"Tracking John Rogers’ Ariel Investments Portfolio – Q2 2021 Update"
"Ariel Investments’ 13F portfolio value increased from $10.15B to $10.64B this quarter.They added ADT Inc. and increased ViacomCBS while decreasing Philip Morris and Meredith Corp.The top three positions are Baidu, Philip Morris, and Lazard and they add up to ~11% of the portfolio.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  filed on 08/13/2021. John Rogers’ 13F portfolio value increased ~14% from $8.88B to $10.15B 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 Baidu, Philip Morris, Lazard, First American Financial, and Microsoft. They add up to ~18% of the portfolio. Please visit our  Portfolio series to get an idea of their investment philosophy and our  for the fund’s moves during Q1 2021.Their flagship mutual fund is the Ariel Fund (ARGFX) incepted in 1986. Ariel Fund has a lifetime annualized return of 11.57% compared to 11.32% for the Russell 2500 Index and 11.07% for the S&P 500 Index. In the most recent 10-year period, it has underperformed the S&P index by a substantial margin: 11.97% vs 14.84%. 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 Roche Holding AG (RHHBY), Deutsche Boerse AG (DBOEY), Nintendo Company (NTDOY), Michelin (MGDDY), Koninklijke Ahold Delhaize (ADRNY), Snam SpA (SNMRY), and Subaru (FUJHY).New Stakes:ADT Inc. (ADT) and Progressive Corporation (PGR): ADT is a 1.55% of the portfolio position purchased this quarter at prices between ~$8.50 and ~$11.50 and the stock currently trades just below the low end of that range at $8.34. The small 0.78% PGR stake was established at prices between ~$92 and ~$107 and the stock is now at $96.15.Note: Progressive is back in the portfolio after a quarter’s gap.Stake Disposals:FLIR Systems (FLIR): The very small 0.53% stake in FLIR was disposed during the quarter.Stake Increases:Lazard Ltd. (LAZ): LAZ is a 3.26% 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 two quarters saw another ~38% stake increase at prices between ~$38.50 and ~$48. The stock is now at $48.17.Note: Ariel Investments have a ~6.5% ownership stake in Lazard.First American Financial (FAF): FAF is a 3.17% 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 last quarter at prices between ~$51 and ~$58. The stock is now at ~$71. There was a marginal further increase this quarter.Mattel Inc. (MAT): The 2.95% 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 another 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. The stock currently trades at ~$21.70. Last five quarters have seen only minor adjustments.Nielsen Holdings (NLSN): The 2.81% 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. The stock currently trades at $21.38. Last two quarters have seen a combined ~10% increase.Kennametal Inc. (KMT): KMT is a 2.58% 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. That was followed with a similar increase last quarter at prices between ~$35 and ~$42. The stock currently trades at $37.54. This quarter also saw a ~8% stake increase.Note: Ariel Investments has a ~8.5% ownership stake in Kennametal Inc.Stericycle Inc. (SRCL): SRCL is a 2.55% 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. Last quarter saw a ~20% stake increase at prices between ~$65 and ~$72.50. The stock currently trades at $68.53. This quarter saw a minor ~3% further increase.BOK Financial (BOKF) and Mohawk Industries (MHK): These two stakes were built over the last two years. The 2.63% BOKF stake was built at prices between ~$37 and ~$98. The stock currently trades at ~$87. MHK is  a 2.38% of the portfolio position purchased at prices between ~$59 and ~$168 and it is now at ~$202. Both stakes saw minor increases this quarter.Madison Square Garden Entertainment (MSGE): MSGE is a 2.53% of the portfolio stake built over the last five quarters at prices between ~$64 and ~$116 and the stock currently trades at ~$78.Note: Ariel Investments has a ~16% ownership stake in Madison Square Garden Entertainment.Northern Trust (NTRS): NTRS is a ~2% 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.KKR & Company (KKR): KKR is a ~2% 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. Last year saw a ~45% selling at prices between ~$18.50 and ~$40.50. The stock currently trades at $64.31. There was a minor ~2% stake increase last quarter and a marginal increase this quarter.Jones Lang LaSalle (JLL): The 1.94% 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. The last decade had also seen consistent selling almost every year. H2 2020 saw a ~25% stake increase at prices between ~$90 and ~$154. The stock currently trades at ~$243. There was a minor ~4% further increase over the last two quarters.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. Last quarter saw a ~40% stake increase at prices between ~$111 and ~$131. The stock currently trades at ~$122 and the stake is at 1.64% of the portfolio. This quarter saw a marginal increase.Axalta Coating (AXTA): The 1.60% AXTA stake was built over the last two quarters at prices between $26.75 and $33.75 and the stock currently trades at ~$31.MSG Networks (MSGN): The MSG Networks position goes back to 2011 when the company was called Madison Square Garden. It was established at prices between $6.75 and $8.50. 