"Tracking John Rogers’ Ariel Investments Portfolio – Q1 2020 Update"
"Ariel Investments’ 13F portfolio value decreased from $7.97B to $5.70B this quarter.They added Envista and Vail Resorts during the quarter.The top three positions are Philip Morris, Microsoft, and Baidu and they add up to ~14% 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 05/14/2020. John Rogers’ 13F portfolio value decreased ~30% from $7.97B to $5.70B this quarter. The portfolio is diversified with recent 13F reports showing around 150 positions. There are 66 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 Philip Morris, Microsoft Corp, Baidu Inc., Gilead Sciences, and Mattel. They add up to ~20% of the portfolio. Please visit our  Portfolio series to get an idea of their investment philosophy and the fund’s moves during Q4 2019.Their flag ship mutual fund is the Ariel Fund (ARGFX) incepted in 1986. Ariel Fund has produced alpha during its lifetime – 11.02% annualized return compared to 10.72% for the Russell 2500 Index and 10.56% for the S&P 500 Index. It has however underperformed in the most recent 10-year period. 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 Boerse AG (DBOEY), Roche Holding AG (RHHBY), Nintendo Company (NTDOY), Koninklijke Ahold Delhaize (ADRNY), Michelin (MGDDY), NTT Docomo (DCMYY), and Nippon Telegraph & Telephone (NTTYY).New Stakes:Envista Holdings (NVST) and Vail Resorts (MTN): These two new positions were established during the quarter. The 0.91% NVST stake was purchased at prices between ~$12 and ~$33 and the stock currently trades at $19.54. MTN is a 0.81% of the portfolio position established at prices between ~$142 and ~$252 and it is now at ~$184.Stake Disposals:Anixter International (AXE), Fluor Corp (FLR), National Oilwell Varco (NOV), and Pioneer Natural Resources (PNQ): These small (less than ~1% of the portfolio each) stakes were disposed this quarter.Stake Increases: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. Last four quarters had seen another ~20% stake increase at prices between $70 and $91. The stock currently trades at $70.42 and it is currently the top position at 5.36% of the portfolio. This quarter also saw a ~10% stake increase. For investors attempting to follow, PM is a good option to consider for further research.Baidu Inc. (BIDU): BIDU is a top-three position at 3.79% of the 13F 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. This quarter saw another ~20% stake increase at prices between ~$84 and ~$145. The stock currently trades at ~$116.Gilead Sciences (GILD): A very small stake in GILD was first purchased in 2012. The position has seen consistent increases every year since. 2014-2015 and 2017 saw bulk buying at prices between ~$65 and ~$120. The stock currently trades at $73.20 and it is a top five position at 3.50% of the portfolio. This quarter saw a ~6% stake increase.Mattel Inc. (MAT): The 2.72% 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. This quarter saw another ~15% stake increase at prices between $7.25 and $14.75. The stock currently trades at $9.62. For investors attempting to follow, MAT is a good option to consider for further research.Interpublic Group (IPG): The 2.63% 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. Last four quarters had seen a ~40% stake increase at prices between $19.50 and $24. The stock currently trades at $17.28. This quarter saw a marginal further increase.Northern Trust (NTRS): NTRS is a 2.38% 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. Recent activity follows: 2018 saw a ~7% trimming at prices between ~$79 and ~$111 while the last five quarters have seen a minor increase. The stock currently trades at $83.61.Kennametal Inc. (KMT): KMT is a 2.13% of the portfolio position. It was established in 2014 at prices between $34 and $52. The position had seen minor buying over the years. This quarter saw a ~15% stake increase at prices between $15 and $37. The stock currently trades at $27.80.Note: Ariel Investments has a ~8% ownership stake in Kennametal Inc.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 following years saw minor selling while last year there was a ~12% stake increase. The stock currently trades at ~$135. This quarter saw a marginal increase.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 the last four quarters saw a similar increase at prices between ~$14 and ~$25. The stock is currently at $11.29. This quarter saw another ~6% stake increase.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, last quarter saw a minor stake increase. There was a ~55% stake increase this quarter at prices between ~$11 and ~$42. The stock is currently at $22.90 and the stake is at 1.52% of the portfolio.Adtalem Global Education (ATGE), Affiliated Managers Group (AMG), Berkshire Hathaway (BRK.B), BOK Financial (BOKF), BorgWarner Inc. (BWA), Cardinal Health (CAH), EOG Resources (EOG), GlaxoSmithKline plc (GSK), Janus Henderson Group (JHG), Keysight Technologies (KEYS), Knowles Corp (KN), Mohawk Industries (MHK), The Madison Square Garden (MSG), Meredith Corp (MDP), Royal Caribbean Cruises (RCL), US Silica Holdings (SLCA), Verizon Communications (VZ), and Zebra Technology (ZBRA): These small (less than ~1.5% of the portfolio each) positions were increased during the quarter.Stake Decreases:Microsoft Corp (MSFT): MSFT is a top three position at ~5% 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. Since then, the stake has wavered. Recent activity follows: last four quarters had seen a ~22% reduction at prices between ~$100 and $160. This quarter saw