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Cathie Wood says her contrarian views set her apart, not her gender



Catherine Wood, chief executive officer of ARK Investment Management LLC, speaks during the Milken Institute Global Conference in Beverly Hills, California, on Monday, Oct. 18, 2021.

Kyle Grillot | Bloomberg | Getty Images

It’s hard to talk about the topic of women in investing without mentioning Cathie Wood. The founder, CEO and chief investment officer of Ark Investment Management was the first woman to claim the title of manager of the largest actively managed fund.

Yet, when Wood reflects on her career, she said she attributes any professional marginalization to her contrarian views rather than her gender. On any given day, she is rarely reminded that she is a woman, Wood told CNBC in a recent interview.

Her exchange-traded funds, which focus on “disruptive innovation,” have suffered year to date. Still, Wood remains among the largest active managers, with more than $21 billion invested in her funds.

By being unwavering and publicly vocal about her conviction in investing in the future, Wood gives her critics ample opportunity to take aim at her unique strategies.

“Other people say that I am attacked in the media because I’m a woman. I don’t think that is [the case] … I really think it’s because we’re disrupting the financial world and we’re unsettling people,” said Wood. “It’s the ideas and the research. They’re pretty provocative.”

Wood, 66, founded Ark Invest in 2014 after a long tenure running AllianceBernstein’s Global Thematic Growth Fund, which she navigated through the tech and telecom bust. Wood was 57 years old when she started the research-centric investment group because she found herself frustrated by how little investors were focused on innovation and technology.

“There was nowhere I was going to fit in and I didn’t want to fit in anywhere,” said Wood. “I wanted to blaze a trail.”

Through her mystical conviction in provocative growth strategies in the U.S. equity market, Ark’s ETFs were created. Her strategies focus on five disruptive technologies: DNA sequencing, robotics, artificial intelligence, energy storage and blockchain technology. However, Wood is often criticized for the expensive, high-multiple and sometimes illiquid stocks in her funds.

Ark’s flagship fund, Ark Innovation, made popular high-growth names like Tesla, Zoom Video, Roku and Teladoc Health.

“I’ve seen people put her down and I’ve seen people praise her but neither of those descriptions of Cathie have focused on her gender,” said economist Arthur Laffer, one of Wood’s former teachers and longstanding mentors.

‘Can’t take the numbers from you’

Ark Innovation — which trades under ticker ARKK — was largely put on the map after Ark Innovation’s banner year in 2020. The fund was full of equities that thrived during the coronavirus pandemic — a group that became known as stay-at-home stocks — and it rallied nearly 150%. Last year, during a rotation to value as the economy recovered, the fund lost 25%.

2022 has been a dismal year so far for Wood’s funds as growth pockets of the market are punished by surging interest rates. Ark Innovation is down more than 30% and sits more than 50% from its 52-week high in June 2021.

The depreciation in Wood’s stocks from mid-February of 2021 has not changed Ark’s forecast. Wood said she is just getting her highest-conviction stocks at lower prices. This should result in a quadrupling in her flagship fund over the next five years, she has said.

Wood, who focuses on a five-year investing time horizon, said attaching yourself to numbers is a great way to set yourself apart in the financial industry.

“Politics can’t take the numbers from you, they are what they are,” she said. “Those are going to be good numbers and bad numbers and you hope over time that the average is pretty good.”

To be sure, Wood’s loyal following has not abandoned her or her vision. Ark Innovation is net positive in inflows for the year at more than $1 billion of incoming cash.

Raised as a ‘first-born son’

Wood is the first child of Gerald and Mary Duddy, first-generation immigrants from Ireland. She said she was raised as her parents’ “first-born son.” Her parents encouraged her to pursue avenues regardless of gender.

Raising his children in Los Angeles, Gerald Duddy placed an emphasis on education and research, something Wood still values today. In 2018, she launched the Duddy Innovation Center for Excellence at her alma mater, Notre Dame Academy, in Los Angeles.

In 1977, Wood found herself in Laffer’s class at the University of Southern California. Wood recalls not even knowing what business was at the time, but she quickly became enamored by economics and research.

Laffer, a former member of President Ronald Reagan’s Economic Policy Advisory Board, accepted Wood into his graduate-level class when she was an undergraduate student. Laffer recommended Wood for her first job and has stayed a close friend and confidant.

“There isn’t anyone who has done what she has done,” said Laffer. “That’s why her returns are unbelievably abnormal. It also works the other direction of course, but her returns over her career have been amazing because of her hard work.”

