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 Investments Monthly Commentary - November

    During the long 2002-2007 bull market, and especially in its final months, we received many questions and plenty of suggestions regarding our stance on energy stocks. As you know, energy stocks and commodities were red-hot during much of that cyclical, relatively low-quality stock surge, and we had little exposure to the area in our domestic stock portfolios. For a long time, we held a belief that energy companies were largely dependent on natural resource prices—which makes it difficult to build and defend the durable competitive advantage we seek. Besides, with the prices of those commodities and stocks so rich, there was not much value at hand. It is worth noting that as commodities became inflated, we spent an enormous amount of time studying the sector and its effect on our holdings.

    Fast forward to 2013 and we have a number of energy companies in our portfolios. This is true because we shifted our perspective as well as our expertise. Indeed, our view on the space evolved as we started to discover potential opportunities that we can describe in two categories. First, we now think some energy companies can overcome their direct exposure to energy commodities through differentiated business models. Second, we believe some energy-related enterprises’ cash flows are far less volatile than natural resource prices. After we began finding opportunities, we also hired Anthony Walker, a research analyst with deep expertise in the energy sector. Now, among our domestic portfolios, we own a dozen energy and energy-related companies.  


  • John Rogers Adds to Perceptron and CPI Aerostructures

    As reported by the GuruFocus Real Time Picks, John Rogers increased his holdings in two companies on Nov. 30. The guru made notable increases to his holdings in the technology-based CPI Aerostructures (CVU) and Perceptron (PRCP).

    John Rogers is the Founder, Chairman, CEO and CIO of Ariel Capital Management. Rogers manages Ariel’s small and mid-cap institutional portfolios as well as the Ariel Fund (ARGFX) and Ariel Appreciation Fund (CAAPX). The guru focuses his investment selections on small and medium-sized companies whose share prices are undervalued, and his fund seeks to purchase companies whose prospects include high barriers to entry, sustainable competitive advantages, and predictable fundamentals that allow for double-digit cash earnings growth.  


  • Ariel Capital's John Rogers Trims Sotheby’s, DeVry, Hospira, IPG, Others

    Chicago-based Ariel Capital Management is led by Guru John Rogers who has earned a number of monikers, including “master wealth builder,” "the turtle” and “The Patient Investor,” after his column by the same name. He is also listed in a new book, “The World’s 99 Greatest Investors: the Secret of Success,” by Magnus Angenfelt.

    The portfolio of John Rogers currently lists 173 stocks, 29 of them new, with a total value of $6.86 billion and a quarter-over-quarter turnover of 8%. The portfolio’s top sector weightings are consumer cyclical at 24.6%, financial services at 22.8% and industrials at 19.3%. John Rogers is averaging a 12-month return of 19.34%. In 2012, Ariel Fund returned 20.32% compared to the S&P’s 15.4%.  


  • Ariel Investment's Charles Bobrinskoy - Higher Interest Rates Will Be Challenging for Market

    Ariel Investment's Director of Research Charles Bobrinskoy discusses the Fed's eventual taper and the effect it will have on the market:

      


  • John Rogers Comments on MTS Systems Corp.

    During the quarter, we initiated one position and exited two positions in Ariel Fund. We added MTS Systems Corp. (MTSC), which specializes in physical testing equipment. It occupies a key, important niche for manufacturing firms that are doing more and more virtual testing. In our view, companies are unlikely to abandon real-world physical tests; that stance is a contrarian one in a world where many believe virtual testing will eventually completely take over. In addition to significant potential growth, it boasts good operating margins, a sturdy balance sheet, and remains a very trusted brand.

    From John Rogers' Ariel Fund and Ariel Appreciate Fund portfolio manager letter third quarter 2013.  


  • John Rogers Comments on Gannett Co.

    In contrast to our financial names, one of our best performers during the quarter was a name many challenged in the not-so-distant past. As many know, although our media names fall squarely within our circle of competence as evidenced by our deep expertise in the industry, they represented some of our poorest performing and most controversial holdings during the worst of the financial crisis. During that tough period, we re-examined every position with a fresh perspective that required us to consider each stock from a lens of having never owned it. In the case of Gannett Co., Inc. (GCI), despite its underperformance, we still saw tremendous value and, true to our contrarian leanings, doubled and tripled down on the holding as the price became more and more attractive—making the stock one of our largest positions. It is important to note, after taking some lumps, we eliminated other media names whose brands and franchises did not appear to be nearly as compelling over the long-term.