another ~15% selling at prices between ~$135 and ~$189. The stock currently trades at ~$188. They are harvesting gains.Stericycle Inc. (SRCL): SRCL is a 2.48% 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. The stock currently trades at $56.75. Last four quarters had seen a ~10% trimming. This quarter also saw similar trimming.First American Financial (FAF): FAF is a 2.40% 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: last four quarters had seen a ~20% selling at prices between ~$45 and ~$64. This quarter also saw a ~10% trimming. The stock is now at $50.38.Lazard Ltd. (LAZ): LAZ is a top-five 2.18% 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. Since then, the stake has remained relatively steady although adjustments were made every quarter. Last year saw a ~15% combined increase at prices between ~$31 and ~$40.50. The stock is now at $28.52.  There was a ~3% trimming this quarter.Note: Ariel Investments have a ~5% ownership stake in Lazard.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. This quarter saw another ~30% selling at prices between ~$96 and ~$119. The stock currently trades at ~$105 and the stake is at 2.15% of the portfolio.KKR & Company (KKR): KKR is a ~2% of the portfolio position purchased in 2011 at prices between $10.50 and $19. The position has remained relatively steady over the years although most quarters have seen minor adjustments. This quarter saw a ~14% reduction. The stock currently trades at $29.15.Johnson & Johnson (JNJ): The ~2% JNJ position was established in 2015. The stake has stayed remarkably steady since. This quarter saw a ~9% trimming. The stock currently trades at $142.Laboratory Corp (LH): LH is a ~2% 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 rebuilt at prices between ~$89 and ~$111. Next year also saw a ~30% stake increase at prices between ~$112 and ~$127. Last four years had seen consistent selling. The stake was reduced by ~50% over that period at prices between ~$103 and $190. The stock currently trades at ~$168. This quarter also saw a ~5% trimming.Nielsen Holdings (NLSN): The ~2% 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 over the last four quarters at prices between $19.50 and $27. The stock currently trades well below the low end of their purchase price ranges at $15.12. This quarter also saw a ~5% trimming.Jones Lang LaSalle (JLL): The 1.42% 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 while the last four quarters saw a combined ~10% stake increase. The stock currently trades at ~$109. There was marginal trimming this quarter.Aflac Inc. (AFL), Amdocs Ltd. (DOX), Bio-Rad Laboratories (BIO), CBRE Group (CBRE), Charles River Laboratories (CRL), China Mobile (CHL), Generac Holdings (GNRC), Houlihan Lokey (HLI), Illinois Tool Works (ITW), Littelfuse Inc. (LFUS), Masco Corp. (MAS), MTS Systems (MTSC), Molson Coors (TAP), Nokia Corp (NOK), Omnicom Group (OMC), Progressive Corp (PGR), Schlumberger Ltd. (SLB), Simpson Manufacturing (SSD), Stanley Black & Decker (SWK), Tegna Inc. (TGNA), Willis Towers Watson (WLTW), Western Union (WU), and Zimmer Biomet Holdings (ZBH): These small positions (less than ~1% of the portfolio each) were reduced during the quarter.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), Acacia Research (ACTG), Alithya Group (ALYA), Ballantyne Strong (BTN), Brink’s Co (BCO), CarMax (KMX), Capital Southwest (CSWC), Cumberland Pharma (CPIX), Cowen Inc. (COWN), Century Casinos (CNTY), Emcore (EMKR), GAIA Inc. (GAIA), GSI Technology (GSIT), Kindred Biosciences (KIN), Lake Industries (LAKE), Lazard Ltd. (LAZ), MTS Systems (MTSC), Mitcham Industries (MIND), Orion Energy (OESX), Perceptron (PRCP), RealNetworks (RNWK), Rubicon Technology (RBCN), Strattec Security (STRT), Synacor (SYNC), and U.S. Silica Holdings (SLCA).Below is a spreadsheet that shows the changes to John Rogers’ Ariel Investments 13F portfolio holdings as of Q1 2020:Regulatory filings thru 3/18/2020: 13G/As – 2/14/2020: KIN – 1.78M shares – 4.6% of business, GLAE – Glassbridge Enterprises – 3883 shars – 15.4% of business, GAIA – 803K shares – 6.4% of business, EMKR – Emcore - 982K shares – 3.4% of business, CVU – CPI Aerostructures – 207K shares – 1.7% of business, CSWC – Capital Southwest – 161K shares – 0.9% of business, CPIX – Cumberland Pharma – 1M shares – 6.7% of business, COWN – Cowen Inc. – 718K shares – 2.5% of business, CNTY – Century Casinos  - 1.2M shares – 4.1% of business, BTN – Ballantyne Strong – 3.37M shares – 23.2% of business, ALOT – Atronova – 340K shares – 4.8% of business, ACTG – Acacia Research – 2.2M shares – 4.4% of business, TURN – 180 degree capital – 2.98M shares – 9.6% of business, STRT – Strattec Security – 230.5K shares – 6.1% of business, SLCA – U.S. Silica Holdings – 10.8M shares – 14.7% of business, RNWK – RealNetworks – 6M shares – 15.8% of business, RBCN – Rubicon Technology – 78K shares – 2.9% of business, PRCP – Perceptron – 1.1M shares – 11.5% of business, OESX – Orion Energy – 436k shares – 1.4% of business, MTSC – MTS Systems – 1.44M shares – 7.5% of business, MSGN – MSG Networks – 8.7M shares – 18.7% of business, MIND – Mitcham Industries – 2.87M shares – 23.6% of business, LAZ – 5.45M shares – 5.2% of business, KMT – Kennametal – 5.75M shares – 6.9% of business. 13G/As – 2/10: LAKE – Lakeland Industries – 139K shares – 1.7% of business, 541K shares – 6.85 of business, 13G/As – 1/10: SYNC – Syancor – 1.34M shares – 3.4% of business, GSIT – GSI Technology – 549K shares – 2.4% of business, 13G/A – 12/10 – ALYA – Alithya Group – 1.04M shares – 2.1% of business."