John Rogers’ Ariel Investments Portfolio – Q4 2021 Update (MUTF:AGLOX)

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This article is part of a series that provides an ongoing analysis of the changes made to Ariel Investments’ 13F stock portfolio on a quarterly basis. It is based on Ariel Investments’ regulatory 13F Form filed on 2/14/2022. John Rogers’ 13F portfolio value increased ~9% from $10.94B to $11.86B this quarter. The portfolio is diversified with recent 13F reports showing around 150 positions. There are 57 securities that are significantly large (more than ~0.5% of the portfolio each) and they are the focus of this article. The largest five stakes are Madison Square Garden Entertainment, Mattel, First American Financial, Philip Morris, and Baidu. They add up to ~16% of the portfolio. Please visit our Tracking John Rogers’ Ariel Investments Portfolio series to get an idea of their investment philosophy and our last update for the fund’s moves during Q3 2021.

Their flagship mutual fund is the Ariel Fund (MUTF:ARGFX) incepted in 1986. Ariel Fund has a lifetime annualized return of 11.33% compared to 10.88% for the Russell 2500 Index and 11.06% for the S&P 500 Index. In the most recent 10-year period, it has underperformed the S&P index: 12.91% vs 15.42%. The other mutual funds in the group are Ariel Appreciation Fund (MUTF:CAAPX), Ariel Focus Fund (MUTF:ARFFX), Ariel International Fund (MUTF:AINTX), and Ariel Global Fund (MUTF:AGLOX).

Note: Some of the top holdings in their International and Global funds are not in the 13F report as they are not 13F securities. They are Roche Holding AG (OTCQX:RHHBY), Deutsche Boerse AG (OTCPK:DBOEY), Endesa SA (OTCPK:ELEZF), Nintendo Company (OTCPK:NTDOY), Michelin (OTCPK:MGDDY), Koninklijke Ahold Delhaize (OTCQX:ADRNY), and Snam SpA (OTCPK:SNMRY).

Stake Disposals:

Johnson & Johnson (JNJ) and Meredith Corp. (MDP): These two small (less than ~1.25% of the portfolio each) stakes were disposed this quarter.

Stake Increases:

Madison Square Garden Entertainment (MSGE): MSGE is a 3.66% of the portfolio stake built over the last seven quarters at prices between ~$64 and ~$116 and the stock currently trades at ~$82.

Note: Ariel Investments has a ~23% ownership stake in Madison Square Garden Entertainment.

Mattel Inc. (MAT): The 3.32% MAT position was first purchased in 2016 at prices between ~$25 and ~$34. Next year saw a stake doubling at prices between ~$13 and ~$30.50. 2018 also saw a one-third stake increase at prices between ~$9.50 and ~$18. Q1 2019 saw a ~12% trimming while the next two quarters saw a one-third increase at prices between ~$9.50 and ~$14.50. Q1 2020 saw another ~15% stake increase at prices between $7.25 and $14.75. Last two quarters have also seen a ~17% increase at prices between ~$18 and ~$23. The stock currently trades at $22.82.

Note: They have ~5% ownership stake in the business.

Lazard Ltd. (LAZ): LAZ is a ~3% of the portfolio position first purchased in 2009 at prices between ~$19 and ~$38. Next year saw a stake-tripling at prices between ~$25 and ~$36. The interim period saw further buying but in 2014 there was a ~25% selling at prices between ~$39 and ~$50. Recent activity follows. 2019 saw a ~15% increase at prices between ~$31 and ~$40.50. Last three quarters saw another ~45% stake increase at prices between $38.70 and $48.75. The stock is now at $35.48. There was a marginal further increase this quarter.

Note: Ariel Investments have a ~7% ownership stake in Lazard.

BOK Financial (BOKF) and Mohawk Industries (MHK): These two stakes were built over the last two years. The 2.94% BOKF stake was built at prices between ~$37 and ~$98. The stock currently trades at $97.16. MHK is a ~2% of the portfolio position established at prices between ~$59 and ~$168 and it is now at ~$132. Both stakes saw minor increases in the last three quarters.

Nielsen Holdings (NLSN): The 2.84% NLSN stake was purchased in 2017 at prices between ~$36 and ~$45. Next year saw a ~60% stake increase at prices between $22 and $37.50 and that was followed with a ~45% further increase in 2019 at prices between $19.50 and $27. Q4 2020 saw a similar increase at prices between ~$13.50 and ~$21. Last four quarters have seen another ~50% increase at prices between ~$19.50 and ~$28. The stock currently trades at $22.21.

