Mellody Hobson on Ariel Investments' Breakup With Calvert

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.