopt an active management strategy; she adopted a stock selection strategy when managing active ETFs, and some of the largest asset management companies had She thinks this is impossible; she has also bought some companies that others think are too expensive and not considered promising.
The popular stocks of Shigekura bull market became famous in one fell swoop
Last year, Ark Investment’s actively managed funds performed very well. Five of the seven ETFs had an average return of 141%. Three of these five ETFs were the best performers of all funds in the United States. Wood’s status as a star fund manager reflects a current trend of the times: Tesla (TSLA), Robinhood, Reddit, Game Station(GME) and Bitcoin, the most important investment themes of the moment are all about outsiders subverting the status quo.
“The Ark is also an outsider,” Morningstar (Morningstar) Vice President of Research John Rekentheller (John Rekenthaler) said, “Although Casey Wood(Cathie Wood) Worked in the investment industry for many years, but Ark was not established for a long time. It is a new company. Its success gives people a feeling of transcending Wall Street and transcending tradition.” Wood has a large number of fans on social media, and Bogle Like Buffett’s fans, they believe in Wood’s investment philosophy. Ark Investment even launched peripheral products (all sales are donated to an epidemic relief charity)), and she also believes that there is no bubble in the stock market. The important idea that Wood is now sprouting was sown 30 years ago. She said, “Now, we are ready for the golden age.”
How is the “Queen of Investment” made
Wood’s parents immigrated to the United States from Ireland and settled in Los Angeles. Like many immigrant families, education and career always came first during Wood’s growth. She said, “I have been regarded as the eldest son of the family since I was a child, and the character who wants to guide the family forward.”
Wood’s father served in the Irish Army and the U.S. Air Force and later became a successful radar system engineer. Wood said that his father paid great attention to details and was meticulous in his work. He always urged Wood to discover the connections between things. She also said that her mother is a “helpful” person, “likes to laugh and is full of energy.”
Wood graduated from the University of Southern California with a degree in economics and finance. Under the recommendation of her mentor, the well-known “supply school” economist Arthur Laffer (Arthur Laffer), she joined the Capital Group Started the first job. Wood served as an assistant economist there for three years. In 1980, Jennison Associates, an investment advisory company, needed an employee who could analyze economic data. Wood moved to New York at the age of 25 to become the company’s chief economist.
Wood said that her experience at Jennison Associates shaped her argumentation skills. In the early 1980s, interest rates and inflation both reached double digits, and productivity and the economy fell sharply. Most well-known economists at the time-including Henry Kaufman (Henry Kaufman), known as “Doctor Doom” and Milton Friedman (Milton Friedman)-all believe that inflation is already a deep-rooted problem in the financial system, but Wood believes that interest rates have peaked .
Spiros “Sig” Segaras, co-founder of Jennison Associates(Spiros “Sig” Segalas) is Wood’s boss and mentor. He often invites outstanding figures in these economic fields to share their predictions and ask Wood to share with them debate. She recalled, “No one believed our judgment for four years, and I had to have a one-on-one debate with Henry Kaufman. I knew the data I studied, and I knew what I was talking about, but I had to let They believed that I did know what I was talking about because I was very young then.”
Segalas called Wood a “very firm lady”. He arranged Wood in a nearby office so that he could ask her for advice and assign her to write a quarterly letter for the company. Saigaras said, “At the time, Wood was the smartest in the company and he gave me a lot of assistance.”
Wood has worked for Jennison Associates for 18 years, during which time he raised three children. Interest rates began to decline in the 1980s, providing more development opportunities for technology companies, and the business laid the foundation for a new era of innovation featuring personal computers, semiconductors, and wireless functions. Wood decided to become a stock analyst and portfolio manager.
Wood researched areas that other analysts had overlooked. “I’m like a puppy looking for leftovers under the table,” she said. She found some stocks that belonged to the intersection of multiple industries and that sell-side analysts did not follow. Wood realized that this is where innovation happens. For example, Reuters (Reuters) used to be regarded as a mysterious “database publishing” company that collected data from financial companies and then packaged them for sale. To these companies. No one understood this business model at the time, but Wood noticed Reuters: “I think Reuters is a very important company, and it turns out that it is a pioneer of the Internet.”
