A fund manager finds her flock
Cathie Wood, the hottest fund manager on Wall Street, didn’t rise to prominence in the typical way. A common path to success for money managers is to land larger and larger accounts, transitioning from managing billions of dollars from wealthy individuals to handling trillions from pension funds, endowments and sovereign wealth funds. Wood has taken the reverse route, explains The Times’s Matt Phillips in a big new profile of the fund manager.
Since leaving the world of traditional money management, Wood’s bold bets on Tesla, Robinhood and cryptocurrency have won her clients and followers among the masses of tech-loving, risk-seeking small investors who dove into the market over the past year or so. Her recent success is as much about her investment acumen as her willingness to go against the grain, an approach that has captured the anti-establishment mood of the markets. Can she keep it up?
How she got here: Wood, 65, used to manage money for pension funds at AllianceBernstein. Then, as now, her preferred approach was to take big bets on tech stocks and ride hot investment trends. Managing money for pension funds held Wood back. Former colleagues said she didn’t fit in. Deemed too risky, she struck out on her own, founding Ark Invest in 2014 with a pitch calibrated to attract individual investors.
In part, the deeply religious money manager said the motivation to strike out on her own came from an epiphany on a summer day in 2012: “I really feel like that was the Holy Spirit just saying to me, ‘OK, this is the plan,’” she told the “Jesus Calling” podcast last year. Ark now manages $85 billion, up from less than $10 billion at the end of 2019.
What she does differently: Wood’s decisions to buy and sell stocks are disclosed daily to any investor who signs up for her email updates, an unheard-of level of transparency. As her public profile grows, these pronouncements often move share prices, creating a self-reinforcing loop. This strategy came into its own last year, with Wood’s Ark Innovation fund gaining an astounding 150 percent. Supporters elevated her to an unlikely cultural icon, putting her face on T-shirts and other merchandise.
The tide may be turning: Wood’s flagship fund is down 7 percent this year, underperforming the market, a demonstration of her feast-or-famine style of investing. That volatility may not rattle return-chasing retail traders. And Ark’s approach may not convince the risk-averse fund management industry to change its ways. But it raises questions about finding a new balance amid shifting market forces.
Wood’s emergence as the standard-bearer for a new movement has also created an opportunity for other investors to bet against her singular vision. Hedge fund managers, including Michael Burry of “The Big Short” fame, have recently been buying put options that pay out if Wood’s highly concentrated fund stumbles. It isn’t the first time that people have thought she was wrong.
HERE’S WHAT’S HAPPENING
The F.D.A. could give full approval to Pfizer’s coronavirus vaccine today. The expected authorization could lead to more vaccine mandates at companies, universities and hospitals. Polls suggest the “emergency use” approval of vaccines made some people hesitant to get the shots.
President Biden may extend the Aug. 31 deadline for removing American troops from Afghanistan. The military has evacuated 28,000 people over the past week, and the Pentagon has enlisted six commercial airlines — American, Atlas Air, Delta, Omni Air, Hawaiian Airlines and United — to help evacuate more Americans and Afghan allies from Kabul.
Citadel redeems $500 million it put into Melvin Capital during the meme-stock frenzy. That is part of the $2 billion in emergency liquidity Citadel injected into the fund as it suffered a short squeeze earlier this year. Steven Cohen’s Point72, which made a $750 million infusion, told The Times it’s “staying put.” Melvin is down 41 percent for the year.
New York’s economic revival is on hold. The rise of the Delta variant of the coronavirus has dashed the city’s hopes that September would see a return to normal. With return-to-office plans postponed, events canceled and foreign tourism low, Mark Zandi, the chief economist at Moody’s Analytics, said “it’s going to be a long time before New York City gets its economic groove back.”
China’s growing corporate crackdown hits dozens of I.P.O.s. The country’s market regulator halted 42 planned listings while it investigated one of China’s biggest law firms, an investment bank and other firms linked to the deals. The carmaker BYD, which hoped to raise about $400 million selling shares in its chip-making unit, was among the firms affected by the move.
Topps tears up its SPAC deal
Topps pulled the plug on its deal to go public via a SPAC backed by Mudrick Capital on Friday, the day after it learned that its licensing deal to make baseball cards would end after more than 70 years. Major League Baseball and its players’ union said they would not renew their licenses with Topps when they ran out in the next few years. Instead, they would award the licenses exclusively to Fanatics, the fast-growing, Silver Lake-backed collectibles group, which is creating a new card company.
Topps was left in the dark about the negotiations. Its co-owner, the former Disney chief Michael Eisner, had a “brief, heated call with M.L.B. commissioner Rob Manfred asking why he hadn’t been given a heads-up or a chance to counter,” The Wall Street Journal reported.
