Tue, 11/17/2020 – 09:45
Tesla uber-bull Cathie Wood has done such a great job managing ARK Investment Management (mostly by piling into overvalued tech fads that have screamed to all time highs on the heels of a massive NASDAQ gamma squeeze), Resolute Investment Managers has decided to take majority control of the firm.
The power shift, which Pensions & Investments notes isn’t especially amicable, comes due to a 2016 agreement between Resolute and ARK, where RIM acquired a minority stake in the investment manager – with a call option “to purchase a controlling voting and equity interest in (ARK) that is exercisable in 2021.”
While the financial terms of the deal have not been made available, ARK’s founder, CEO and CIO, Wood, who currently owns 50% to 75% of the firm, didn’t seem happy with RIM’s decision.
Wood said in a statement:
“On behalf of the employee-owners of ARK, we are disappointed that Resolute Investment Managers and its private equity owner, Kelso & Co., have chosen to issue this unwelcome notice that they intend to seize control of our business.”
“As reported by Morningstar, ARK has delivered top one-percentile returns for multiple products over one-, three- and five-year periods. Thanks to our research and investing success, paired with our innovative digital marketing strategies, ARK now ranks among the largest ETF issuers in the U.S.,” Wood continued.
She concluded: “The remarkable success of our team is rooted firmly in a culture of transparency, collaboration, and employee ownership. We do not believe that equity ownership by a party tangential to our business is in the best interest of ARK’s stakeholders.”
Perhaps Wood should have considered this at any point over the last few years and, instead of making one CNBC appearance after the next to pump a $4,000 price target on Tesla, should have spent time renegotiating her agreement with RIM.
Regardless, the deal may actually be a blessing in disguise for Wood, who is likely going to receive a large payday and gets a chance to potentially exit on top – with the added bonus of a scapegoat to blame any future implosion by the firm on.
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Author: Tyler Durden