John Rogers

Last Update: 2014-09-10

Number of Stocks: 188
Number of New Stocks: 13

Total Value: $8,179 Mil
Q/Q Turnover: 5%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

John Rogers Watch

  • John Rogers' Ariel Funds March Commentary

    Plenty of people talk about "endpoint sensitivity," but oftentimes they miss half the story. That is, in a data series there are really two endpoints—the last one and the first one. As standardized one-year, three-year, and five-year periods roll along, people focus great attention on the most recent month and tend to forget about the month that "goes away." Making this mistake in 2014 could prove harmful when examining five-year returns.

    Below are some recent returns for Ariel Fund. One reason we have selected our flagship mutual fund for this illustration is because its relative performance recently has been quite stable. Over the five years ended February 28th, 2014, it was the top-performing fund in Morningstar's Mid-Cap Blend category. It remained on top for the five-year period as of March 31* . At first glance, however, its absolute returns look like they changed a lot in one month:


  • John Rogers' Ariel Investments February Commentary

    In the investing world, the worst of times can be the best of times to buy. The markets provided that lesson once again to investors over the last five years. A half-decade ago, with panic at generational highs and expectations near all-time lows, the market bottomed on March 9, 2009. As a result, the five-year results you see ending February 28, 2014 are likely the best month-end returns you will see for a long time. Before we get to those numbers, however, we would like to look back at our view exactly five years ago in the February 2009 commentary.

    Recall that neither we nor anyone could "call the bottom" back then. Indeed, looking straight into the rearview mirror, the financial press was doing close to the opposite, "reporting extensively about the so-called 'lost decade.'" The prevailing notion was that the negative 10-year return for the stock market shattered the status of stocks as a good long-term investment. We noted, however, that "[s]ince the beginning of 1929, the stock market has had negative 10-year returns at month-end only 9% of the time, and only 5% of the time after the Great Depression's damage." Moreover, these "lost" decades tended to be closer to market bottoms than signposts on the way to further losses: We noted that buying "at the end of a difficult 10-year stretch, even if the economy is in poor shape, tends to yield good results rather than bad ones." We used the strong decade-long periods immediately succeeding the negative 10-year returns from December 1974 and August 1982 to make the point. We ended with our core conclusion: "History tells us, however, this is the time to shove fear in the closet, think rationally, and ponder the next 10 years rather than the ten that just ended."


  • Ariel Investments' John Rogers Recommends Stocks

    Value investor John Rogers (Trades, Portfolio) recommends JM Smucker (SJM), Bally Tech (BYI) and Lazard (LAZ).

  • John Rogers' Ariel Fund Comments on Roche

    Roche (XSWX:RO)'s story is different, and even more provocative. Its revenue growth has been quite steady, shifting only slightly from 9% in the 1991 to 2005 period down to 8% in the 2005 to 2012 period. Its earnings and P/E multiple, however, have been more jumpy throughout the multi-decade period, largely because Roche has had negative earnings years such as 1997 and 2002. Still, there is a very clear drop in sentiment in the recent period not reflected in fundamental results. That is, in 2005 Roche earned $1.37 per share, rising to $3.02 per share last year—a growth rate of +11.9% annually— without any negative earnings years. The recent steady growth is far better, we think, than the volatile rise of 3 +9.8% per year from 1991 to 2005. And yet the market chopped Roche's P/E ratio in half, from 27.3x in 2005 to 13.6x in 2011 (before it recovered a bit recently).

    What we see, then, is two companies with very long, strong track records before one even considers any details about the businesses—and both stocks are much cheaper than they have been historically. That prompted us to investigate, and when we dove deeply we got even more interested...


  • Ariel International Fund & Ariel Global Fund - Healthy Ideas

    Dear Fellow Shareholder: As you know, stocks continued a massive global rally this quarter. So we are happy to report a quarter of strong absolute performance and solid relative results. During the quarter, Ariel International Fund gained +11.03%, versus the MSCI EAFE Index, which returned +11.61%. Additionally, Ariel Global Fund rose +8.49%, topping the MSCI ACWI Index, which advanced +8.02%.