Mudrick warned about the risk of losing M.L.B. licenses in its merger documents, given the “substantial portion” of revenue they provided for Topps. But the SPAC sponsor felt confident enough to announce a merger deal in April, presumably relying on the long relationship between Topps and baseball. It may have not taken heed of players’ increasing demands for more of a say over how they earn money from their likenesses. Fanatics will give the union an equity stake and a seat on the board of its new venture.
The sports collectibles industry is experiencing a renaissance. Now that Fanatics has taken away the crown jewel in the Topps portfolio, it could do what it did with Majestic after it bought that company’s rights to make major-league uniforms: acquire it. It could also go after Panini or Upper Deck, but the Topps brand remains strong among hobbyists. “Collectors are nostalgic, by nature, so the thought of the Topps brand going away is saddening,” said Chris Ivy, the director of sports auctions for Heritage Auctions.
“There are some people whose confidence outweighs their knowledge, and they’re happy to say things which are wrong. And then there are other people who probably have all the knowledge but keep quiet because they’re scared of saying things.”
— Helen Jenkins, an infectious disease expert at Boston University, on the problem of communicating scientific uncertainty about the coronavirus to the public.
The week ahead
Taper talk: Central bankers meet for their annual gathering in Jackson Hole, Wyo., starting on Thursday. The Fed has made important announcements at the event in the past, and many expect Jay Powell, the Fed’s chair, to reveal details about how and when the bank plans to wind down its bond-buying program.
British travel restrictions: Britain will update its much-criticized “traffic light” system of pandemic travel rules, which imposes various quarantine and testing requirements on people returning from “green,” “amber” and “red” listed countries.
The Paralympics: Tokyo is still grappling with a high level of coronavirus infections and a low rate of vaccination while preparing for the Paralympics to start on Tuesday. As with the Olympics, no spectators will be allowed.
From The TimesMachine: On Aug. 23, 1995, tech obsessives counted down to midnight for the release of Windows 95, waiting at stores around the world to be among the first to get their hands on a copy of the software. The Times called it the “splashiest, most frenzied, most expensive introduction of a computer product in the industry’s history.”
The real price of a colonoscopy
In January, a federal rule ordered hospitals to publish the prices they negotiate with private insurers, so patients and employers had the information they needed to shop for the best options. Hospitals, however, have largely ignored the rule, so The Times worked with researchers at the University of Maryland-Baltimore County to create a database showing how much basic medical care costs at 60 major hospitals. The results are eye-opening.
Prices vary wildly, and sometimes insured patients pay more than those with no coverage. At the University of Mississippi Medical Center, a colonoscopy costs $2,144 with an Aetna plan, $1,463 with Cigna insurance and $782 with no insurance at all. That’s just one example. Given the scant data available, it’s difficult to know the net costs to employers and employees, beyond that they are seemingly random.
Hospitals treat fines as a cost of doing business. Those that post prices use hard-to-use formats designed for data scientists and professional researchers. And the penalty for noncompliance is a maximum of $109,500 per year — N.Y.U. Langone, a system of five inpatient hospitals that have not posted their prices, reported $5 billion in revenue in 2019.
The data could invite scrutiny of private health insurance and hospitals. In a sweeping executive order last month, President Biden directed health officials to “support” price transparency efforts. The order also pushed the F.T.C. to review and revise its guidelines for hospital mergers.
THE SPEED READ
Britain’s competition regulator has opened an investigation into S&P Global’s $44 billion tie-up with the financial data company IHS Markit. (Reuters)
The political news site The Hill was acquired for $130 million by Nexstar, the biggest local television operator in the U.S. (NYT)
Pfizer agreed to buy the remaining shares in Trillium Therapeutics it does not already own, valuing the cancer drug specialist at $2.3 billion. (Reuters)
The Treasury secretary Janet Yellen has reportedly told advisers that she supports reappointing Jay Powell as Fed chair. (Bloomberg)
The U.S. vaccination drive relied on consultants like McKinsey, Deloitte and BCG — and not everyone is happy about it. (WaPo)
A California judge ruled the state’s law classifying many gig workers as independent contractors was unconstitutional and unenforceable. (NYT)
Western Union and MoneyGram suspended payments in Afghanistan, as they evaluate how U.S. sanctions on the Taliban apply in the country. (WSJ)
Best of the rest
Time’s Up, the high-profile charity formed in the #MeToo movement, is being roiled by a crisis over its ties to those in power, like Gov. Andrew Cuomo of New York. (NYT)
Facebook decided not to release a report about its most viewed posts over fears the top content would reflect poorly on the company. (NYT)
The pay gap between women and men on the boards of Britain’s largest companies is even greater than in the general workforce. (FT)
“What an Adult Tricycle Says About the World’s Bottleneck Problems.” (NYT)
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