John W. Rogers Jr. has an eclectic and impressive resume. As a philanthropist, he gives millions of dollars to causes supporting education, youth initiatives and racial equity.

The firm he founded in 1983, Chicago-based Ariel Investments, was a pioneer in incorporating what would later become known as environmental, social and governance (ESG) criteria into its investment process.

His family is also notable. His father, John Rogers Sr., was a Tuskegee airman and Chicago circuit court judge. His mother, Jewel Lafontant, was the first African-American woman to graduate from the University of Chicago Law School. She later went on to become deputy solicitor general during the administration of President George H.W. Bush.

In the investment world, the 62-year-old Rogers is known for his patient, value-driven style of investing. Portfolio turnover in the Ariel Fund, which he has managed since its inception in 1986, typically clocks in at 20% to 30%. Holdings in the concentrated portfolio of 25 to 45 small and mid-cap holdings are purchased at a discount to the firm’s estimate of private market value and held until they approach that value or a better opportunity comes along. While they typically remain in the portfolio for three to five years, a few stick around even longer.

Through the last 37 years, Rogers’s firm has adhered doggedly to its small- and mid-cap value roots, even at times when the strategy was out of favor. Today, with $11.4 billion under management, Ariel still promotes the virtues of patient investing for its mutual funds and separate accounts, and of using the market’s short-term focus to uncover mispriced companies whose true value will be realized over time.

The strategy has rewarded the firm’s mutual fund and separate account investors over the long haul. The Ariel Fund’s annualized return has handily beaten the Russell 2500 Value Index, and the fund has landed in the top 34th percentile of Lipper’s mid-cap value funds since inception and ranked 15 out of 95 funds over 10 years. Its comparative performance has been especially notable in volatile bear markets such as the one during the early 2000s, when the fund’s preference for reasonably priced names in a broad swath of sectors helped it avoid the fallout from the late 1990s tech bubble.

With 40 years of industry experience under his belt, Rogers has a lot to say about a variety of topics. Recently, Financial Advisor caught up with him to talk about where he thinks the market is headed, when value investing might finally overtake growth, his long career, and minority representation in the financial advisory community.

Selloff Buys
The March 2020 selloff provided an opportunity for the Ariel Fund to initiate positions in several stocks such as global dental supplier Envista Holdings Corporation, which was recently spun out of global science and technology conglomerate Danaher Corporation. The company maintains a market leadership position in an industry with favorable growth dynamics, and continues to benefit from pre-spinoff research and development investments and the upcoming launch of several new products in high-growth segments.

During the first quarter, the fund also staked a claim in Vail Resorts, a high-quality business with a clear competitive advantage and superior scale in a niche market managed by a team that has demonstrated smart capital allocation decisions that maximize strong recurring cash flows. “We believe the headwinds the travel and leisure industry are currently experiencing will soften and think the company’s robust balance sheet will weather the storm,” Rogers says.

Second quarter additions to the portfolio included the Madison Square Garden Entertainment Corporation. The company, which owns scarce and well positioned venue assets in New York City and Las Vegas, was spun out from Madison Square Garden Company on April 17.

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