Ariel Investments is a terrific firm with a value investing philosophy based in Chicago, Illinois, with offices in New York and Sydney. As of June 30, 2019, it manages $12.9 billion in assets. Since 1983, they have been disciplined, long-term investors with a turtle for a logo.
On July 23, Ariel Focused Value Fund manager Charles Bobrinskoy appeared on CNBC and explained his views on the market. He’s bullish, which I always want to know more about because I’m worried all the time.
Here’s a summary of his message.
People have been very negative about the U.S. and the rest of the world, he said. Expectations were very low. Many people expected an earnings recession, but we are not seeing that. People have been saying for 10 years the recession is due. The inverted yield curve indicator is going to be wrong. Fundamentally, the U.S. economy is growing. There is low unemployment. The regulatory environment is improving.
People are talking about a China slowdown because the country is going from an 8% growth rate to 6% growth rate.
There is also a strong dollar that’s a headwind, and we are still doing well. We have a good earnings outlook.
He stays away from bond-substitute stocks. Don’t own REITs, don’t own MLPs, don’t own high-dividend-paying utilities, he said. )I still think there are many cyclicals that trade at 10x or 11x earnings).
Here are the top 15 holdings in the Ariel Focus Fund:
Blackstone Group LP (BX, Financial)
Lockheed Martin Corp. (LMT, Financial)
Laboratory Corp. of America Holdings (LH, Financial)
BorgWarner Inc. (BWA, Financial)
KKR & Co. Inc. (KKR, Financial)
Zimmer Biomet Holdings Inc. (ZBH, Financial)
Bank of New York Mellon Corp. (BNY, Financial)
Stericycle Inc. (SRCL)
Western Union Co. (WU)
Disclaimer: Author is long KKR & Co. Inc.
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