2013 saw a one-third selling at prices between $13.50 and $19. Following the Madison Square Garden split-off in 2015, the position was increased from ~1.6M shares to almost 9M shares by 2017 at prices between ~$15 and ~$26. Next year saw a ~23% reduction at prices between ~$19 and ~$27 while 2019 saw a similar increase at prices between ~$14 and ~$25. There was a ~15% selling last quarter at prices between ~$15 and ~$21 while this quarter there was a ~25% stake increase. The stake is at 1.46% of the portfolio.Note: MSG Entertainment merged with MSG Networks in an all-stock (0.172 shares of MSGE for each MSGN held) deal that closed last month.ViacomCBS Inc. (VIAC) previously CBS Corporation: The original CBS position goes back to 2006 when around 6.2M shares were purchased at prices between $24 and $32. The position size peaked at over 13M shares in 2008. That year saw a ~175% stake increase at prices between $5 and $25. Last December, CBS Corporation merged with Viacom to form ViacomCBS. Ariel Investments also had a position in Viacom for which they got shares in the combined business in the ratio 1:0.59625. Including that, Q4 2019 saw a minor stake increase. There was a ~55% stake increase in Q1 2020 at prices between ~$11 and ~$42. Last three quarters saw a ~88% selling at prices between ~$22 and ~$100 while this quarter saw an about turn: ~300% stake increase at prices between ~$38 and ~$45. The stock is currently at ~$40 and the stake is at 1.26% of the portfolio.nVent Electric (NVT): NVT is a 1.12% of the portfolio stake purchased over the last two quarters at prices between ~$22 and ~$33 and the stock currently trades at $34.51.Adtalem Global Education (ATGE), Affiliated Managers Group (AMG), Brink’s Co (BCO), CBRE Group (CBRE), Cardinal Health (CAH), Credicorp Ltd. (BAP), Janus Henderson Group (JHG), Keysight Technologies (KEYS), Korn Ferry (KFY), Knowles Corp (KN), Littelfuse Inc. (LFUS), Masco Corp. (MAS), OneSpaWorld Holdings (OSW), Simpson Manufacturing (SSD), Tegna Inc. (TGNA), and Walgreens Boots Alliance (WBA): These small (less than ~1.5% of the portfolio each) stakes were increased during the quarter.Note: Ariel Investments have significant ownership stakes in the following businesses: Knowles Corp and OneSpaWorld.Stake Decreases:Baidu Inc. (BIDU): BIDU is currently the top position at 4.44% 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. Last quarter saw a ~18% selling at prices between ~$204 and ~$340. That was followed with a minor ~4% trimming this quarter. The stock currently trades at ~$153.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. Last quarter saw another ~15% stake increase at prices between ~$79 and ~$91 while this quarter there was a ~20% selling at prices between ~$88 and ~$101. The stock currently trades at ~$103 and it is currently the second largest position at 3.73% of the portfolio.Microsoft Corp (MSFT): MSFT is a top five position at 3.04% 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 six quarters saw another ~43% selling at prices between ~$137 and ~$270. The stock currently trades at ~$304. They are harvesting gains.Interpublic Group (IPG): The ~3% 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. Since then, the stake has wavered. Recent activity follows: 2018 saw a ~20% selling at prices between $20 and $25. 2019 had seen a ~40% stake increase at prices between $19.50 and $24. The stock currently trades at $36.54. Last six quarters have seen only minor adjustments.Envista Holdings (NVST): The 2.50% 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 $42.74. Last four quarters have seen only minor adjustments.Snap-On Inc. (SNA): SNA is a 2.11% 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 ~$226. Last few years have seen only minor adjustments.Laboratory Corp (LH): LH is a 1.79% 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. Last five years had seen consistent selling. The stake was reduced by ~70% over that period at prices between ~$105 and ~$215. The stock currently trades at ~$303. Last two quarters have seen only minor adjustments.Gilead Sciences (GILD): A very small stake in GILD was first purchased in 2012. The position had seen consistent increases every year since. 2014-2015 and 2017 saw bulk buying at prices between ~$65 and ~$120. There was a ~40% stake increase in Q3 2020 at prices between ~$62 and ~$78. That was followed with a ~15% further increase next quarter. Last two quarters saw a similar reduction. The stock currently trades at ~$72 and the stake is at 1.62% of the portfolio.Aflac Inc. (AFL), Amdocs Ltd. (DOX), Berkshire Hathaway (BRK.B), BorgWarner Inc. (BWA), Charles Schwab (SCHW), Check Point Software (CHPK), Core Laboratories (CLB), Charles River Laboratories (CRL), Goldman Sachs (GS), Johnson & Johnson (JNJ), Meredith Corp (MDP), NetApp Inc. (NTAP), Stanley Black & Decker (SWK), US Silica (SLCA), Vail Resorts (MTN), Verizon Communications (VZ), Zebra Technology (ZBRA), and Zimmer Biomet Holdings (ZBH): These small (less than ~1.5% of the portfolio each) stakes were reduced this quarter.Note: Ariel Investments have significant ownership stakes in the following businesses: Meredith Corp and US Silica Holdings.Kept Steady:None.Note: Although the position sizes relative to the 13F portfolio are very small, Ariel Investments have significant ownership stakes in the following small-cap businesses: 180 degree capital (TURN), Ballantyne Strong (BTN), GSI Technology (GSIT), and Mind Technology (MIND).Below is a spreadsheet that shows the changes to John Rogers’ Ariel Investments 13F portfolio holdings as of Q2 2021:Source: John Vincent. Data constructed from Ariel Investments’ 13F filings for Q1 2021 and Q2 2021.Regulatory filings from 2/22/2021 thru 6/25/2021: 13G/As – 4/12: 180 degree digital – TURN -~179K shares – 1.7% of business,  US Silica – SLCA – 5.26M shares – 7.1% of business.  13G/As – 3/10: RealNetworks- RNWK – 617K shares – 1.6% of business, Mind Technology – MIND – 1.77M shares – 14.5% of business, Ballantyne Strong – BTN – 867K shares – 4.8% of business."