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Holly LaFon
Articles (8990)  | Author's Website |

Ariel Funds' Charlie Bobrinskoy Taking GuruFocus User Questions

Ask an investing question to a pro!

July 17, 2018 | About:

We’re excited to bring Charlie Bobrinksoy as the next investment professional for a Q&A.

Bobrinskoy, the vice chairman, head of investment group and portfolio manager at Ariel Investments, joined the firm in 2004 after 21 years as an investment banker. Ariel Investments is the Chicago-based value asset manager founded by John Rogers (Trades, Portfolio).

To ask Bobrinskoy a question, post it in the comment section below. He will respond with answers shortly.

Ariel Investments takes a patient, long-term approach and invests on convictions rather than benchmarks. In its different funds, the firm applies two schools of thought in value investing: Ben Graham’s notion of buying companies at deep discounts to their balance sheet and Warren Buffett (Trades, Portfolio)’s idea of buying higher-quality companies at a discount to their intrinsic value.

“A critical component is having a strategic, sustainable competitive advantage,” he said in a recent video. “It can come from a great brand. It can come from a great market position. It can come because you’re the low-cost manufacturer. There are lots of different sources of this sustainable competitive advantage, but you have to have it.”

In addition to heading thought leadership at Ariel, Bobrinskoy manages its Ariel value strategies, a concentrated portfolio of all U.S. stocks. The average forward price-earnings ratio of his companies is 13.1, shy of the 14.8 ratio of the Russell 1000 Value Index.

His $59.1 million Ariel Focus Fund holds 30 stocks with a quarter in its largest sector, financials. The largest positions at the end of the first quarter were:

He also sold IBM (NYSE:IBM).

Bobrinskoy is optimistic that stocks will remain attractive despite looming interest rate hikes. In his first-quarter letter, he said:

“Despite higher market volatility, we remain cautiously optimistic that steady economic and corporate earnings growth, as well as U.S. tax reform will boost profitability for many of our domestic holdings. In the meantime, while cyclical pressures on inflation are building, we believe technological innovation presents a considerable headwind. Not to mention, history shows that stocks can still do well in a rising rate environment. With the S&P 500 Index trading at 17.1x forward earnings and the Russell 2500 Index trading at 17.6x, valuations remain below euphoric levels.”

Learn more about Ariel’s investments at their portfolio here.

Don’t forget to leave any question about investing for Charlie in the comments section below! Thanks!

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


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Comments

James Li
James Li premium member - 3 months ago
Hi,

Thank you for taking our questions. I have a question regarding your sell in IBM:

I understand that Warren Buffett (Trades, Portfolio) closed his IBM position earlier this year.

What are some key reasons why you sold IBM?

Thanks.

Sydnee Gatewood
Sydnee Gatewood premium member - 2 months ago

Hello,

Thanks for taking questions!

I am curious to know what your thoughts are on the trend in consolidation we are seeing among major corportations. As larger conglomerates are formed, what does it mean for those companies that are left behind? Do you see any trends?

jazz39
Jazz39 - 2 months ago    Report SPAM

What do you think about Consumer Staples stocks right now? --Karim

breddy
Breddy - 2 months ago    Report SPAM

When analysing stocks, how much of your analysis would you say comes down to art/feel versus a scientific/rule-based approach?

Aton
Aton - 2 months ago    Report SPAM

1) how do you find Ben Graham-type ideas in the era of investing sites and stock screeners?

2) how do you determine what percentage of portfolio a position must take?

3) how do you hedge your investments (if you do that)?

Thank you!

jomado3
Jomado3 - 2 months ago    Report SPAM

Hi Charlie,

Thanks for taking the time to answer questions. I have a few questions for you.

1. When looking for potential investments what types of metrics are most important to you during the initial screening phase?

2. If you were currently sitting on 50% cash in your portfolio, would you be looking to invest it all in the near term, dollar cost average it into the market over the course of the next couple years, or sit on it and wait for the right opportunities?

3. How does your investing approach change in a rising interest rate environment? Or will it not change at all?

Jacobtrowe
Jacobtrowe premium member - 2 months ago

Hello Mr. Bobrinskoy. If you started from scratch today, how would you construct a portfolio that you couldn't change until the year 2029?

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