Last year, Ark’s ETF performed very well, but this year has a bad start.
Data as of March 3; Source: Morningstar; Ark
After leaving Jennison Associates in 1998, Wood co-founded the hedge fund Tupelo Capital. In 2001, she joined AllianceBernstein as a portfolio manager and subject research strategist, managing more than $5 billion in assets. She continues to firmly invest in high-growth, high-risk, and low-value stocks.
Wood’s determination to study stocks is as firm as she is to study economics. “Kathy’s curiosity is very strong. She read a lot of Wall Street analysts’ research reports and reads everything,” Wood’s boss at the time and current Morgan Stanley Wealth Management Company (Morgan Stanley Wealth Management) Chief Investment Officer’s Lisa Shalett (Lisa Shalett) said, “She Tireless, always working to ensure that the team has conducted thorough research and has a different perspective.”
Wood’s portfolio performed very well in the bull market at the beginning of this century, but during the financial crisis from 2008 to 2009, it fell more than the market. “Undoubtedly, Casey’s strategy can easily fall out of favor,” Shalette said. “When a liquidity crisis occurs in the market or a major change in interest rates occurs, the assets held will be affected together and it will not be able to bring diversified investments to customers. “
In fact, Wood’s bold strategy has made some institutions unsatisfied. AllianceBernstein hopes that his fund can be protected. Wood’s investment portfolio is generally considered too volatile. Wood said that she was required to adjust her portfolio by holding indexes such as the S&P 500 Index, but she disagreed with this approach: “I think the trend towards index investment is a bit too much, and the market lacks innovation.” She found, Private equity investors are more willing to invest in highly valued stocks than stock investors who are worried about volatility. Wood said, “Sometimes the price at which the stocks of listed companies are sold is only 10% of the price that the private equity market is willing to accept. I see a huge opportunity there.”
founding the Ark and opening up a new world
Later, Wood received anotherEnlightenment. Wood grew up in a Catholic family and considers himself a man of faith. She read religious literature and went to church to worship. In 2006, when the real estate bubble had not yet reached its peak, Wood believed that the bubble was about to burst. She drastically reduced the risk of her investment portfolio and underperformed the market. “It was embarrassing to underperform the market by 1,000 basis points,” she recalled.
However, when she talked to her spiritual mentor, she realized that “you can’t worship any idol, and index investment has become an idol.” In the second year, she recovered most of the losses. But in prayer and meditation, Wood got the following revelation: “Index investing is all about past success. God does not want us to be trapped in the past. He wants us to enter the new world.” At that moment, she realized that she was You must start your own company. “I think startups can deliver this message,” she said. “We took out all the chips.” In 2014, Wood left AllianceBernstein and started his own company.
Wood named the company after the word Ark in the (Ark of the Covenant). In the traditions of Judaism and Christianity, the ark of the covenant It is a container with a slate engraved with the Ten Commandments, but later she told the client that Ark is the abbreviation of Active Research Knowledge, and her mission is to allocate capital to the most useful places, that is, those technologies that can bring about change.
In the first three years, Ark had no external investors, so Wood personally paid the operating expenses of the entire company, such as salary and product registration fees. The company does not have an office, and everyone brings their own computers to work in public office spaces. “Many people doubt her, and many friends are worried, but her confidence has never wavered,” said Tom Stout, one of the first employees of Ark and the current chief operating officer.(Tom Staudt) said, “Cathy took her personal wealth to risk because her conviction was extremely firm. I joined the Ark entirely because of Casey, and I admire her for her vision.”
Currently, the scale of Ark is still small, with only about 30 employees, most of whom are millennials. Stout said that Wood wants to ensure that employees have the spirit of opening up a new world. She also hired people with less experience in the financial field. Most of the employees doing investment business in Ark do not have a Wall Street background or an MBA degree. On the contrary, they are experts in different industries and are encouraged to “think from different perspectives and take a long-term perspective.” Think in terms of perspective,” Stout said.
