Cathie Wood
Courtesy of ARK InvestCathie Wood, founder and CEO of ARK Investment, will retain control of the asset-management company after monthlong talks with a minority shareholder that tried to stage a takeover.
Exchange-traded funds from ARK Investment––with a sharp focus on companies in disruptive innovation––have been on a tear this year. Their stellar performance has drawn a whopping amount of new assets to the privately held asset manager founded just six years ago.
But ARK investors have had one big uncertainty in their minds over the past month: Founder and CEO Cathie Wood, who’s been credited as the major reason for ARK’s investment insight and success, might lose control of the company.
A regulatory filing last month suggests that Resolute Investment Managers, ARK funds’ U.S. distributor and minority stakeholder, might be planning to take a controlling stake in the firm via an option it acquired in July 2016.
Wood had said that she was disappointed about Resolute’s “unwelcome notice,” and that she doesn’t believe the majority ownership by “a party tangential to our business” is in the best interest of ARK stakeholders.
That concern should be relieved now. The two firms announced Monday that they have come to an agreement that ARK will continue as an independent entity led by founder Catherine Wood.
According to the joint statement, ARK had repurchased the option from Resolute for an undisclosed amount, financed through a multi-tranche term loan facility provided by Eldridge Corporate Funding. This way, Wood will remain the firm’s majority shareholder, while Resolute stays ARK’s largest nonemployee shareholder with the minority share purchased in 2016.
“Cathie Wood and her team have done an exemplary job building ARK Invest from the ground up, and we look forward to supporting the firm’s momentum for years to come,” said Gene Needles, Resolute’s Chairman and Chief Executive Officer.
ARK will also retain Resolute’s distribution services for its products in a long-term agreement. The two firms said they’ll collaborate in building out additional digital distribution efforts. This came after ARK said in late October that it was exploring the potential replacement of Resolute.
“We can succeed only with strong partners by our side and we are delighted to have reaffirmed the partnership with Resolute for our U.S. distribution,” said Wood in the Monday statement.
Both ARK and Resolute declined to offer additional comments.
According to Morningstar, ARK runs at least three of the 10 best-performing ETFs over the past one-, three-, and five-year periods. Five of its actively managed ETFs have returned an average of more than 150% year to date, thanks to their large bets on highflying stocks like Tesla (ticker: TSLA) and Square (SQ).
Captivated by ARK funds’ strong performance and Wood’s optimism on future-shaping innovations, investors have been pouring millions of dollars to the asset manager daily.
In December alone, ARK funds took in nearly $6.8 billion new assets, the third most only behind ETF giants Vanguard and BlackRock’s (BLK) iShares. That is especially impressive considering ARK has only seven ETFs under its sleeve, while BlackRock and Vanguard have hundreds.
Now that Wood is assured the seat behind the wheel, ARK investors can continue to sail along without worries of changes.
Write to Evie Liu at evie.liu@barrons.com
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December 30, 2020 at 06:06AM
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ARK Founder Cathie Wood to Retain Control of Firm - Barron's
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