Cathie Wood: Innovation On Top of the Wall Street World

Cathie Wood is the founder, CEO, and CIO of ARK Invest, an investment management firm based in New York City. The firm, which deals with actively managed exchange-traded funds and focuses on investing in disruptive technology, has become the talk of Wall Street since Wood founded the investment house in 2014.

Along with her successes on Wall Street with ARK Invest, her net worth has continued to soar. And this year, her status as a star stock-picker earned her a spot on Forbes’ inaugural 50 Over 50 list.

Of course, Wood didn’t just appear at the top. While her success seems instant, she has been laying the groundwork for years. Let’s take a look at how the founder and head of this successful investment firm rose to the top and made her fortune.

Getting Started

The oldest child of immigrants from Ireland, Cathie Wood spent her early years in Los Angeles, California. After graduating from Notre Dame Academy, an all-girls Catholic high school, she graduated summa cum laude from the University of Southern California. Here, she earned a Bachelor of Science degree in finance and economics.

While at USC, supply-side economist Arthur Laffer was one of Wood’s professors. He would become her mentor and helped her secure a job as an assistant economist at Capital Group. She spent three years there before moving to New York City to take a job at Jennison Associates, where they were looking for someone to crunch economic data. She became its chief economist at the age of 25.

Early Career

Wood stayed at Jennison for eighteen years, working as chief economist, equity research analyst, portfolio manager, and managing director. During this time, interest rates began to decline, allowing tech companies to grow and inviting innovation.

It comes as no surprise now that Wood was looking at stocks that other analysts were ignoring — but at the time, it was unheard of.

“I was like a little dog looking for scraps under the table,” Wood told Barron’s Advisor.

She was taking risks on companies that no one else understood. She was looking for innovation.

Following those eighteen years at Jennison, Wood left in 1998. She teamed up with Lulu C. Wang and co-founded Tupelo Capital Management, a hedge fund based in New York City; by 2000, it managed $800 million in global thematic strategies.

In 2001, Wood joined investment management firm AllianceBernstein as a portfolio manager and thematic research strategist. During her twelve years here, she became Chief Investment Officer of Global Thematic Strategies, with $5 billion in assets under management.

Through all of these career moves, Wood stuck to her high-growth, high-risk investment strategy, looking for innovation that would drive into the future. According to Wood, her portfolios were deemed too volatile a lot of the time. That full-throttle volatility wasn’t sitting so well with AllianceBernstein, who wanted more stability on the funds.

Founding ARK Invest

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In 2014, Wood’s idea for actively managed exchange-traded funds based on disruptive innovation was deemed too risky by AllianceBernstein, but she wasn’t ready to give up. She knew that disruptive innovation–innovation that creates a new market and eventually displaces the established status quo–could pay off big time. She was after those transformative technologies.

This is when ARK Invest was born. Wood left AllianceBernstein and launched her own firm. The name ARK is an acronym for Active Research Knowledge, but Wood also named it for the Ark of the Covenant, a gold-covered chest in Jewish and Christian tradition that holds the two stone tablets of the Ten Commandments.

ARK Invest launched its first four active funds in 2014: the Innovation ETF, the Genomic Revolution ETF, the Next Generation Internet ETF, and the Autonomous Technology and Robotics ETF. All four of these were seeded with capital from Bill Hwang with Archegos Capital Management.

For the first few years, there were no outside investors. Wood personally supported the entire outfit, paying for salaries, product registration expenses, and other operating costs. Employees worked out of a public co-working space on their own computers.

ARK Invest continued to grow. The company no longer operates out of a public space–these days, employees work from an open-floor space office in Manhattan. The firm added the Fintech Innovation ETF in 2019; and in 2021, the Space Exploration and Innovation ETF. The company also maintains two index funds: the 3D Printing ETF, and the Israel Innovative Technology ETF.

