Talking With John Rogers: Slow and Steady

The Ariel fund is No. 3 in the Morningstar mid-cap blend category over five years, with average annual returns of 24%. During the crisis, John Rogers stayed the course and bought more firms he liked, such as Gannett (GCI) and real-estate outfit Jones Lang LaSalle (JLL), as they fell further.

The fund tends to hold stocks for years, with about a fifth of its holdings a decade old and nearly half, five years old. U.S. Silica Holdings (SLCA), which makes gravel and sand used in hydraulic fracturing, or fracking, is a newer investment. While John Rogers is not typically a fan of commodity-heavy businesses, U.S. Silica’s commodity is in short supply, and the company is a master at moving it quickly and efficiently, creating the competitive edge that Ariel favors.

Given the market’s strong run off the lows hit in 2009, some value managers are wary. But John Rogers says that investors’ risk aversion and over diversification has left some sectors neglected. “So many people are fighting the last war that there still are bargains,” he contends. Alternative-investment firm KKR (KKR), which the fund bought during the market’s 2011 tumble, is one such example. As pensions and endowments stray from a traditional mix of 60% stocks and 40% bonds and embrace alternatives like private equity, KKR should benefit. “The sector is really cheap and misunderstood,” John Rogers says. “KKR has an extraordinary brand in private equity.”

The economy may be in better shape than people believe, he adds. “As we talk to management teams, we think this recovery is in the fourth inning and people will be surprised by how strong it will be,” John Rogers says. Because of the strength of his holdings’ underlying businesses, John Rogers thinks some could enter mergers, divestitures, or privatization deals, which could create more upside. Health-care companies Hospira (HSP) and Charles River Laboratories International (CRL) are potential beneficiaries.

But with 56% of its assets in cyclical sectors and people wavering on the economy, the fund sits near the bottom of its category this year, down 2.4%. Given its concentration, with just 42 stocks and no cash, the fund can be volatile. International Game Technology (IGT) has been one of the biggest drags this year, as the sluggish economy and bad weather hurt the slot-machine maker, which also has lost market share. John Rogers says a profit warning caught him by surprise, but he still thinks IGT will benefit over the long run from its size, regulatory experience, and the global growth in gaming.

See full Talking With John Rogers: Slow and Steady via Barron’s

LEAVE A COMMENT


Saved Articles
X
TextTExtLInkTextTExtLInk

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

Congrats! Are you a smart person?

We have an exclusive targeted & limited time offer for being a sophisticated and loyal reader.

ValueWalkPremium is a website and newsletter on the latest industry news much of which is not in the public domain and obtained via our sources.

We also have 10 years of resources on how to use this information to better your investment process.

Sign up for  today and get our exclusive content for 40% off. This is our second biggest discount ever!!

Use coupon code VIP20 or click on the button below

Limited time offer only ENDS 2/29/2019 or after next 25 subscribers take advantage whichever comes first – please do not share this discount with others

 

0