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