John Rogers, president and founder of Ariel Capital Management, discussed his views on the stock market on CNBC this morning.
John founded Ariel in 1983 at the age of 24. He manages the Ariel Fund (ARGFX) and the Ariel Appreciation Fund CAAPX) as well as managing small and mid-cap portfolios for institutions and wealthy individuals. John is also a long time Forbes Magazine columnist, having written the Patient Investor column since 1986.
John's investment philosophy centers around buying small and medium-sized companies whose share prices are undervalued. He calculates what the private market value would be on such companies and buys those trading at a significant discounts to his figures.
On CNBC this morning. John spoke of being "extraordinarily comfortable" with the stock market at these levels. He believes that most analysts are way too pessimistic in their expectations for 2010 earnings. He stated that people don't believe this rally has legs because of poor revenue growth, but he believes that revenue growth should resume strongly next year.
When asked if he is rotating into lagging sectors he said that he is mostly sticking to his guns and staying with sectors that will benefit from a stronger economy, such as media in general and specifically Gannett (GCI, Financial). John staring buying GCI in 2007 and rode in down "painfully" to a low in the $2 area. John bought a lot of stock in the $2-3 range increasing his position to 27 million shares as of 6/30/09. With the stock recently trading at $11 CNBC asked John if it was time to move on. John replied that GCI still had plenty of upside because the company is well diversified, having an electronic business comprised mainly of Career Builder, as well as television stations. He believes advertising will recover, greatly benefitting all areas of the company.
In a more general note John stated "behavioral finance" tells us that most analysts are anchored in the past and will miss the robust earning growth he sees for next year, and as a true contrarian he wants to be bullish when nine out of ten people he talks to are worried. He believes the market will continue to climb this "wall of worry."
John founded Ariel in 1983 at the age of 24. He manages the Ariel Fund (ARGFX) and the Ariel Appreciation Fund CAAPX) as well as managing small and mid-cap portfolios for institutions and wealthy individuals. John is also a long time Forbes Magazine columnist, having written the Patient Investor column since 1986.
John's investment philosophy centers around buying small and medium-sized companies whose share prices are undervalued. He calculates what the private market value would be on such companies and buys those trading at a significant discounts to his figures.
On CNBC this morning. John spoke of being "extraordinarily comfortable" with the stock market at these levels. He believes that most analysts are way too pessimistic in their expectations for 2010 earnings. He stated that people don't believe this rally has legs because of poor revenue growth, but he believes that revenue growth should resume strongly next year.
When asked if he is rotating into lagging sectors he said that he is mostly sticking to his guns and staying with sectors that will benefit from a stronger economy, such as media in general and specifically Gannett (GCI, Financial). John staring buying GCI in 2007 and rode in down "painfully" to a low in the $2 area. John bought a lot of stock in the $2-3 range increasing his position to 27 million shares as of 6/30/09. With the stock recently trading at $11 CNBC asked John if it was time to move on. John replied that GCI still had plenty of upside because the company is well diversified, having an electronic business comprised mainly of Career Builder, as well as television stations. He believes advertising will recover, greatly benefitting all areas of the company.
In a more general note John stated "behavioral finance" tells us that most analysts are anchored in the past and will miss the robust earning growth he sees for next year, and as a true contrarian he wants to be bullish when nine out of ten people he talks to are worried. He believes the market will continue to climb this "wall of worry."
