How to Invest Like Mellody Hobson

Who is Mellody Hobson?

Mellody Hobson is an American businesswoman who is co-CEO of Ariel Investments, a firm with more than $17 billion in assets under management as of March 2023. Hobson's position with Ariel Investments has given her the opportunity to serve on various boards of directors during her career, including at Starbucks (SBUX 0.47%), where she is chairwoman.

This article will look at Hobson's investment approach and achievements.

Mellody Hobson's personal stats

Age: Born on April 3, 1969.
Source of wealth: Hobson owns almost 40% of Ariel Investments, making her the largest shareholder. She's worked her entire career at the firm, going from intern to co-CEO.
Marital status: In 2013, Hobson married George Lucas, known for films including Star Wars and Raiders of the Lost Ark.
Residence: Hobson resides in her hometown of Chicago.
Children: One.
Education: Hobson graduated from Princeton University in 1991. Today, Princeton is building a residential facility called Hobson College in her honor.

Mellody Hobson's investment approach

John W. Rogers founded Ariel Investments and placed a priority on value investing -- the investing style used by Warren Buffett. And when Mellody Hobson was named co-CEO in 2019, it wasn't so she could transform the firm. To the contrary, Hobson is also a fan of Buffett's investing style, and Rogers appreciates the continuity she'll bring to the firm long after he's gone.

In a 2019 LinkedIn post, Hobson said Buffett: The Making of an American Capitalist changed the way she thought about investing. The 2008 biography chronicles how Buffett's investing philosophies developed and changed over the years, highlighting some of his greatest investments. Hobson's 2019 post highlighted the importance of value investing for her own approach.

Ariel Investments likes to invest in small-cap stocks and international stocks. But looking through its holdings makes it clear that the firm is looking for value across the entire stock market, regardless of a company's size or its industry. Investors often consider different metrics when determining the value of a stock. But according to Hobson's fellow co-CEO Rogers, Ariel Investments is looking for public companies that trade at about a 40% discount to their private market value.

Given how closely Rogers and Hobson work together at Ariel Investments, it's likely she shares a similar view of value investing.

As an example of this philosophy from late 2022, Rogers said shares of Sphere Entertainment (SPHR -1.68%) -- called Madison Square Garden Entertainment at the time -- traded at a 70% discount to its private-market value, an attractive price for the value-minded leaders at Ariel Investments. Since then, Sphere Entertainment has spun off Madison Square Garden Entertainment (MSGE -0.18%) into a publicly traded company.

For what it's worth, shares are up about 40% as of this writing, combining the value of shares from Sphere Entertainment and Madison Square Garden Entertainment.

Another large position for Ariel Investments is Chinese internet search engine company Baidu (BIDU 0.62%).

According to regulatory filings, Ariel Investments owned more than 6.6 million shares of Madison Square Garden Entertainment and more than 2.8 million shares of Baidu as of March 2023, the shares being worth more than $240 million and $380 million, respectively. We don't know exactly what Hobson thinks about these two companies.

Many investors change investing styles over the years. But if one thing stands out with Hobson, it's her consistency. She jokes that not even her work phone number has changed since she graduated college.

With a track record of staying the course, Hobson likely won't deviate from value investing in the future.

Mellody Hobson's investments

There's plenty that we don't know about Mellody Hobson's investments -- not everything is required to be disclosed. But we can make a few observations.

As mentioned, Hobson is chairwoman of coffee giant Starbucks -- the first African-American woman chairperson of an S&P 500 company. Due to her position at the company, she's acquired a stake in the business. Directly and indirectly, she owned more 720,000 shares of Starbucks as of early 2023, valued at more than $70 million.

Additionally, Hobson has been a director at banking titan JPMorgan Chase (JPM 0.06%) since 2018. And as of March 2023, she owns more than 146,000 shares of JPMorgan Chase, both directly and indirectly, worth about $20 million.

Starbucks and JPMorgan likely make up a very large percentage of Hobson's net worth. It's probably safe to assume that these are companies she believes in for the long term.

Conclusion

Mellody Hobson's story is inspiring

It's clear that Mellody Hobson has worked hard to get where she is today. From humble beginnings in Chicago, she excelled in school and in work to become one of the country's most influential people. She's a good reminder to think long-term while climbing the ranks. And her example also reminds us not to forgot to turn around to give a helping hand to those behind us.

Mellody Hobson FAQ

What is Mellody Hobson best known for?

While Hobson has worked for Ariel Investments for more than 30 years, she's perhaps better known for her work outside of asset management.

As chairwoman of Starbucks, she's the first African-American woman to lead an S&P 500 constituent. Many people also recognize her as a director for DreamWorks Animation from 2004 to its 2016 acquisition by NBCUniversal. Still others recognize her from her time as a director at The Estee Lauder Companies (EL 1.7%), from 2005 to 2018.

Moreover, Hobson relishes the opportunity to speak to the public about how to manage finances and how to inspire children to care about investing from a young age. She's often invited to talk about these subjects on TV, and many people may recognize her from her many appearances on Good Morning America over the years.

What is Mellody Hobson doing now?

Hobson is still active in her job at Ariel Investments, in addition to leading at companies including Starbucks and JPMorgan Chase.

However, Hobson isn't just active in the business world. She's also extremely active in her community. She's on the board for After School Matters, a nonprofit after-school program in Chicago that teaches job skills to thousands of teens through apprenticeship and internship programs.

Additionally, she and her husband are involved in the development of the Lucas Museum of Narrative Art, which is expected to open in 2025 in Los Angeles.

When did Mellody Hobson join Ariel Investments?

Ariel Investments founder John W. Rogers first met Hobson when she was still in high school and she immediately impressed him. While studying at Princeton, she was brought in as an intern at the firm. When she graduated in 1991, Ariel Investments hired her.

Starting in client services and marketing, Hobson worked her way up to president of Ariel Investments by 2000 and was promoted to co-CEO in 2019.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Jon Quast has positions in Starbucks. The Motley Fool has positions in and recommends Baidu, JPMorgan Chase, and Starbucks. The Motley Fool has a disclosure policy.

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