    For the one-year period ending September 30, 2013, Ariel International Fund returned +28.11% versus +24.29% for the MSCI EAFE Index. Over the same period, Ariel Global Fund advanced +28.84% compared to the MSCI ACWI Index, which gained +18.37%. For both funds, the top contributing sector was information technology, while the top detracting sector was telecommunication services. For Ariel International Fund, on a stock specific basis, top contributors were Nokia Corp. and Roche Holding AG, gaining +158.31% and +49.23%, respectively. Detractors included NTT DoComo, Inc. and Nintendo Co., Ltd., sliding -2.20% and -9.83%, respectively. Top contributors for Ariel Global Fund were Nokia Corp. and Gilead Sciences, Inc. returning +155.49% and +89.48%, respectively. Detractors included NTT DoComo, Inc., returning -5.47%, and Mobistar SA, falling -19.63%, respectively. Turning to philosophy and process, as we have mentioned before, we are true bottom-up stock pickers, but oftentimes market pressures bearing down on an area cause us to dive into that part of the market to find bargains. In our second-quarter 2013 letter, we explored how this tactic drove a significant weighting in Japanese stocks that worked very well and quite quickly. Mind you, we did not "bet" on Japan, but rather used the market's pessimism toward its overall economy in order to initiate positions in thriving multinationals that happened to be headquartered in Japan.


  • John Rogers Comments on Brooks Automation Inc.

    Brooks Automation, Inc. (BRKS) — Based outside of Boston, Brooks produces semiconductor manufacturing equipment, and has recently expanded into the life sciences area. The company has a leadership position in tool automation for semiconductor makers. The company has a pristine balance sheet with excess cash, solid leadership under CEO Steve Schwartz, and currently trades for roughly its book value.


  • John Rogers Comments on Superior Industries Intl Inc.

    Superior Industries Intl Inc. (SUP) — Los Angeles-based Superior is the leading wheel supplier to the North American auto industry. The company is solidly profitable, pays a dividend yielding over 4%, and has attractive long-term growth prospects if it is able to effectively increase its capacity. Yet the stock trades below book value, with no debt and significant excess cash.


  • John Rogers Comments on RealNetworks Inc.

    RealNetworks, Inc. (RNWK) — Based in Seattle, RealNetworks is best known for its RealPlayer media player software. The company has struggled in recent years, but we were attracted by the return of founder Rob Glaser to a company trading barely above its net cash and below our estimate of liquidation value. Since our initial purchase, the company has introduced RealPlayer Cloud, which along with other new products makes us confident that Mr. Glaser is likely to lead a successful turnaround.


  • John Rogers Comments on Vical

    Vical (VICL)

    We typically use these letters to discuss our approach to deep value investing, to outline the case for our favorite stocks, or to comment on trends in the market which we believe will affect our portfolio holdings. This quarter, however, we will share the story of a stock we have held for more than a decade which, at first glance, appears to have "blown up." We want to explain why we have owned it, how our valuation work continues to indicate a bargain within our long-term discipline, and how we will evaluate the company going forward. Most importantly, we want to demonstrate why we think the company is on solid footing and continues to provide a great long-term investment opportunity. On Monday, August 12 th , after announcing that the Phase III trial of its Allovectin compound, a metastatic melanoma therapy, had failed, Vical stock dropped by 57%. Specifically, it did not meet either the primary endpoint of objective response rate or the secondary goal of overall survival. This result obviously disappointed the company, shareholders, and, most of all, cancer patients. Many had hoped this immunotherapy compound would revolutionize treatment for those battling this terrible disease. Although we would have preferred a better outcome on Allovectin, our thesis for Vical was not a simple bet on its success. In our analysis, the company's infectious disease platform – with multiple promising products – was worth well more than the $240 million enterprise value of Vical just prior to the announcement. We continue to believe that is the case. All along, we knew a Phase III failure for Allovectin would lead to a s h or t- term hit to the stock, but we believed in the long-term, Vical was an undervalued infectious disease company. To us, Allovectin represented a free option on a cancer treatment with enormous upside potential. This option proved to be of no value, but our view on the rest of the company has not changed.


  • John Rogers' Ariel Discovery Fund - The DNA of Vical

    Dear Fellow Shareholder: This was a disappointing quarter for Ariel Discovery Fund, as our return of +2.47% lagged the +7.59% return of the Russell 2000 Value Index and the +5.24% gain of the S&P 500 Index. Year-to-date, Ariel Discovery Fund has returned +19.67%, as compared to +23.07% for the Russell 2000 Value and +19.79% for the S&P 500 Index. We continue to trail the benchmark since inception due to a tough launch, but even with this tough quarter our two-year annual return of +27.18% is respectable compared to the Russell 2000 Value Index and the S&P 500 Index.

