June 18, 2021

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Bill Hwang provided seed funding for Ark ETFs, reveals Cathie Wood

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Cathie Wood has revealed that Bill Hwang, the investor whose Archegos Capital family office exploded causing billions of dollars in losses, was central to the launch of its asset manager Ark Invest.

In a TV interview on Friday, Wood also said that she exchanged ideas with Hwang about US stocks and in particular the media sector in 2013, when Archegos still focused primarily on investing in Asia.

Wood created Ark, which manages exchange-traded funds focused on innovative technology companies, in 2014 after a long career on Wall Street at AllianceBernstein and Jennison Associates.

“He [Hwang] provided the seed for our first four ETFs and we are very grateful to them. This was at a time when market makers were fed up with planting new strategies because they would be stuck with $ 2 million stuck in an ETF going nowhere, ”she told CNBC.

“We had to go get that seed and Bill, hear what I was saying about the company I was going to create. . . was very intrigued and very intrigued by the actions that interested us, ”she said. “He was just starting to learn more about them.

A fierce rally in tech stocks helped propel Ark into the top ten of the largest U.S. ETF managers and investors poured money into its funds. The flagship innovation fund now has assets of $ 22 billion. The other three Ark funds initiated by Hwang are its Genomic Revolution, Next Generation Internet and Autonomous Technology and Robotics funds.

Wood, like Hwang a pious Christian, who named Ark after the gold-covered chest described in the Book of Exodus, said she met the former hedge fund manager when they were both advisers to a religious group who deals with the youth of Wall Street.

“On the way back from this event, we were trading ideas for stocks at the time and I know he bought one of the stocks we had great faith in, Netflix,” Wood said.

Banks which acted as Archegos suffered $ 10 billion in losses at the end of March after Hwang’s heavily leveraged bets on a small number of US and Chinese stocks turned against him, including media group ViacomCBS.

When asked if Hwang still had a stake in any of Ark’s funds, Wood said ETFs didn’t know who their shareholders were, and added, “I never asked him if he kept the money. If he wanted to volunteer he could have but no, we never had that conversation.

A number of banks are seeking compensation after suffering losses from derivative transactions with Archegos, which the Financial Times reported this week was preparing for insolvency. Washington securities regulators are probing the debacle.

Wood said she hadn’t spoken to Hwang since Archegos blew up. “I sent her a note after hearing about the unfortunate events we have all witnessed and I wish her well,” she told CNBC. “He was there for us at the start and we are very grateful to him for that.



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