Ariel’s John Rogers Defends Active Management

Before becoming the founder and chairman of Chicago-based Ariel Investments, John Rogers Jr. was a varsity basketball player at Princeton University and a winner at both Wheel of Fortune and Warren Buffett’s NetJets Poker Invitational in Las Vegas. This according to a recent Barrons article. During a recent interview with Barrons, Rogers said, “I worry that our industry hasn’t done an effective job of defending itself and showing the value that is added by active management.” Here are some interview highlights: Rogers gravitates toward businesses with strong recurring revenue, such as real estate management companies. “These are businesses that fit […]

Index Fund Bubble on the Horizon

Index funds have been “bumping up” the prices of all stocks in the major indexes as managers put “record amounts of shareholder money to work,” says an article in last week’s Institutional Investor. This has created a bubble that could spell trouble for passive investors but present opportunities for active ones. John Rogers, CEO of $2 billion Ariel fund, said that when the downturn occurs, the “mindless selling that index funds must do” will allow active managers to shop for values, and investors will be “shocked” by how much they paid for securities simply because they were part of a benchmark.  […]

Veteran Fund Managers Part II

In yesterday’s blog post, we shared some insights from tenured money managers regarding the patience necessary for investment success. An article in last weeks’ InvestmentNews offered more feedback from this group of sage investors, which included; Ariel Fund’s John Rogers, Robert Bacarella of the Monetta fund, Mario Gabelli of Gabelli Asset Management Company and John Carey of the Pioneer fund. When asked how they’ve managed to stay in the competitive world of fund management, here are their responses: Gabelli: “We’re obsessed with studying our companies, reading annual reports.” He added, “We have knowledge that we’ve accumulated over an extended period […]

Stocks for the Sporting Investor

Top fund manager John W. Rogers Jr. says there’s money in sports — and the stocks of sports-related companies. “Sports is in the sweet spot of transformative technology and media that have made these pastimes even more ­ubiquitous and entertaining,” Rogers writes in his latest Forbes column. “And more lucrative.” Rogers says high-definition television is allowing sports fans to watch games in better quality and mobile devices are letting them watch games on the go. And, while the rise of the DVR has let consumers bypass ads on TV shows, most sports fans watch games live, and thus can’t fast-forward […]

Focus on Facts, Not Fear, Says Rogers

In his latest Forbes column, John W. Rogers Jr. stresses the importance of staying rational amid market turbulence, and says he’s bullish on the financial sector because investors have been treating it with an irrational amount of fear. “An unemotional response is the right one in many critical moments — be it the game-winning shot or a life-saving procedure,” Rogers writes. “But it’s hard to hold it together in a crisis. If you keep your wits and buy during panics, the rewards can be outsized.” One example of rational thinking leading to investing profits, he says, involves oil giant BP. […]

Rogers Talks Moats

In his latest column for Forbes, top fund manager John Rogers looks at the notion of economic “moats”, and how investors can profit from companies that have them. Rogers looks the wisdom of two great value investors — Warren Buffett and Charles Munger of Berkshire Hathaway — as it pertains to moats. Buffett, he says, has said of moats, “The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The […]

Rogers: “Mountain” of Corporate Cash to Help Market

In his latest Forbes column, John W. Rogers Jr. says that while pessimism remains in the market, he’s generally upbeat. “I am optimistic about the economy and the stock market in 2011 — although my expectations are more tempered than before,” Rogers writes. “The management teams I talk to every day have real conviction that their businesses have stabilized and are growing. Corporations are sitting on the largest mountain of cash ever, and eventually they will have to put it to work. They can reinvest in their businesses, make acquisitions, pay down or restructure debt, buy back shares or pay […]

Herro, Rogers Offer Picks

As part of a recent charity event, top strategists John Rogers and David Herro talked about where they are currently finding value in the market. Rogers, who heads Ariel Investments, “focused on long-term value investing in ‘out of favor’ media stocks” at the Chicago event, Crain’s Chicago Business reported. Rogers recommended that attendees take a look at three of his media holdings, Gannett Co., CBS Corp. and Viacom Inc. Herro, who was recently named one of Morningstar’s fund managers of the decade, focused on Japan, citing the country’s recovering economy. He is particularly high on Daiwa Securities Group Inc., thanks […]

Rogers on How to Profit from the Takeover Takeoff

Ariel Investments’ John W. Rogers Jr. says Corporate America’s appetite for takeover deals is creating big opportunities for investors. Rogers, whose Ariel Fund is in the top 10% of funds in its class over the past year and the top 12% over the past ten years, writes in his latest Forbes article that “small investors are still shying away from U.S. stocks, but big corporate buyers can’t seem to get enough of them,” in the form of takeover deals.  While individual investors are yanking money from mutual funds, corporations are in the beginning of a “spending spree” that is part […]

Rogers on Where to Find Contrarian Plays

In the latest edition of Forbes.com’s “Intelligent Investing”, Ariel Investments CEO John Rogers Jr. discusses his investment strategy, and explains why he’s high on several media companies and other out-of-favor firms right now. “We love low P/Es,” says Rogers, whose flagship Ariel Fund has returned close to 7% per year over the past decade while the S&P 500 has been in the red. “We also want to do the discounted cash flow analysis that most business school students learn to be able to look to the future and see the cash flows and discount them back. And then we look […]

More Fund Managers Snatching Up Bargains

Money has been flowing out of mutual funds at an incredible rate in the past year, but three well-known fund managers see opportunity in the flight from stocks, BusinessWeek’s Tara Kalwarski writes. Kalwarski interviewed John Rogers of Ariel Fund, David Herro of Oakmark International Fund, and Tom Marsico of Marsico Focus Fund, and found that all are responding to big losses last year by doing quite a bit of bargain hunting right now. Rogers’ fund is worth half of what it was a year ago, but he has a track record of emerging strong from crises; in the year after […]

Rogers: Stocks in Margin of Safety Territory

John Rogers, CEO of Chicago-based Ariel Capital Management and long time Forbes magazine columnist, says that stocks have a margin of safety versus bonds at the current time. In his latest column, Rogers provides past historical examples, both in 1974 and 1987, where the earnings yield on equities (i.e. the inverse of the P/E ratio or the expected return on stocks given their earnings) was superior to that of bonds. According to Rogers, had you put $100 in stocks at in the 1974 bottom where the earnings yield was 14% you would have generated a return of 16% annually over […]