    On June 13th, Gannett agreed to acquire Belo Corporation (BLC) and its 20 television stations that reach more than 14 percent of U.S. television households in a $2.2 billion transaction. The New York Times dubbed it, "…the biggest local television station sale in more than a decade."2 The acquisition will nearly double Gannett's broadcast properties (from 23 to 43) and create the fourth-largest owner of major network affiliates reaching nearly one-third of all U.S. television households. Gannett will have 21 stations in the top 25 markets and will become the second largest owner of network-affiliated television stations. While normally skeptical and wary of acquisitions, we immediately saw the value of this transaction and future possibilities for Gannett Investors also applauded the deal as evidenced by the fact that Gannett's stock closed +34% higher on the day of the announcement while Belo shares increased +28%. The reason being, Belo will not only accelerate Gannett's transformation into a diversified media company with higher profitability and returns—it will also give Gannett more leverage when negotiating the valuable retransmission fees local television stations receive from cable and satellite operators in exchange for the right to carry those stations on their systems. Size matters when seeking higher retransmission fees with cable and satellite distributors and also when bargaining with the broadcast networks for their cut of that revenue. Retransmission revenues create a dual revenue stream for Gannett, similar to cable networks, while reducing cyclicality from what has historically been an advertising-only business model. And whereas advertising can be hard to forecast, contractual agreements make retransmission revenues predictable and sticky. Moreover, we anticipate a meaningful increase in these revenues once broadcast network compensation becomes more aligned with their ratings.  


  • John Rogers Comments on Janus

    Lastly, Janus (JNS)—whose ongoing challenges have tested even our patience—represents the most contrarian name in our entire portfolio as measured by the large number of Wall Street analysts who have a sell rating on the stock. An undesirable trifecta of weak investment results, the negative impact from performance-based fees and net outflows largely isolated to three of its well-known mutual funds have created a perfect storm for this $162 billion asset manager. In our view, the bad news is more than priced in. By our calculation, performance fees have bottomed. Moreover, the company's balance sheet continues to strengthen and outflows should stabilize once returns improve.

    From John Rogers' Ariel Fund and Ariel Appreciate Fund portfolio manager letter third quarter 2013.  


  • John Rogers Comments on First American Financial

    Rising mortgage rates drove down First American Financial (FAF)'s stock price as Wall Street investors feared an end to the refinancing boom. Over the near-term, we anticipate downward earnings revisions as refinancings come to a halt rather quickly and new home sales take time to ramp up. But looking further out, we know title insurance policies on new home purchases are twice as profitable as refinancings which will drive earnings at First American. Not to mention, with the stock trading at just 10x consensus earnings, our bullishness is only magnified by the stock's incredibly cheap valuation.

    From John Rogers' Ariel Fund and Ariel Appreciate Fund portfolio manager letter third quarter 2013.  


  • John Rogers Comments on Lazard Ltd.

    With Lazard (LAZ), we are able to look beyond the negatively-impacted emerging markets stocks held by the firm's investment management business. We like the enduring economics of money management and treat this meaningful profit contributor as icing on the cake of the company's diversified investment banking operation.

    From John Rogers' Ariel Fund and Ariel Appreciate Fund portfolio manager letter third quarter 2013.  


  • John Rogers' Ariel Fund and Ariel Appreciate Fund Portfolio Manager Letter

    Dear Fellow Shareholder: For the second quarter ending June 30, 2013, Ariel Fund rose +1.69% versus +1.54% for the Russell 2500 Value Index and +2.47% for the Russell 2000 Value Index. Meanwhile, Ariel Appreciation Fund earned +4.35% during the three-month period versus a +1.65% return for the Russell Midcap Value Index and +2.21% gain for the Russell Midcap Index. As a means of comparison, the broad market, as measured by the S&P 500 Index earned +2.91% during the three-month period. For the first six months of this year, Ariel Fund returned +17.71% versus +15.10% for the Russell 2500 Value Index and +14.39% for the Russell 2000 Value Index. Meanwhile, Ariel Appreciation Fund earned +20.58% during the six-month period versus a +16.10% return for the Russell Midcap Value Index and +15.45% gain for the Russell Midcap Index. By comparison, the year-to-date return for the S&P 500 Index was +13.82%.

    The Fed Factor  


  • John Rogers' Ariel Funds Third Quarter 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 September 30, 2013, the average annual total returns of Ariel Fund (Investor Class) for the one-, five- and ten-year periods were +33.28%, +13.07% and +7.94%, respectively. Ariel Fund's Investor Class shares had an annual expense ratio of 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, arielinvestments.com.

    The third quarter of 2013 goes in the books as yet another strong one. Specifically, the global MSCI ACWI Index showed gains of +8.02%, while in the U.S. the S&P 500 Index rose +5.24%. That brings the year-to-date totals to +14.92% and +19.79%, respectively—a very strong year by any measure. As noted in The Wall Street Journal, quarterly gains have been strong for some time but without being abnormal. For the S&P 500 Index, 14 of the past 18 quarters have had positive returns, and the same is true of the MSCI ACWI Index. Such trajectories are not unusual. For instance, during the 1990s bull market and the 2002-2007 surge, the U.S. market actually had an even higher ratio of rising quarters. Altogether this pattern tells us the flip-side of the "slow recovery" coin has been a nice, long string of solid quarterly stock market gains and an economy that seems neither weak nor overheated. We experienced solid gains this quarter as Ariel Fund rose +8.78%, beating the Russell 2500 Value Index's +6.43% jump, as well as the +7.59% rise of the Russell 2000 Value Index.  


  • John Rogers Comments on U.S. Silica Holdings Inc.

    During the quarter, we initiated a position in U.S. Silica Holdings Inc. (SLCA), a supplier of industrial-grade sand to the oil and gas markets. Silica (the technical name for this sand) is critical in the process of hydraulic fracturing, and in our view, mastering the logistics and transportation of this commodity constitutes a durable competitive advantage. We believe the market is underestimating the likely pace of growth in U.S. Silica's revenue and earnings over the next several years (as demand continues to meaningfully increase), as well as the attractive cash flow characteristics of the company's business.

    From John Rogers' Ariel Funds third quarter 2013 commentary.  


  • John Rogers Comments on Nordstrom Inc.

    Also, premier department store Nordstrom, Inc. (JWN) returned -5.74% due to slow sales and a scaled-back outlook. Its EPS of $0.93 actually exceeded the $0.88 consensus earnings expectation. Still, management noted the "softer than anticipated" sales trends and lowered its EPS guidance from the $3.65 to the $3.80 range to between $3.60 to $3.70. We strongly agree with management that the phenomenon is cyclical and short-term rather than a long-term issue. The company continues to stand out for its great brand, phenomenal customer service, energetic growth in its Nordstrom Rack stores, and so forth. Long-term we think most department stores are positioned to struggle, but Nordstrom is poised to thrive.

    From John Rogers' Ariel Fund third quarter 2013 commentary.  


  • John Rogers Comments on Jones Lang LaSalle

    A few of our holdings struggled in the third quarter. Real estate specialist Jones Lang LaSalle Inc. (JLL) fell -4.21% due to an earnings miss. Revenues came in near expectations, at $989 million—an increase of 7% year-over-year—versus the consensus of $995 million. Management suggested the bulk of the earnings miss came from higher-than-expected expenses. Adding to the Wall Street discontent was a lower forecast for the Americas in investment sales activity: growth of 10% to 15% rather than 15% to 20%. We see all these as minor, short-term issues and think the long-term picture is bright. People will always buy and sell corporate real estate, and the trend toward outsourcing real estate management is straightforward and rational. We plan to remain patient.

    From John Rogers' Ariel Funds third quarter 2013 commentary.  


  • John Rogers Ariel Fund Third Quarter 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 September 30, 2013, the average annual total returns of Ariel Fund (Investor Class) for the one-, five- and ten-year periods were +33.28%, +13.07% and +7.94%, respectively. Ariel Fund's Investor Class shares had an annual expense ratio of 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, arielinvestments.com.Inc. 0.0%; Sotheby's 1.8%; Jones Lang LaSalle Inc. 3.5%; Nordstrom, Inc. 0.7% and U.S. Silica Holdings Inc. 1.6%. Portfolio holdings are subject to change. The performance of any single portfolio holding is no indication of the performance of other portfolio holdings of Ariel Fund.

