Tracking John Rogers’ Ariel Investments Portfolio – Q1 2024 Update (MUTF:ARGFX)

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 5/14/2024. John Rogers’ 13F portfolio value increased from $10.04B to $10.17B this quarter. The portfolio is diversified, with recent 13F reports showing around 150 positions. There are 59 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, Jones Lang LaSelle, Madison Square Garden Entertainment, Generac Holdings, and Resideo Technologies. 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 Q4 2023.

Their flagship mutual fund is the Ariel Fund (MUTF:ARGFX) incepted in 1986. Ariel Fund has a lifetime annualized return of 10.52% compared to 10.32% for the Russell 2000 Index and 10.79% for the S&P 500 Index. 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).

New Stakes:

Aptiv PLC (APTV): The small 0.84% APTV position was established this quarter at prices between $76.20 and $90.17. The stock currently trades near the low end of that range at $76.28.

Stake Increases:

Mattel, Inc. (MAT): MAT is currently the largest 13F position at 3.04% 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. Recent activity follows. The last several quarters had seen minor trimming, while this quarter there was a marginal increase. The stock currently trades at $17.33.

Note: They have ~4% ownership stake in the business.

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% during Q2 2023 and another ~15% in the next quarter. The stock currently trades at $37.03. The last quarter saw an ~8% increase and that was followed with a ~3% increase this quarter.

Note: they control ~18% of the business.

Affiliated Managers Group (AMG), ADT Inc. (ADT), Adtalem Global Education (ATGE), Core Laboratories (CLB), Envista Holdings (NVST), Interpublic Group (IPG), J. M. Smucker (SJM), Knowles Corp. (KN), Littelfuse Inc. (LFUS), Lindblad Expeditions (LIND), Paramount Global (PARA), and Prestige Consumer Healthcare (PBH): These small (less than ~2.2% of the portfolio each) stakes were increased during the quarter.

Note: They have significant ownership stakes in Knowles Corp, Lindblad Expeditions, and Prestige Consumer Healthcare.

Stake Decreases:

Jones Lang LaSalle (JLL): The 2.76% 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 had seen selling since 2004. The bulk of the selling happened in 2006 at prices between ~$55 and ~$93. Recent activity follows. 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 ~$196. There was a minor ~5% increase during Q2 2023 and a ~4% increase in the next quarter. This quarter saw a ~9% trimming.

Madison Square Garden Entertainment (MSGE): MSGE is currently at 2.70% 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 $34.46. There was a minor ~5% increase during Q2 2023 and a ~3% increase in the next quarter. There was a ~3% trimming this quarter.

Note: they control ~18% of the business.

Generac Holdings (GNRC): GNRC is a 2.66% stake that saw a ~27% increase during Q1 2023 at prices between ~$98 and ~$135. There was a ~15% increase during Q3 2023 at prices between ~$103 and ~$154. The stock is now at ~$139. The last quarter also saw an ~8% increase. There was marginal trimming this quarter.

Resideo Technologies (REZI): The 2.65% REZI stake was built during the three quarters through Q2 2022 at prices between ~$19.50 and ~$28 and the stock currently trades near the low end of that range at $19.85. There was a ~5% trimming this quarter.

Note: They have an ~8.6% ownership stake in the business.

Lazard, Inc. (LAZ): LAZ is a 2.60% of the portfolio position, first purchased in 2009 at prices between ~$19 and ~$38. The next year saw a stake-tripling at prices between ~$25 and ~$36. In 2014, there was a ~25% selling at prices between ~$39 and ~$50. Recent activity follows. The three quarters through Q3 2021 saw a ~45% stake increase at prices between $38.70 and $48.75. The stock is now at $37.88. There was a ~35% trimming in the last seven quarters.

Note: Ariel Investments has a ~6% ownership stake in Lazard.

Charles River Laboratories (CRL): The CRL stake saw a ~50% stake increase during Q2 2023 at prices between ~$184 and ~$210. The next quarter saw a minor increase, while in the last quarter there was marginal trimming. The stake was decreased by 11% this quarter at prices between ~$204 and ~$273. The stock currently trades at ~$210 and the stake is at 2.49% of the portfolio.