    Top performers during the quarter were Furmanite Corp. (FRM), which gained +47.98%; Emergent BioSolutions Inc. (EBS), up +32.11%; and Gulf Island Fabrication, Inc. (GIFI), which returned +28.51%. On the downside were Vical Inc. (VICL), losing -60.38%; JAKKS Pacific, Inc. ( JAKK), down -40.71% before it was sold, and Pendrell Corp. (PCO), which fell by -25.67% (although it remains up +52.67% year-to- date). Vical is discussed in detail below.


  • Ariel Investments' John Rogers Comments on Janus Capital Group Inc.

    Asset manager Janus Capital Group Inc. (JNS) soared +46.37% on better-than-expected earnings and revenue. Specifically, in October the company reported quarterly earnings of $0.18 per share versus consensus of $0.17. Its assets under management (AUM) rose to $166.7 billion, from $158.2 billion a year ago. The company’s cash investments totaled $793 million versus $543 million in debt, giving it a positive $250 million net cash position. Finally, Janus repurchased more than one million shares of its own stock. Clearly, the roaring 2013 stock market had a good deal to do with the positive news that caught Wall Street’s attention. For our part, we were more interested in the capital allocation decisions because those are under management’s control.

    From John Rogers (Trades, Portfolio)' Ariel Investments fourth quarter 2013 commentary.  

  • Ariel Investments' John Rogers Comments on Lazard Ltd.

    In addition, restructuring specialist and asset manager Lazard Ltd (LAZ) surged +27.36%, topping estimates for earnings and revenue by a significant margin. Its earnings per share for the third quarter were $0.46 versus the estimate of $0.37. The company’s operating revenue was $489 million, well above the $452 million expectation. Its September 30 AUM reached $176 billion, an all-time high to that date. We closely watch that figure, because we think it is an overlooked part of the business. Meanwhile, the global leading restructuring business had $42 million in revenue, 23% higher than a year ago. Still, restructurings continue to be well below the usual rate, leading us to believe the future is even brighter..

    From John Rogers (Trades, Portfolio)' Ariel Investments fourth quarter 2013 commentary.  

  • Ariel Investments' John Rogers Comments on Western Union Co.

    Also, transaction specialist Western Union Co. (WU) returned –6.85% due to disappointing guidance. Its quarterly earnings report was solid, with earnings and revenues both above consensus. At the same time, however, the company signaled that costs for regulatory and compliance investments would be higher than expected. As a result, management expects operating profit to be flat next year, and share buybacks will be minimal. Management had been returning capital to shareowners at a steady clip: Through the first three quarters of 2013, the company returned nearly $550 million to shareholders through dividends and buybacks. Admittedly Western Union has had a difficult couple of years, but we think its economic moati is firmly in place, even though most analysts seem to be looking right past it.

    From John Rogers (Trades, Portfolio)' Ariel Investments fourth quarter 2013 commentary.  

  • Ariel Investments' John Rogers Comments on International Game Technology

    A few of our holdings struggled in the third quarter. Gaming equipment specialist International Game Technology (IGT) slipped –3.46% due to a disappointing earnings report. Although revenues exceeded expectations by a solid margin, EPS of $0.30 fell short of the consensus $0.34 figure. The environment was more competitive than expected, leading to fewer of IGT’s games on the floor, as well as a corresponding decline in overall play. Still, the company is allocating capital smartly. It announced a $200 million share repurchase plan, which would retire roughly 4% of the shares outstanding. We continue to think that although gaming has been softer than expected in the ongoing recovery, eventually it will pick up.

    From John Rogers (Trades, Portfolio)' Ariel Investments fourth quarter 2013 commentary.


  • John Rogers' Ariel Investments Q4 2013 Commentary

    Investing in small and mid-cap stocks is more risky and more volatile than investing in large cap stocks. Ariel Fund often invests a significant portion of its assets in companies within the financial services and consumer discretionary sectors and its performance may suffer if these sectors underperform the overall stock market. Performance data quoted represents past performance. Past performance does not guarantee future results. All performance assumes the reinvestment of dividends and capital gains and represents returns of the Investor Class shares. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For the period ended December 31, 2013, the average annual total returns of Ariel Fund (Investor Class) for the one-, five- and ten-year periods were +44.68%, +26.01% and +8.18%, respectively. Ariel Fund’s Investor Class shares had an annual expense ratio of 1.03% for the year ended September 30, 2013 and 1.06% for the year ended September 30, 2012. Performance data current to the most recent month-end for Ariel Fund may be obtained by visiting our web site,