Wood started in the industry as an assistant economist on the West Coast at The Capital Group. She said she often was the only woman in the room.

“Many guests thought I was the secretary and would ask for coffee and I was happy to give it to them. … I was happy to be in that room,” she said.

As Wood’s career progressed, she was accompanied and mentored by many supportive women like Lulu Wang, with whom she started hedge fund Tupelo Capital Management.

Still, other female colleagues suffered from so-called queen bee syndrome, she said, using a term that is used to describe a situation when women fail to support other women.

“There have been women who didn’t make it easy for me,” Wood recalled.

Cathie Wood and children

Ben Larrabee Photography

‘Innovation levels the playing field’

Wood’s worshipers

Wood attributed much of her success to her loyal band of followers — who are often Gen Z and millennials.

“It’s the younger population that stuck with us,” she said.

Wood has garnered much attention from the millennials who were a part of the massive wave of retail investors that hopped into the market during the Covid-19 pandemic. Day traders in online chatrooms will follow Wood’s trades and post slogans like “In Cathie We Trust” or call her “Cathie BAE” (before anyone else).

While many investors chided these investors as “dumb money” trading in speculative stocks, Wood always defended the group.

Ark has an unconventional social strategy where it shares its research, puts its analysts on social media, and sells “Ark Invest” swag, like sweatshirts and baseball caps.

ARK Invest hoodie and cap

Ark Investment Management

She said her younger fanbase appreciates that Ark is willing to be the closest vehicle to a venture capital firm in the public equity market. That is, an ETF that invests in companies’ long-term growth prospects.

“The younger people have a more innate understanding of these nascent technologies, how volatile they are but also how promising they are,” she said.

And her amateur following has proved to be anything but fickle, as investors double down on her funds despite this year’s troubling performance.

“They always believed it would come back and we are rebounding a bit now. Truth wins out,” Wood said.

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Goldman Sachs CEO David Solomon gets 29% pay cut to $25 million



David Solomon, Chairman & CEO of Goldman Sachs, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 23rd, 2023. 

Adam Galica | CNBC

Goldman Sachs CEO David Solomon will get a $25 million compensation package for his work last year, the bank said Friday in a regulatory filing.

The package includes a $2 million base salary and variable compensation of $23 million, New York-based Goldman said in the filing. Most of Solomon’s bonus— 70%, or $16.1 million, is in the form of restricted shares tied to performance metrics, while the rest is paid in cash, the bank said.

Solomon’s pay, while large by most any measure, is about 29% lower than the $35 million he was granted for his 2021 performance. Meanwhile, Goldman’s full year earnings fell by 48% to $11.3 billion, thanks to sharp declines in investment banking and asset management revenue, the company said last week.

While the bank was primarily hit by industrywide slowdowns in capital markets activity as the Federal Reserve raised interest rates, Solomon also faced his own set of issues last year. Goldman was forced to scale back its ambitions in consumer finance and lay off nearly 4,000 workers in two rounds of terminations in recent months.

Solomon’s pay package is smaller than that of rivals Jamie Dimon of JPMorgan Chase and James Gorman of Morgan Stanley, who were awarded $34.5 million and $31.5 million respectively.

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Fiji fires police commissioner and end security deal with China



Police operate a security check point in the Fijian capital of Suva in December following general elections. The Pacific island nation has played an important regional role amid competition between China on the one side and Australia, New Zealand and the United States on the other.

Saeed Khan | Afp | Getty Images

Fiji’s president on Friday suspended the commissioner of police following a general election saw the first change in government in the Pacific island nation in 16 years, after the military earlier warned against “sweeping changes.”

President Ratu Wiliame Katonivere said Commissioner of Police Sitiveni Qiliho had been suspended on the advice of the Constitutional Offices Commission, “pending investigation and referral to and appointment of, a tribunal.”

The Supervisor of Elections Mohammed Saneem was also suspended by the commission, the statement said.

Qiliho declined to comment to local media because he said he will face a tribunal over his conduct. He was seen as being close to former prime minister Frank Bainimarama, who led Fiji for 16 years before a coalition of parties narrowly won December’s election and installed Sitiveni Rabuka as leader of the strategically important Pacific nation.

The day before a coalition agreement was struck, Qiliho and Bainimarama called on the military to maintain law and order because they said the hung election result had sparked ethnic tensions, a claim disputed by the coalition parties.

