How John Rogers’ patience is paying off at Ariel Investments
John Rogers is celebrating the 30th anniversary of Ariel Investments and the Ariel Mutual Funds, the first African-American owned mutual fund and investment management firm, which he founded at age 24.
Today, Ariel has nearly $5 billion under management. Its flagship Ariel Fund has posted a 236 percent gain since March 2009.
But Rogers’ road hasn’t always been smooth. In 2006, when its value investing was out of style, Ariel lagged its benchmark and lost some pension accounts. The market calamity of 2008 hit the firm hard: Ariel Fund was down 47 percent for the year, resulting in staff layoffs. Then Ariel fund came roaring back with a 68 percent gain in 2009. Since it started, Ariel Fund has handily beat the S&P 500 for average annual return.
Rogers credits patience and persistence. The firm’s logo is appropriately a tortoise.
Last month, Ariel scored big when one of its holdings, Waukegan-based WMS Industries, announced its sale to a competitor, netting the firm an estimated $44 million gain on 4.4 million shares.
Rogers, a friend of President Barack Obama and his occasional basketball partner, chairs the Presidential Advisory Council on Financial Capability, charged with improving America’s financial literacy. I recently spoke to Rogers about his career, his perspective on investing and his view on where the country is headed.
On investing discipline
“We had the courage of our convictions to buy more of our stocks that were getting crushed and thrown away at prices that we thought were totally unrealistic. Others got fearful and sat on their hands, or sold in panic. We did the opposite. We bought aggressively, and that helped us have this huge return since the March 2009 lows.”
On what it takes
“I tell young people all the time … become a true expert so that you’re someone that people can count on.
“You have to work hard — Saturdays and Sundays — and live up to your business commitments to fellow employees, your boss, your customers. … If you stay focused on being really good at one thing, and stay on top of what’s happening in your industry and live up to your promises, that’s the road to success.”
On minority roadblocks
“I think that in hindsight what made it tough is that typically even well-meaning corporations and non-profits like universities and hospitals, when they think about doing business with minority firms, they think about it initially in a commodity area, things that are bought through procurement — construction, janitorial and catering services, those types of businesses. And they really never have thought about using people of color in professional services, where relationships matter so much.
“It’s remarkable if you look at the top 25 accounting firms, there are no African-American firms, or in the top law firms list, there are no African-American firms, and you can count minority money management firms on one hand. . . . . And [those are] the parts of the economy that are growing fastest and are paid best and create wealth.”
On income inequality
“I’m a tried-and-true capitalist, competitor, and I want to make a lot of money and be successful. But I do think that this world where some hedge fund people have been making $3- and $4 billion dollars a year is outside the normal bounds of compensation, relative to the middle class. And I think that highlighting these income disparities is the right thing to do, that we’ll create a more motivated workforce if we can start to show how much we value and appreciate the middle class.”
On the economy
“The power of this economic recovery is so strong, what’s happening with housing coming back, construction jobs and other [jobs] tied to the housing recovery, will help numbers to be surprisingly good — and the power of the American economy unleashed will give lots of growth and job creation — no matter where we end up in negotiations on tax policy.”
On the market
“We’re long-term, patient investors, and we feel there’s still an overabundance of risk aversion in a lot of pension and endowment offices. And so there’s a lot of cash getting ready to come back to the stock market as people start to believe in this economic recovery. … I’m really convinced that this is a great time to invest, and that we will look back on today’s market as one of the great bull market recoveries ever.”