Mohawk Industries (MHK): MHK is a 2.41% of the portfolio position built over the three years through Q1 2022 at prices between ~$117 and ~$230, and it is now just below that range at ~$114. The stake was decreased by 13% this quarter at prices between ~$98 and ~$131.

Gentex Corp. (GNTX): The 2.28% GNTX stake was purchased in Q3 2021 at prices between ~$27.50 and ~$38. Q3 2023 saw an ~18% selling at prices between ~$29 and ~$34. The stock currently trades at $33.81. There was a minor ~2% trimming this quarter.

Kennametal Inc. (KMT): KMT is a 2.26% 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 below the low end of their purchase price ranges at $24.61. The last few quarters have seen minor trimming.

Note: Ariel Investments has a ~11.5% ownership stake in Kennametal Inc.

Carlyle Group (CG): The 2.25% CG stake was built during the two quarters through Q3 2023 at prices between $27.50 and $42 and the stock currently trades at ~$40. There was a marginal increase in the last quarter. The stake was decreased by 24% this quarter at prices between $37.83 and $47.23.

Northern Trust (NTRS): NTRS is a 2.23% 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 saw minor increases, while this quarter there was a ~4% trimming. The stock currently trades at ~$80.

Check Point Software (CHKP): The 2.23% stake in CHKP was built during the last two quarters at prices between ~$125 and ~$154 and the stock currently trades at ~$157. There was an ~8% trimming this quarter.

First American Financial (FAF): FAF is a 2.11% 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. Recent activity follows: There was a ~25% 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 $52.59. The last several quarters saw only minor adjustments.

Microsoft Corp. (MSFT): MSFT is now at 1.51% 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: The first three quarters of 2023 saw a ~50% reduction at prices between ~$222 and ~$358. The last quarter saw another ~37% selling at prices between ~$313 and ~$383. The stock currently trades at ~$433. There was marginal trimming this quarter. They are harvesting gains.

Baidu, Inc. (BIDU): BIDU is currently at 1.18% 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. Q3 2023 saw a ~22% selling at prices between ~$125 and ~$156. That was followed by another ~30% reduction in the last quarter at prices between ~$105 and ~$135. The stake was decreased by 25% this quarter at prices between ~$98 and ~$118. The stock currently trades at ~$94.

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. Recent activity follows. There was a ~18% selling during Q3 2023 at prices between ~$90 and ~$99. That was followed by a ~48% reduction in the last quarter at prices between ~$87 and ~$95. The stake was decreased by 67% this quarter at prices between $87.76 and $94.97. The stock currently trades at ~$104, and it is now a very small position at 0.38% of the portfolio.

Axalta Coating (AXTA), BOK Financial (BOKF), Boyd Gaming (BYD), Brink’s Company (BCO), Credicorp Ltd. (BAP), CBRE Group (CBRE), Charles Schwab (SCHW), CarMax, Inc. (KMX), DaVita (DVA), Goldman Sachs (GS), Gilead Sciences (GILD), Intel Corp. (INTC), Janus Henderson Group (JHG), Leslie’s (LESL), Labcorp Holdings (LH), Madison Square Garden Sports (MSGS), Masco Corp. (MAS), Manchester United (MANU), Norwegian Cruise Line Holdings (NCLH), NetApp (NTAP), nVent Electric (NVT), OneSpaWorld Holdings (OSW), Royal Caribbean Cruises Ltd. (RCL), Simpson Manufacturing (SSD), Stanley Black & Decker (SWK), Stericycle, Inc. (SRCL), Verizon Communications (VZ), and Zebra Technologies (ZBRA): These small (less than ~2.2% of the portfolio each) positions were decreased during the quarter.

Note: They have significant ownership stakes in Adtalem Global Education, Core Laboratories, GCM Grosvenor, Leslie’s, Madison Square Garden Sports, Manchester United, and OneSpa Holdings.

Below is a spreadsheet that shows the changes to John Rogers’ Ariel Investments 13F portfolio holdings as of Q1 2024:

Source: John Vincent. Data constructed from Ariel Investments’ 13F filings for Q4 2023 and Q1 2024.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.