VZ - Tracking John Rogers' Ariel Investments Portfolio - Q3 2023 Update

2023-12-06 01:02:58 ET

Summary

• Ariel Investments' 13F portfolio value decreased by 11% this quarter, from $10.56B to $9.45B.
• The largest five stakes in the portfolio are Mattel, Baidu, Kennametal, Madison Square Garden Entertainment, and Philip Morris.
• Stake increases were seen in Madison Square Garden Entertainment, Jones Lang LaSalle, Generac Holdings, Northern Trust, and Mohawk Industries, among others. Stake decreases were seen in Mattel, Baidu, Kennametal, Philip Morris, and others.

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 11/14/2023. John Rogers' 13F portfolio value decreased ~11% from $10.56B to $9.45B this quarter. The portfolio is diversified with recent 13F reports showing around 150 positions. There are 61 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 Mattel, Baidu, Kennametal, Madison Square Garden Entertainment, and Philip Morris. They add up to ~14% 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 Q2 2023.

Their flagship mutual fund is the Ariel Fund ( ARGFX ) incepted in 1986. Ariel Fund has a lifetime annualized return of 10.11% compared to 9.91% for the Russell 2500 Index and 10.37% for the S&P 500 Index. The other mutual funds in the group are Ariel Appreciation Fund (CAAPX), Ariel Focus Fund (ARFFX), Ariel International Fund (AINTX), and Ariel Global Fund (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 Deutsche Börse AG (DBOEY), Roche Holding AG (RHHBY), Endesa, S.A. (ELEZF), Michelin (MGDDY), Koninklijke Ahold Delhaize (ADRNY), and Subaru (FUJHY).

Stake Increases:

Madison Square Garden Entertainment ( MSGE ) : MSGE is currently at 2.51% of the portfolio. The original MSGE stake was built over the seven quarters through Q4 2021 at prices between ~$27 and ~$79. The stock currently trades at $30.35. There was a minor ~5% increase last quarter and a ~3% increase this quarter.

Note: Ariel Investments has a ~5.6% ownership stake in Madison Square Garden Entertainment. The prices quoted above are adjusted for the Sphere Entertainment ( SPHR ) spin-out in April.

Jones Lang LaSalle ( JLL ) : The 2.35% 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. That was followed with a ~11% increase during Q1 2023 at prices between ~$137 and ~$185. The stock currently trades at ~$162. There was a minor ~5% increase last quarter and a ~4% increase this quarter.

Generac Holdings ( GNRC ) : GNRC is a 2.32% stake that saw a ~27% increase during Q1 2023 at prices between ~$98 and ~$135. There was a ~15% increase this quarter at prices between ~$103 and ~$154. The stock is now at ~$123.

Northern Trust ( NTRS ) : NTRS is a 1.89% 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. The last few quarters have seen minor increases. The stock currently trades at $80.76.

Mohawk Industries ( MHK ) : MHK is a 1.87% of the portfolio position built over the three years through Q1 2022 at prices between ~$117 and ~$230 and it is now at $91.68. There were minor increases in the last several quarters.

Affiliated Managers Group (AMG), ADT Inc. (ADT), Brink 's Co. (BCO), Charles River Laboratories (CRL), Carlyle Group (CG), Check Point Software (CHKP), Envista Holdings (NVST), J. M. Smucker (SJM), Knowles Corp. (KN), Leslie 's (LESL), Littelfuse Inc. (LFUS), Lindblad Expeditions (LIND), NetApp (NTAP), OneSpaWorld Holdings (OSW), Paramount Global (PARA), Prestige Consumer Healthcare (PBH), Stericycle, Inc. (SRCL), and Zebra Technologies (ZBRA): These small (less than ~2.5% of the portfolio each) stakes were increased this quarter.

Stake Decreases:

Mattel, Inc. ( MAT ) : MAT is currently the largest 13F position at 3.65% of the portfolio. It 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. H2 2021 had also seen a ~17% increase at prices between ~$18 and ~$23. The last several quarters have seen minor trimming. The stock currently trades at $18.90.