    The Russell 2500™ Value Index measures the performance of the small to mid-cap value segment of the U.S. equity universe. It includes those Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000® Value Index measures the performance of the smallcap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. Russell® is a trademark of Russell Investment Group, which is the source and owner of the Russell Indexes' trademarks, service marks and copyrights.  


  • John Rogers' Ariel Funds September Commentary

    Although it may be hard to believe, the crash of Fall 2008 was a half-decade ago. At the time, the market was signaling the U.S., and therefore the world, was on the precipice of financial disaster. With that in mind, we read through our writings from that time to see what message they have for us now. The first thing we noticed: as is often the case, the realities of the present shape our memories of the past. Specifically, because we did not go over the edge and did in fact achieve stability, most people today take that outcome as a foregone conclusion. So the commentariat has the luxury of pointing toward mistakes rather than appreciating the achievements of that period; we think a far more balanced view is wise. We also noticed that even amidst such turbulence and carnage, it was possible to look past the particulars and see the big picture. That lesson remains important today. September 2008 was a month of tremendous upheaval with many, many moving parts. Today, however, conventional wisdom boils it down to one event—the "mistake" that Lehman was allowed to go bankrupt. That summary strikes us as Monday-morning quarterbacking. In the quarterly commentary from September 30, 2008 we wrote:

    [quote]The market volatility, velocity of change, and scale of transformation we experienced in September 2008 were unprecedented. . . . . Still, we would argue the fundamental metamorphosis of the financial services industry was far more important and nerve-wracking. Of the 25 largest publicly-traded U.S. financial services companies this time last year, nine of them underwent radical transformations in September 2008. The government took control of Fannie Mae (FNM), Freddie Mac (FRE), and AIG (AIG). Lehman Brothers was not so lucky, declaring bankruptcy. Merrill Lynch (MER), Washington Mutual, and Wachovia (WB) all sold themselves at distressed prices. Finally, Morgan Stanley (MS) and Goldman Sachs (GS) became bank holding companies in order to avoid ending up like Merrill or Lehman. The financial world has already changed radically and will take more time to stabilize.  


  • Two Gurus Reduce Two Challenged Companies

    Both CSP Inc. (CPSI) and ITT Educational Services Inc. (ESI) have struggled in the last year. Their revenues are way down as of the second quarter, year over year. Richard Blum’s Blum Capital Partners LP continues to trim sinking education companies where the company is 10% owner, and John Rogers of Ariel Capital Management cuts a long-held defense company that delivered high gains over five years.

    Here are company updates and reviews of the billionaires' trades:  


  • John Rogers Takes 10% Stake in Two Companies

    Earlier today GuruFocus Real Time Picks reported Guru John Rogers’ two increases made on Sept. 30. The guru made a rather large increase to his stake in Rosetta Stone (RST) and a smaller yet notable increase to his position in Astro-Med (ALOT).

    Rosetta Stone (RST)
      


  • GuruFocus 5-year lows: Anworth Mortgage Asset Corporation, Contango Oil & Gas Company, Dendreon Corp, Sequenom Inc.

    According to GuruFocus list of 5-year lows, these Guru stocks have reached their 5-year lows: Anworth Mortgage Asset Corporation, Contango Oil & Gas Company, Dendreon Corp, Sequenom Inc.

    Anworth Mortgage Asset Corporation (ANH) Reached the 5-year Low of $4.86  


  • Kids Decide on Dolls or Devices - JAKK, Others 70% Off

    Move over Cabbage Patch Kids® and Hello Kitty®. Kids are changing.

    Children have a strong preference for electronic devices, according to Stephen Berman, CEO and president of toy maker and action figure licensee, Jakks Pacific Inc. (JAKK). Berman believes that the play behaviors of children have changed so much that new play behavior is at least one contributing factor in his toy company’s declining revenue. Berman commented in a company press release, “We also believe the decline in sales reflects the continuing change in play patterns of children of all ages, who continue to rely more and more on smart devices for their fun and entertainment. As previously announced, this shift in play patterns has caused companies like Jakks to evolve to meet the changing demands of its consumers with technologically enhanced product offerings.”  


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