By the end of 2020, ARK Invest’s Innovation ETF had become the largest actively managed ETF, with a whopping $17 billion in assets under management and a 170% return in 2020. By the beginning of 2021, ARK Invest had become one of the top 10 issuers of exchange-traded funds, and two funds run by Wood are on the list of the 10 largest female-run funds by total net assets.

What ARK Invest Does

ARK Invest focuses on disruptive technology. This includes technologies such as artificial intelligence, robotics, electric vehicles, self-driving vehicles, energy storage, DNA sequencing, 3D printing, and more. The firm has also invested in cryptocurrencies, which Wood calls an “insurance policy” against inflation.

They also do other things a little differently than other investment management firms.

ARK’s employees are mostly millennials with less experience in finance. In fact, most of them don’t have a Wall Street background or even an MBA. ARK employs about 30 people who are experts in different industries. Among the employees are gaming engineers, artificial intelligence experts, cancer researchers, and even a sailboat captain.

This diverse team is a key part of ARK’s success, according to Wood. Their wide range of experiences and knowledge provide information that financial advisors don’t always possess. For instance, ARK employs scientists because they can better assess the impact of disruptive technologies in their fields of expertise.

Wood has a passion for transparency, so she has managed to create an open-source ecosystem of sorts. ARK publishes current analysis and opens its research reviews to the public. Wood posts real-time logs of her firm’s trades, as well. Her strategies are all available on ARK’s website. The company’s weekly brainstorming sessions are open for anyone to join, including rival investors.

Although it may seem counterintuitive to share her secrets with everyone, Wood believes it sparks discussions that add to ARK’s strategies. She believes that collaborating and sharing information makes them more successful.

Even just within the office, everything is open. There are no cubicles in ARK Invest’s office space. Not even Wood herself has an office. Instead, she sits on a tall chair at her desk so that she can see and talk to anybody, and all the other desks are arranged in a circle. This helps ARK share, collaborate, and attract information with information.

Wood’s Bold Predictions

Cathie Wood was named the best stock picker of 2020 by Matthew Winkler, the co-founder and editor-in-chief of Bloomberg News. So, it should come as no surprise that she has been correct about some very big things when it comes to technology and innovation.

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In early 2018, Wood stated on CNBC that she saw Tesla stock increasing by 1,100%, to a price of $4,000, in just five years. She later reiterated that claim in 2019, after the price of Tesla stock dropped.

Although she was mocked at the time, she was later proved correct: Tesla’s price reached her target at the beginning of 2021, two years earlier than she predicted. Elon Musk’s electric car company is now worth five times more than Ford and General Motors combined.

And that Tesla stock is a part of ARK’s Innovation ETF.

Cathie Wood’s Net Worth

All of that hard work, innovation, drive, and success has earned Cathie Wood quite a bit of money. As someone known as a star stock-picker and runs a company with $50 billion in assets under management, it should come as no surprise that Wood is worth an estimated $250 million herself. This helps her secure a spot on Forbes’ annual list of America’s Richest Self-Made Women.

These days, Wood resides in Wilton, Connecticut. She hasn’t forgotten about her upbringing in Los Angeles, though. In 2018, Wood donated generously to her high school, Notre Dame Academy, to start the Duddy Innovation Institute.

The program offers a challenging education opportunity for girls interested in studying disruptive innovation and technology. Much like her belief that innovative technologies will lead the future, she also sees young women leading the way in innovative industries like genomics, robotics, blockchain technology, artificial intelligence, and more.

Students at Duddy Innovation Institute start out their studies with Wood’s trademark subject, disruptive innovation. From there, students jump into other subjects, like robotics and genomics. The point, here, isn’t to train a bunch of Wall Street-savvy young women. Instead, she’s hoping to encourage them to pursue any career they want, much like her Irish immigrant parents did for her.

However, if they do want to trade with the best of the best, it’s not out of the question that some of these young women might end up at ARK.

“I would love to bring some of these young people, get them through college and give them a shot,” Wood said to Bloomberg News.

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