Kennametal Inc. (KMT): KMT is a 2.70% of the portfolio position. It was established in 2014 at prices between $34 and $52. The position had seen minor buying over the years. Q1 2020 saw a ~15% stake increase at prices between $15 and $37. Last three quarters had seen another ~43% stake increase at prices between ~$33 and ~$42. The stock currently trades at $28.88. There was a marginal further increase this quarter.

Note: Ariel Investments has a ~11% ownership stake in Kennametal Inc.

Envista Holdings (NVST): The 2.38% NVST stake was purchased in Q1 2020 at prices between ~$12 and ~$33. There was a ~75% stake increase next quarter at prices between ~$13 and ~$24.50. The stock currently trades at $50.56. Last six quarters have seen only minor adjustments.

Snap-On Inc. (SNA): SNA is a ~2% of the portfolio stake purchased in 2012 at prices between ~$52 and ~$80. Next year saw a ~50% stake increase at prices between ~$80 and ~$110. The stock currently trades at ~$206. Last few years have seen only minor adjustments.

Northern Trust (NTRS): NTRS is a 1.93% very long-term position first purchased in 2002. The 2002-2004 timeframe saw a ~10M share stake built at prices between ~$30 and ~$60. The position has since been sold down. The bulk of the selling was in the 2005-2007 timeframe at prices between ~$42 and ~$81. Last several quarters have seen only minor adjustments. The stock currently trades at ~$118.

Laboratory Corp. (LH): LH is a 1.82% of the portfolio stake first purchased in 2008 at prices between ~$60 and ~$80. That original stake was sold out in 2011 at prices between ~$73 and ~$101. 2014 saw a larger position built at prices between ~$89 and ~$111. Next year also saw a ~30% stake increase at prices between ~$112 and ~$127. 2016-2020 timeframe had seen consistent selling. The stake was reduced by ~70% over that period at prices between ~$105 and ~$215. The stock currently trades at ~$276. Last four quarters have seen only minor adjustments.

ADT Inc. (ADT): ADT is a 1.74% of the portfolio position purchased over the last two quarters at prices between ~$8.50 and ~$11.50 and the stock currently trades below that range at $7.45. There was a marginal increase this quarter.

J. M. Smucker (SJM): SJM is a very long-term stake that has been in the portfolio for well over a decade. The original huge stake was sold down in 2008. Q1 2020 saw another ~30% selling at prices between ~$96 and ~$119. Q1 2021 saw a ~40% stake increase at prices between ~$111 and ~$131. The stock currently trades at ~$134 and the stake is at 1.71% of the portfolio. Last three quarters have seen minor increases.

Axalta Coating (AXTA): The 1.67% AXTA stake was built in H1 2021 at prices between $26.75 and $33.75 and the stock currently trades at $24.36. Last two quarters have also seen minor increases.

Manchester United (MANU) and Gentex Corp. (GNTX): These two positions purchased last quarter were increased this quarter. MANU is a 1.31% of the portfolio position established at prices between ~$14 and ~$20.50 and the stock currently trades at $14.65. The 1.25% GNTX stake was purchased at prices between ~$31 and ~$38 and the stock currently trades at $28.96.

Note: They have a ~21% ownership stake in Manchester United.

Adtalem Global Education (ATGE), Affiliated Managers Group (AMG), Aflac Inc. (AFL), BorgWarner Inc. (BWA), Boyd Gaming (BYD), Brink’s Co. (BCO), Core Laboratories (CLB), Credicorp Ltd. (BAP), Janus Henderson Group (JHG), Madison Square Garden Sports (MSGS), Masco Corp. (MAS), OneSpaWorld Holdings (OSW), Resideo Technologies (REZI), Stanley Black & Decker (SWK), Tegna Inc. (TGNA), Trip.com (TCOM), and Paramount Global (PARA), previously ViacomCBS: These small (less than ~1.75% of the portfolio each) stakes were increased this quarter.

Note: Ariel Investments has significant ownership stakes in the following businesses: OneSpa World Holdings, Madison Square Garden Sports, Knowles Corp, Core Laboratories, and Adtalem Global Education.

Stake Decreases:

First American Financial (FAF): FAF is a 3.21% of the portfolio stake established in 2011 at prices between ~$11 and ~$17. 2013 also saw a ~25% stake increase at prices between ~$21 and ~$28. The position has seen consistent reductions since 2015. Recent activity follows: 2019 had seen a ~20% selling at prices between ~$45 and ~$64. There was a ~25% stake increase in Q4 2020 at prices between ~$44.50 and ~$54.50. That was followed with a similar increase in Q1 2021 at prices between ~$51 and ~$58. The stock is now at $67.12. Last few quarters have seen minor trimming.