The Pacific island nation, which has a history of military coups, has been pivotal to the region’s response to competition between China and the United States, and struck a deal with Australia in October for greater defence cooperation.

No more China policing deal

On Thursday, Fiji Times reported that Rabuka said his government would end a police training and exchange agreement with China.

“Our system of democracy and justice systems are different so we will go back to those that have similar systems with us,” the prime minister was quoted as saying, referring to Australia and New Zealand.

The prime minister’s office did not immediately respond to a request for comment.

Republic of Fiji Military Forces Commander Major General Jone Kalouniwai earlier this month warned Rabuka’s government against making “sweeping changes,” and has insisted it abide by a 2013 constitution which gives the military a key role.

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Inventory glut and underused factories



Intel CEO Pat Gelsinger, with U.S. President Joe Biden (not pictured), announces the tech firm’s plan to build a $20 billion plant in Ohio, from the South Court Auditorium on the White House campus in Washington, January 21, 2022.

Jonathan Ernst | Reuters

Intel’s December earnings showed significant declines in the company’s sales, profit, gross margin, and outlook, both for the quarter and the full year.

Investors hated it, sending the stock over 9% lower in extended trading, despite the fact that Intel did not cut its dividend.

The earnings report, which was the eighth under CEO Pat Gelsinger’s leadership, shows a legendary technology company struggling with many factors outside of its control, including a deeply slumping PC market. It also highlights some of Intel’s current issues with weak demand for its current products and inefficient internal performance, and underscores how precarious the company’s financial health has become.

“Clearly, the financials aren’t what we would hoped,” Gelsinger told analysts.

In short: Intel had a difficult 2022, and 2023 is shaping up to be tough as well.

Here are some of the most concerning bits from Intel’s earnings report and analyst call:

Weak and uncertain guidance

Intel didn’t give full-year guidance for 2023, citing economic uncertainty.

But the data points for the current quarter suggest tough times. Intel guided for about $11 billion in sales in the March quarter, which would be a 40% year-over-year decline. Gross margin will be 34.1%, a huge decrease from the 55.2% in the same quarter in 2021, Gelsinger’s first at the helm.

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But the biggest issue for investors is that Intel guided to a 15 cent non-GAAP loss per share, a big decline for a company that a year ago was reporting $1.13 in profit per share. It would be the first loss per share since last summer, which was the first loss for the company in decades.

An inventory glut

Dropoff in gross margin

Underpinning all of this is that Intel’s gross margin continues to decline, hurting the company’s profitability. One issue is “factory load,” or how efficiently factories run around the clock. Intel said that its gross margin would be hit by 400 basis points, or 4 percentage points, because of factories running under load because of soft demand.

Ultimately, Intel forecasts a 34.1% gross margin in the current quarter — a far cry from the 51% to 53% goal the company set at last year’s investor day. The company says it’s working on it, and the margin could get back to Intel’s goal “in the medium-term” if demand recovers.

“We have a number of initiatives under way to improve gross margins and we’re well under way. When you look at the $3 billion reduction [in costs] that we talked about for 2023, 1 billion of that is in cost of sales and we’re well on our way to getting that billion dollars,” Gelsinger said.

The not-so-bad news: Dividend and self-driving

Long-term investors have always closely watched how the company balances the near-term need to placate shareholders with the massive capital spending needed to stay competitive in the semiconductor manufacturing business.

If Intel is cutting costs and still needing to invest in chip factories to power its turnaround, analysts say it may want to reconsider its dividend. Intel spent $6 billion on dividends in 2022, but did not cut its dividend on Thursday.

Meanwhile, the company said it wants to cut $3 billion in costs for 2023 and analysts believe it wants to spend around $20 billion in capital expenditures to build out its factories.

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Gelsinger was asked about this dynamic on Thursday.

“I’d just say the board, management, we take a very disciplined approach to the capital allocation strategy and we’re going to remain committed to being very prudent around how we allocate capital for the owners and we are committed to maintaining a competitive dividend,” Gelsinger replied.

There was at least one bright spot for Intel on Thursday.

Mobileye, its self-driving subsidiary that went public during the December quarter, reported earlier in the day, showing adjusted earnings per share of 27 cents and revenue growth of 59%, to $656 million. It also forecast strong 2023 revenue of between $2.19 billion and $2.28 billion. Shares rose nearly 6% during regular trading hours Thursday.

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