    Both domestic and international stocks had strong returns in 2013, including the final quarter of the year. Somewhat predictably, the investment areas that were the most popular over the last half decade— bonds and emerging market stocks—had their comeuppance with negative returns for the year. And although investors were generally skeptical of developed market equities, here and overseas, most broad indices were up between +20% and +35%— well above the low double-digit historical averages. As independent thinkers, we entered the year bullish, viewing the global recovery from the financial crisis as ongoing and believing the pessimism overdone. We had good returns this quarter as Ariel Fund gained +12.99%, beating the Russell 2500 Value Index’s +8.83% jump, as well as the +9.30% rise of the Russell 2000 Value Index.


  • Ariel Investments' John Rogers Comments on January

    The big investment buzz a year ago was the so-called "Great Rotation," an expected shift out of bonds and into equities. In response, we devoted our January 2013 commentary to mutual fund flows, and while we were unsure whether the phenomenon would become a trend, we were clear that we saw the possibility as "a return to familiar ground." That is, from 2008-2012, investors changed their traditional patterns of behavior, evidently in reaction to the sharp equity losses in the 2007-2009 bear market. Last year, we wrote:

    In order of magnitude, the three shifts we have seen lately have been a massive preference for bonds over stocks, a huge swing from actively managed equity portfolios to passive ones and a much greater fondness for funds with stellar short-term performance.


  • John Rogers' Ariel Investments Commentary on December

    Equities of almost all descriptions had a stellar 2013, defying the widespread skepticism that marked the beginning of the year.  Predictably, investors’ enthusiasm grew as stocks climbed.  Although we do not expect returns in 2014 to match those in 2013, we remain cautiously optimistic.   

    Last year, we began providing a five-year performance overview as the centerpiece of our December commentary.  The picture today is very different from that of a year ago, even though four of the calendar years in our snapshot remain the same.  Replacing the awful equity losses from 2008 with the fantastic stock gains from 2013 alters the landscape substantially, on paper and in investors’ minds.


  • John Rogers Comments on Silica Holdings Inc.

    Second is U.S. Silica Holdings Inc. (SLCA), which provides silica—industrial grade sand—chiefly to energy companies; we own it in Ariel Fund as well as our small cap separate account. When many look quickly at the company, they see a straightforward supplier of a pure commodity product, which therefore has no barrier to entry from competition. We believe, on the other hand, that Silica has a substantial competitive advantage due to its top-notch distribution network and its low costs. Two thirds of its customers are oil and gas producers and another third are industrial companies. In both cases, Silica’s customers need continual supplies of industrial sand or else they must idle their operations, costing a significant amount of time and money. In addition, Silica has 75% of its volume under contract, with an average weighted contract life of two years. In our view, Silica’s customers are highly unlikely to simply switch providers based on price.  

  • John Rogers Comments on Bristow Group Inc.

    First comes Bristow Group Inc. (BRS), which provides helicopter services to offshore energy rigs, and is a holding in our traditional mid-cap, small-to-mid cap, and small-cap portfolios. Although energy exploration and production can clearly fluctuate, Bristow offsets those shifts through long-term contracts lasting roughly three to five years. Furthermore, Bristow receives “monthly standing charges”—meaning it gets paid whether its helicopters fly or not—amounting to 70% of its operating income.

    From John Rogers' November 2013 commentary.  

  • John Rogers Comments on Contango Oil & Gas Co.

    The most straightforward such example is Contango Oil & Gas Co. (MCF), which we own in our traditional mid-cap, small-to-mid cap, and small-cap portfolios, as well as in our deep value small cap portfolios. When we first purchased it in 2011, it focused exclusively on shallow-water Gulf of Mexico exploration and production, had an amazingly low-cost operation, virtually no debt, and thus very high cash flow. It was also quite disciplined in drilling only high opportunity locations. Since then the company has unfortunately seen its CEO and Founder, Ken Peak, depart for health reasons and later die. Moreover, it undertook a transformational acquisition, purchasing Crimson Exploration, which had become financially distressed. Its opportunities have now multiplied. And while its leverage has increased somewhat, the company continues to boast relatively low costs, minimal debt, and disciplined exploration. Across our domestic equity portfolios, we own several other companies whose profiles fit this mold.

    From John Rogers' November 2013 commentary.  

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