Philip Morris (PM): A very small position in PM was first purchased in 2013. By 2017, the stake was built to a ~1M share stake. Next year saw the position increased by ~220% at prices between $66 and $110. 2019 had seen another ~20% stake increase at prices between $70 and $91. The three quarters through Q3 2020 had also seen a ~20% stake increase. Q1 2021 saw another ~15% stake increase at prices between ~$79 and ~$91 while next quarter there was a ~20% selling at prices between ~$88 and ~$101. The stock currently trades at ~$92, and it is currently at ~3% of the portfolio. Last two quarters have seen only minor adjustments.

Baidu Inc. (BIDU): BIDU is currently the second-largest position at ~3% of the portfolio. It was established in 2013 with the bulk of the current position purchased in 2015 at prices between ~$134 and ~$234. The interim years had seen minor buying and in 2018 there was a ~25% increase at prices between $157 and $273. Q1 to Q3 2019 saw another one-third increase at prices between ~$97 and ~$142. H1 2020 had seen a ~50% stake increase at prices between ~$84 and ~$145. Q1 2021 saw a ~18% selling at prices between ~$204 and ~$340 while last quarter there was a ~12% stake increase at prices between ~$137 and ~$202. The stock currently trades at ~$148. There was minor trimming this quarter.

Microsoft Corp. (MSFT): MSFT is now at 2.84% of the 13F portfolio. It was a very small stake first purchased in 2010. The 2013-2015 timeframe saw a 2.2M share build-up at prices between ~$26 and ~$56. Recent activity follows: 2019 had seen a ~22% reduction at prices between ~$100 and $160. Last two years saw another ~50% selling at prices between ~$137 and ~$343. The stock currently trades at ~$311. They are harvesting gains.

Interpublic Group (IPG): The 2.65% IPG stake is a very long-term position that goes back almost two decades. It was first purchased in 2001 and the position was built to over 41M shares by 2005 at prices between $9 and $42. Recent activity follows: 2018 saw a ~20% selling at prices between $20 and $25 while next year saw a ~40% stake increase at prices between $19.50 and $24. There was a ~15% trimming over the last two quarters. The stock currently trades at ~$36.

Jones Lang LaSalle (JLL): The 2.55% JLL position is a very long-term stake first purchased in 2001. Next year saw a huge stake build-up at prices between ~$14.50 and ~$25. The position has seen selling since 2004. The bulk of the selling happened in 2006 at prices between ~$55 and ~$93. Most years since have also seen selling. H2 2020 saw a ~25% stake increase at prices between ~$90 and ~$154. The stock currently trades at ~$237. Last several quarters have seen only minor adjustments.

KKR & Company (KKR): KKR is a 1.83% of the portfolio position purchased in 2011 at prices between $10.50 and $19. The position had remained relatively steady over the years although most quarters had seen minor adjustments. 2020 saw a ~45% selling at prices between ~$18.50 and ~$40.50. There was another ~16% selling this quarter at prices between ~$60 and ~$83. The stock currently trades at $58.58.

Amdocs Ltd. (DOX), Berkshire Hathaway (BRK.B), CBRE Group (CBRE), Charles Schwab (SCHW), Charles River Laboratories (CRL), Gilead Sciences (GILD), Goldman Sachs (GS), Keysight Technologies (KEYS), Knowles Corp. (KN), Korn Ferry (KFY), Littelfuse Inc. (LFUS), nVent Electric (NVT), Progressive Corporation (PGR), Simpson Manufacturing (SSD), Vail Resorts (MTN), and Walgreens Boots Alliance (WBA): These small (less than 1.5% of the portfolio each) stakes were reduced during the quarter.

Note: Ariel Investments has a significant ownership stake in Knowles Corp.

Kept Steady:

Stericycle Inc. (SRCL): SRCL is a 2.13% of the portfolio position established in Q1 2018 at prices between ~$58 and ~$76. The bulk of the current stake was purchased in H2 2018 at prices between ~$36.50 and ~$71. Since then, the activity had been minor. Q1 2021 saw a ~20% stake increase at prices between ~$65 and ~$72.50. The stock currently trades at ~$57.

Below is a spreadsheet that shows the changes to John Rogers’ Ariel Investments 13F portfolio holdings as of Q4 2021:

John Rogers - Ariel Investments

John Rogers – Ariel Investments’ Q4 2021 13F Report Q/Q Comparison (John Vincent (author))



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