Note: They have ~4.2% ownership stake in the business.

Baidu, Inc. ( BIDU ) : BIDU is currently the second largest 13F 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 position has wavered. Recent activity follows. Last year saw a ~18% increase at prices between ~$79 and ~$161. This quarter saw a ~22% selling at prices between ~$125 and ~$156. The stock currently trades at ~$114.

Kennametal Inc. ( KMT ) : KMT is a 2.56% 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. The three quarters through Q3 2021 had seen another ~43% stake increase at prices between ~$33 and ~$42. The stock currently trades at ~$24. The last few quarters have seen minor trimming.

Note: Ariel Investments has a ~12% ownership stake in Kennametal Inc.

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 increase 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 saw 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. That was followed by a similar reduction during Q1 2023 at prices between ~$90 and ~$105. There was a ~18% selling this quarter at prices between ~$90 and ~$99. The stock currently trades at $92.54, and it is at 2.41% of the portfolio.

Gentex Corp. ( GNTX ) : The 2.38% GNTX stake was purchased in Q3 2021 at prices between ~$27.50 and ~$38. This quarter saw a ~18% selling at prices between ~$29 and ~$34. The stock currently trades at $30.60.

Lazard Ltd. ( LAZ ) : LAZ is a 2.35% 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. The three quarters through Q3 2021 saw another ~45% stake increase at prices between $38.70 and $48.75. The stock is now at $30.87. There was a ~22% trimming in the last five quarters.

Note: Ariel Investments has a ~6.8% ownership stake in Lazard.

Resideo Technologies ( REZI ) : The 2.30% REZI stake was built during the three quarters through Q2 2022 at prices between ~$19.50 and ~$28 and the stock currently trades at $17.06. The last two quarters saw minor trimming.

Note: They have a ~9.2% ownership stake in the business.

First American Financial ( FAF ) : FAF is a 2.18% 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 by a similar increase in Q1 2021 at prices between ~$51 and ~$58. The next quarter saw a ~15% selling at prices between ~$64 and ~$81. The stock is now at $61.30. The last several quarters also saw minor trimming.

Microsoft Corp. ( MSFT ) : MSFT is now at 1.93% 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. The 2020 to 2021 time period saw another ~50% selling at prices between ~$137 and ~$343. The last three quarters also saw a ~50% reduction at prices between ~$222 and ~$358. The stock currently trades at ~$373.

Sphere Entertainment ( SPHR ) : The SPHR position came about as a result of the spin-out from MSG Entertainment. They had 6.66M shares of MSG Entertainment which now trades under this ticker. The net stake was reduced by ~20% last quarter and another ~15% this quarter. The stock currently trades at $28.41.

Axalta Coating (AXTA), Adtalem Global Education (ATGE), Amdocs Ltd. (DOX), BorgWarner Inc. (BWA), Boyd Gaming (BYD), BOK Financial (BOKF), CBRE Group (CBRE), Charles Schwab (SCHW), CarMax, Inc. (KMX), Core Laboratories (CLB), Credicorp Ltd. (BAP), Equity Commonwealth (EQC), Gilead Sciences (GILD), Goldman Sachs (GS), Interpublic Group (IPG), Itau Unibanco (ITUB), Janus Henderson Group (JHG), Johnson & Johnson (JNJ), Laboratory Corp. (LH), Madison Square Garden Sports (MSGS), Manchester United (MANU), Masco Corp. (MAS), Norwegian Cruise Line Holdings (NCLH), nVent Electric (NVT), Royal Caribbean Cruises Ltd. (RCL), Simpson Manufacturing (SSD), Snap-on Inc. (SNA), and Verizon Communications ( VZ ) : These small (less than ~2.5% of the portfolio each) stakes were reduced during the quarter.

Note: They have significant ownership stakes in Adtalem Global Education, Knowles Corp, Madison Square Garden Sports, OneSpa Holdings, and Manchester United.

Below is a spreadsheet that shows the changes to John Rogers' Ariel Investments 13F portfolio holdings as of Q3 2023:

For further details see: