Mellody Hobson

The president of the Chicago-based investment firm Ariel Investments on breaking with a longtime business partner

As told to Diane Brady

“Loyalty means more to me than love. To go and break that relationship was even hard to say”


I came to Ariel Investments straight out of college in 1991. It was the first minority-owned money management firm. My job was to liaise with the Calvert Group, which was selling our funds, branded as Calvert-Ariel. About three years in, I went to [our] founder, John Rogers, and told him we had to leave. The relationship wasn’t bad, but we were growing up. Calvert stood for socially responsible investing, but we really stood for value investing. We shared the philosophy of Warren Buffett. We had about $400 million under management in our mutual funds. I said we were big enough to strike out on our own. Still, I was torn. Loyalty means more to me than love. To go and break that relationship was even hard to say. Amazingly, John said, “I trust you.”

We flew to Bethesda to meet with Calvert. John was very anxious. He went into a phone booth and called his basketball coach from Princeton, Pete Carril. John had started the company in 1983. He’d been with Calvert for nine years. I just wanted to get it done. When we told the CEO, he was stunned. It was like asking for a divorce. Then we had to go before the board of our mutual fund company. They said we had one month to come to an agreement on what Ariel would pay Calvert to leave. If not, all bets were off — we would lose everything.

It was much harder and way more expensive than we thought. We gave them our nest egg. About $100 million of the assets stayed with Calvert. Over the summer of 1994 we prepared to go out on our own. We hired a marketing firm to brand Ariel Mutual Funds. The accounts had to be transferred by tape. We flew two or three people with tapes on different flights, in case one of the planes crashed. It was Labor Day weekend. I slept in the office because I wanted to wake up and see our name in the Wall Street Journal.

It was a tough period, performance-wise, but there were small victories. I remember when the producer of Wall Street Week [on PBS] called to say they wanted John on the show. I ran around the office, screaming like we’d won an Academy Award. We have about $5 billion now. John manages three of the funds and is the father of the strategy. I run the company. This used to be John’s firm. When we divorced Calvert, it became ours.


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