Before the COVID-19 outbreak, Wood usually worked at the Ark’s desk in the center of Manhattan’s office, an open-plan office space on East 28th Street. There are no cubicles there, and Wood does not have his own office. There is a tall chair in front of her desk—just like the one you see in a bar—all the other desks are arranged in a circle, so she can see anyone just by turning her head. , Talk to anyone. Stout said, “She hopes to create an idea and idea that can come from the investment process and culture of anyone within the company.”
Wood’s belief in transparency is another reason for her decision to start the company. Most financial companies do not allow portfolio managers and analysts to share their research on social media, or even collect information. In Ark, Wood has created an open source ecosystem where the team can share research results and collaborate with scientists, engineers, doctors and other experts. Wood said, “Most compliance teams will not approve of this approach.” Since 2007, I have been working with Wood (both have worked at AllianceBernstein) ’s Brett Winton (Brett Winton) said, “From the very beginning, we said to actively share what we’re creating Knowledge. Winton was an investment thematic research analyst at the time and is now the research director of Ark. He said, “By providing our research to the outside world, we can reflect on where there are differences or misunderstandings, which will help us better Good understanding of what happened. “
Investors and colleagues in the industry like this open attitude. Aleph Capital’s medical industry portfolio manager Emma Vinarsky (Emma Vinarsky) said, “Most funds do not disclose their Wood never hides investment details. She is brave and not afraid of taking risks.“
Michelle mentioned at the beginning of the article is an investor with more than 30 years of investment experience. He told Barron’s that because Wood opened his Twitter account for the first time last year, I have benefited a lot.” Ark’s weekly brainstorming sessions are open to everyone, including industry experts and competitors. For the past four years, Angela Dalton, Ark’s external consultant and Chief Executive Officer of Signum Growth Capital (Angela Dalton) will attend the meeting every Friday, sometimes held in the Ark’s office, sometimes held online. Dalton said, “She’s the only one I met People who are willing to do this. “
Subtracting the down payment for the second house, Michelle still has two-thirds of his pension in the two funds of the Ark. He is still working, owns some properties, and will have a pension after retirement, so he is ready to see where Wood’s vision will take his portfolio in the next 20 to 30 years. But as interest rates climbed and inflation concerns emerged, investors began to discount the future value of these soaring stocks more, resulting in a decline in stock prices, which in turn would lead to more sell-offs.
Wood is not worried about the sharp decline of ARK Innovation. From February 24 to March 1, investors withdrew nearly $700 million from the fund. In the next two days, most of these funds came back and then flowed out again. Ark’s other ETFs also experienced outflows of funds. Winton said he suspects that most of the outflows are caused by options strategies. He said, “The stock trend is easier to predict in a longer period of time. I think it is not wise to try to predict the direction of our strategy in the next two weeks, but many people are making short-term bets.”
Critics warned that Ark may eventually become a victim of its own success-Ark has attracted a lot of “hot money”, Wood must invest this money, and may invest it in areas that she is not very interested in. In this regard, Wood said that Ark still has many investment opportunities. According to her expectations, Ark’s companies will return at least 15% per year, which means that the stock prices of these companies will double in five years. “If we are correct, if these technology companies really grow exponentially, then the opportunities for Ark should also grow exponentially,” Wood said. She pointed out that the surge in newly listed companies in the past year—especially those that went public through special purpose acquisition companies (SPAC)—has also Innovative stock picking provides ample new opportunities.
Michelle firmly believes in the point of view advocated by Wood-looking at the problem from a long-term perspective, and sticking to it during the downturn. He said, “This is the best time to buy on dips. Although the market will fall, it will always rise. People need patience.”
A former colleague of Wood said that Wood is still an unwavering debater and awesome thinker, “She can remember more things and data than anyone I have ever met. She has brainpower. It’s amazing, and it can win the upper hand in any debate. Some people will ask if this is a bit too firm about one’s own views? Yes, but everyone who has these qualitiesPeople are like this. “
This article is from WeChat official account:Barron Weekly (ID: barronschina) , author: Liu Yi Wei, Leslie · P · Norton