Ariel Fund is run by Patient Investor John Rogers. In the past decade his fund has gained 14 percent a year, beating the market by more than 5% annually. His holdings time is typical 4-5 years, a period that a patient investor expects to have things work out.
John Rogers likes to buy companies with high barriers to entry; sustainable competitive advantages; and predictable fundamentals that allow for double digit cash earnings growth. He judge companies’ quality by looking at their returns on capital, balance sheets. As with many value investors, he favors companies with low reinvestment requirements.
In Ariel Funds website, the firm highlighted Mohawk Industries (MHK, Financial) and Johnson & Johnson (JNJ, Financial) as undervalued.
Mohawk Industries, Inc engages in the production and sale of floor covering products for residential and commercial applications in the United States and Europe. Mohawk Industries Inc. has a market cap of $6.23 billion, it was traded at around $91.39 with P/E ratio of 13.47 and P/S ratio of 0.80. Ariel thinks Mohawk Industries (MHK) worth $119, which is about 30% above the current trading prices. GuruFocus users have rated a fair value of $128 for Mohawk.
Mohawk Industries’ business has suffered from softness in new residential construction and replacement sales. But value investors looking at long term. Ariel wrote on their website: “We believe these issues are temporary tough spots and that investor concerns are inflated. The industry historically has passed raw material increases to consumers and we see no reason why Mohawk will not be able to continue this trend.”
Mohawk Industries Inc. is owned by 6 Gurus, 2 of them increased positions, 4 reduced positions. Ronald Muhlenkamp, whose recent performance has been hurt by the housing slumps, sold out his holdings in the quarter ended 03/31/2007. There were no insider buys during the past 6 months.
Mohawk Industries Inc. is a direct competitor of Shaw Industries, which is a subsidiary of Warren Buffett’s company, Berkshire Hathaway.
Ariel Fund also likes blue-chip Johnson & Johnson (JNJ). The stock is traded at 52 week lows at around $60.07 with P/E ratio of 16.64 and P/S ratio of 3.05, as investors fret over select pharmaceuticals losing patent protection in the next three years and the increase in generic competition.
What is John Rogers’ contrarian take? “In our view, short-term setbacks made this high-quality, blue-chip company an incredibly attractive value. In fact, Johnson & Johnson is selling at one of the lowest multiples in years. As such, we initiated our position in February remain confident in the firm’s reputation, highly demanded products, diversification and enormous free cash flow. As of March 31, 2007, the company traded at $60.26, a 43% discount to our $105 value of intrinsic worth.”
Johnson & Johnson (JNJ) is one of the broadest owned stocks among the Gurus. 3 of them initiated positions in the first quarter, at about current prices. 8 others increased their positions, including Warren Buffett. Warren Buffett almost doubled his positions in Johnson & Johnson and owns more than 48 million shares as of 3/31/2007. David Dreman and Ronald Muhlenkamp sold their positions. Johnson & Director Charles Prince bought 5,000 shares of JNJ stock on 02/02/2007 at the average price of $66.78, the price of the stock has decreased by -10.05% since. Charles Prince is the Chairman and CEO of Citigroup (C, Financial).
GuruFocus readers voted a fair value of $110 for Johnson & Johnson, which is very close to what John Rogers has estimated.
John Rogers likes to buy companies with high barriers to entry; sustainable competitive advantages; and predictable fundamentals that allow for double digit cash earnings growth. He judge companies’ quality by looking at their returns on capital, balance sheets. As with many value investors, he favors companies with low reinvestment requirements.
In Ariel Funds website, the firm highlighted Mohawk Industries (MHK, Financial) and Johnson & Johnson (JNJ, Financial) as undervalued.
Mohawk Industries, Inc engages in the production and sale of floor covering products for residential and commercial applications in the United States and Europe. Mohawk Industries Inc. has a market cap of $6.23 billion, it was traded at around $91.39 with P/E ratio of 13.47 and P/S ratio of 0.80. Ariel thinks Mohawk Industries (MHK) worth $119, which is about 30% above the current trading prices. GuruFocus users have rated a fair value of $128 for Mohawk.
Mohawk Industries’ business has suffered from softness in new residential construction and replacement sales. But value investors looking at long term. Ariel wrote on their website: “We believe these issues are temporary tough spots and that investor concerns are inflated. The industry historically has passed raw material increases to consumers and we see no reason why Mohawk will not be able to continue this trend.”
Mohawk Industries Inc. is owned by 6 Gurus, 2 of them increased positions, 4 reduced positions. Ronald Muhlenkamp, whose recent performance has been hurt by the housing slumps, sold out his holdings in the quarter ended 03/31/2007. There were no insider buys during the past 6 months.
Mohawk Industries Inc. is a direct competitor of Shaw Industries, which is a subsidiary of Warren Buffett’s company, Berkshire Hathaway.
Ariel Fund also likes blue-chip Johnson & Johnson (JNJ). The stock is traded at 52 week lows at around $60.07 with P/E ratio of 16.64 and P/S ratio of 3.05, as investors fret over select pharmaceuticals losing patent protection in the next three years and the increase in generic competition.
What is John Rogers’ contrarian take? “In our view, short-term setbacks made this high-quality, blue-chip company an incredibly attractive value. In fact, Johnson & Johnson is selling at one of the lowest multiples in years. As such, we initiated our position in February remain confident in the firm’s reputation, highly demanded products, diversification and enormous free cash flow. As of March 31, 2007, the company traded at $60.26, a 43% discount to our $105 value of intrinsic worth.”
Johnson & Johnson (JNJ) is one of the broadest owned stocks among the Gurus. 3 of them initiated positions in the first quarter, at about current prices. 8 others increased their positions, including Warren Buffett. Warren Buffett almost doubled his positions in Johnson & Johnson and owns more than 48 million shares as of 3/31/2007. David Dreman and Ronald Muhlenkamp sold their positions. Johnson & Director Charles Prince bought 5,000 shares of JNJ stock on 02/02/2007 at the average price of $66.78, the price of the stock has decreased by -10.05% since. Charles Prince is the Chairman and CEO of Citigroup (C, Financial).
GuruFocus readers voted a fair value of $110 for Johnson & Johnson, which is very close to what John Rogers has estimated.
