John Rogers

Last Update: 2014-07-10

Number of Stocks: 182
Number of New Stocks: 10

Total Value: $8,197 Mil
Q/Q Turnover: 9%

Countries: USA
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John Rogers Watch

  • 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 (NYSE: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.”  


  • John Rogers Comments on August

    At Ariel, we use skill in the ongoing quest to overcome luck in order to drive outstanding performance. Obviously, this effort generally goes toward picking stocks that beat the highly efficient market. But, as you know, our CEO and founder John W. Rogers, Jr. first learned about using skill to overcome luck in basketball. This month we want to explain how we overcame a tremendous and persistent investment challenge—heightened volatility during and after the financial crisis—by starting with our favorite sport: basketball.

    In his first six NBA seasons, Larry Bird won two NBA championships (in 1981 and 1984) as well as two MVP trophies (in 1984 and 1985). In his sixth season, he scored 28.7 points per game and hit 52% of his shots. He was on top of the basketball world. But in the first 25 games of his seventh season, he became mired in a bad shooting slump; his scoring fell five points per game and his shooting percentage dropped to 45%. Opinions on how to fix the problem ranged from the superficial and obvious, such as getting closer to the basket, to the extreme, such as hiring a shooting coach. In an interview during the slump, Bird had another take: The only thing I can do is work harder, try to give that extra effort and get over the hump . . . I have to go out and shoot that extra hour. I got to go out and run the extra hour. I have to go out and work on my foot movement.  


  • July Commentary from Ariel's John Rogers

    Over the last couple of years, U.S. merger and acquisition activity has been a conundrum. On the one hand, equity valuations ranged from dirt cheap to reasonable all while corporations have held record amounts of cash. And yet, mergers and acquisitions have been slow. We have touched on this disconnect from time to time, but recently began to delve into the issue more deliberately as a result of a new development. Specifically, the market's traditional skepticism toward acquisitions has morphed into optimism this year.

    When an acquisition is announced, history has shown the acquirer's stock tends to fall, while the target's stock tends to rise. Obviously this is not true of every example, but the general reaction has been so common for so long that it is taken for granted as normal. It also makes some sense in most environments. The market knows that deals do not often work out as anticipated. Moreover, even mergers that seem sound create risk for the acquirer. Thus, investors often sell when a company announces an acquisition in order to avoid integration risk. Recently, some very provocative counter-examples to this well-established behavior began appearing. The one most benefitting our portfolios occurred when Gannett Co., Inc. (GCI) agreed to acquire Belo Corporation (BLC) on June 13th of this year. Not only did Belo shares jump +28.3% that day, but Gannett leapt +34.0%. The deal's size and gains were outliers, but the event was a magnification of a trend rather than a reversal: throughout 2013, there were news stories about acquirers' shares rising rather than falling when deals were announced.  


  • Optimistic John Rogers of Ariel Investments Gives Top Stock Ideas

    John Rogers mentions Lazard (LAZ), Janus Capital (JNS) and KKR (KKR).

      


  • 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 RogersAriel Fund Second Quarter 2013 Commentary.  


  • John Rogers Comments on Contango Oil & Gas Co.

    Natural gas producer Contango Oil & Gas Co. (MCF) slipped -15.81%, largely due to an acquisition. The company was also negatively affected by both the write down of a key reserve and a one-off maintenance on an important well. Clearly, however, the most important event was the acquisition of Crimson Exploration (CXPO). The market responded as if it were a surprise, but we did not think it one. That is, Contango had always operated with no debt, and eventually it would follow one of two paths: sell itself to a larger producer or use its balance sheet to acquire a distressed, leveraged competitor. In doing the latter, Contango emerges with more assets, more cash flows and yet has low leverage. We continue to admire the company and believe it to be quite cheap.  


  • John Rogers Comments on Hospira Inc.

    Injectible drug specialist Hospira, Inc. (HSP) shot up +16.69% on good and surprising news about a new compound. Specifically, its Inflectra drug—a biosimilar medicine to Remicade— was recommended for approval by a crucial European authority for multiple treatments. In Europe, it is likely to be approved to treat rheumatoid arthritis, inflammatory bowel disease and plaque psoriasis. Typically, a drug is only approved for one condition first and then may receive other indications over time. Given Remicade had sales of roughly $2 billion in Europe last year, this was huge news. In recent quarters, there has been such a tight focus on existing facilities and historical problems that few have looked to the future. Our point of view has been the issues will get fixed and the company will go on to create new and better compounds to continue to drive growth; it seems the market needed a reminder such a future was even possible.

    From John RogersAriel Fund Second Quarter 2013 Commentary.  


  • John Rogers Comments on Meredith Corp.

    Magazine publisher Meredith Corp. (MDP) soared +25.91% due to an earnings beat. Specifically, the company reported adjusted EPS of $0.72 versus consensus of $0.68. Revenues climbed 7% to $370 million, topping estimates of $355 million. A primary driver of results was advertising revenues—both national and local advertising increased substantially. In addition, the company brought down net debt from $340 million at the beginning of the year to $331 million as of the earnings announcement on April 25th. We believe the company has traversed a tricky landscape well over the last few years, sticking to its core competencies and smartly improving its already solid balance sheet.

    From John RogersAriel Appreciation Fund Second Quarter 2013 Commentary.  


  • John Rogers Comments on First American Financial Corp.

    Mortgage insurer First American Financial Corp. (FAF) slid -13.35% despite a good overall quarter. We believe the market was essentially confused. The company's official earnings per share were $0.33 versus the $0.42 consensus. The key reason for the miss, however, was a large reserve charge dating to the 2006-2007 period. Without the charge, earnings would have been roughly $0.44 per share. Revenues exceeded expectations by increasing +19%, and purchase orders were up +13%. Admittedly, those were trade-offs for refinancings, which were down -7%. Management was upbeat and optimistic about business, a perspective we think was fully justified. The stock now trades below 1x book, which we think is very cheap given its profitability, powerful market position and business trajectory.

    From John RogersAriel Appreciation Fund Second Quarter 2013 Commentary.  


  • John Rogers Comments on Towers Watson

    Consultant Towers Watson (TW) surged +18.21% as investors became increasingly aware of the potential for gains driven by the Affordable Care Act's implementation. Specifically, Towers Watson is largely known as a defined benefit plan pension consultant; it also, however, consults on related issues and has a health care consultancy. Moreover, in 2012 it purchased Extend Health, which was at the time the largest private Medicare exchange in the US. As businesses deal with the uncertainties stemming from this significant change, they naturally are seeking expertise—and Towers Watson is a go-to specialist in the field. Although we certainly do believe there is value in this part of the company's business, we have recognized it for some time, while the market seems to be treating it as new information.

    From John RogersAriel Appreciation Fund Second Quarter 2013 Commentary.  


  • John Rogers Comments on Interpublic Group of Cos. Inc.

    Advertising holding company Interpublic Group of Cos., Inc. (IPG) gained +12.27% after reporting a solid earnings quarter. The company's reported loss of -$0.13 per share was in line with analyst estimates, and contained significant good news below the headline. Specifically, organic revenue rose +2.3% globally and much better in Latin America and other key growth geographies. Crucially, the company retired its entire $200 million in 4.75% convertible senior notes, thereby bolstering the firm's capital structure. In addition, IPG repurchased 6.2 million shares of stock over the course of the quarter and increased the dividend by 25 percent. In other words, we were pleased with the way management made the key decisions under its control.

    From John RogersAriel Appreciation Fund Second Quarter 2013 Commentary.  


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