"Tracking John Rogers’ Ariel Investments Portfolio – Q2 2020 Update"
"Ariel Investments’ 13F portfolio value increased from $5.70B to $6.57B this quarter.They added Madison Square Garden Entertainment and increased Baidu & Envista during the quarter.The top three positions are Microsoft, Baidu, and Philip Morris and they add up to ~15% 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 08/14/2020. John Rogers’ 13F portfolio value increased ~15% from $5.70B to $6.57B this quarter. The portfolio is diversified with recent 13F reports showing around 150 positions. There are 63 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 Microsoft Corp, Baidu Inc., Philip Morris, Mattel, and Kennametal. They add up to ~20% 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 2020.Their flag ship mutual fund is the Ariel Fund (ARGFX) incepted in 1986. Ariel Fund has a lifetime annualized return of 10.12% compared to 10.17% for the Russell 2500 Index and 10.29% for the S&P 500 Index. In the most recent 10-year period, it has underperformed the S&P index by a substantial margin: 9.80% vs 13.99%. 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), Nintendo Company (NTDOY), Roche Holding AG (RHHBY), Koninklijke Ahold Delhaize (ADRNY), Nippon Telegraph & Telephone (NTTYY), Michelin (MGDDY), and Snam SpA (SNMRY).New Stakes:Madison Square Garden Entertainment (MSGE) and Core Laboratories (CLB): These are small new stakes established this quarter.Stake Disposals:Quest Diagnostics (DGX): The very small 0.83% DGX stake was disposed this quarter at prices between ~$73 and ~$123. The stock currently trades at ~$113. It was a long-term position that was first purchased in 2012.Stake Increases:Baidu Inc. (BIDU): BIDU is a top-three position at 5% 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. The stock currently trades at ~$125. Last two quarters have seen a ~50% stake increase at prices between ~$84 and ~$145. For investors attempting to follow, BIDU is a good option to consider for further research.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 stock currently trades at $79.47 and it is currently the third largest position at 4.69% of the portfolio. Last two quarters have also seen a ~15% stake increase. For investors attempting to follow, PM is a good option to consider for further research.Mattel Inc. (MAT): The 2.61% 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. Last quarter saw another ~15% stake increase at prices between $7.25 and $14.75. The stock currently trades at $11.86. For investors attempting to follow, MAT is a good option to consider for further research. There was a marginal increase this quarter.Stericycle Inc. (SRCL): SRCL is a 2.49% 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 $62.96. Last year had seen a ~10% trimming. Since then, the activity has been minor.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. 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 $34.40.  Last two quarters have seen only minor adjustments.Note: Ariel Investments have a ~5% ownership stake in Lazard.Berkshire Hathaway (BRK.B): BRK.B is a long-term position first purchased in 2011. Recent activity follows. Last few quarters had seen minor buying and that was followed with a ~25% stake increase this quarter at prices between $169 and $202. The stock is now at ~$218.Envista Holdings (NVST) and Vail Resorts (MTN): These two positions were established last quarter. The ~2% NVST stake was purchased at prices between ~$12 and ~$33 and the stock currently trades at $25.64. There was a ~75% stake increase this quarter at prices between ~$13 and ~$24.50. MTN is a ~1% of the portfolio position established at prices between ~$142 and ~$252 and it is now at ~$219. This quarter saw a ~20% stake increase at prices between ~$132 and ~$207.Johnson & Johnson (JNJ): The ~2% JNJ position was established in 2015. The stake has stayed remarkably steady since. Last quarter saw a ~9% trimming while this quarter there was a ~4% increase. The stock currently trades at $147.Nielsen Holdings (NLSN): The 1.72% 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. The stock currently trades well below the low end of their purchase price ranges at $15.47. Last two quarters have seen only minor adjustments.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. The stock is currently at $9.64 and the stake is at 1.41% of the portfolio. Last two quarters saw a minor increase.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 ~$106. There was marginal trimming this quarter.Affiliated Managers Group (AMG), Amdocs Ltd. (DOX), BOK Financial (BOKF), CBRE Group (CBRE), Goldman Sachs (GS), Janus Henderson Group (JHG), Knowles Corp (KN), Littelfuse Inc. (LFUS), Meredith Corp (MDP), Mohawk Industries (MHK), Stanley Black & Decker (SWK), Tegna Inc. (TGNA), and Zimmer Biomet Holdings (ZBH): These small (less than ~1.5% of the portfolio each) positions were increased this 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. Recent activity follows: 2019 had seen a ~22% reduction at prices between ~$100 and $160. Last two quarters saw another ~22% selling at prices between ~$135 and ~$205. The stock currently trades at ~$203. They are harvesting gains.Kennametal Inc. (KMT): KMT is a 2.54% of the portfolio position. It was established in 2014 at prices between $34 and $52. The position had seen minor buying over the years. Last quarter saw a ~15% stake increase at prices between $15 and $37. The stock currently trades at $33.43. There was a ~10% trimming this quarter.Note: Ariel Investments has a ~7% ownership stake in Kennametal Inc.Interpublic Group (IPG): The 2.36% 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 year had seen a ~40% stake increase at prices between $19.50 and $24. The stock currently trades at $18.29. Last two quarters have seen only minor adjustments.First American Financial (FAF): FAF is a 2.31% 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. Last quarter also saw a ~10% trimming. The stock is now at $52.88. There was a marginal reduction this quarter.KKR & Company (KKR): KKR is a 2.19% 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. Last two quarters saw a ~22% selling at prices between $18.50 and $34. The stock currently trades at $35.40.Northern Trust (NTRS): NTRS is a 2.19% 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 saw a minor increase. The stock currently trades at $82.90. There was a ~6% trimming this quarter.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. The stock currently trades at $65.04 and it is at 2.17% of the portfolio. Last quarter saw a ~6% stake increase while this quarter there was a ~30% reduction at prices between $70 and $84.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 last quarter at prices between ~$11 and ~$42. The stock is currently at $30.26 and the stake is at 2.15% of the portfolio. This quarter saw marginal trimming.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 ~$149. Last two quarters have seen only minor adjustments.Laboratory Corp (LH): LH is a 1.89% 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 ~$183. Last two quarters have also seen a ~17% trimming.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. Last quarter saw another ~30% selling at prices between ~$96 and ~$119. The stock currently trades at ~$110 and the stake is at 1.73% of the portfolio. There was a marginal reduction this quarter.Adtalem Global Education (ATGE), Aflac Inc. (AFL), Bio-Rad Laboratories (BIO), BorgWarner Inc. (BWA), Cardinal Health (CAH), CarMax Inc. (KMX), Charles River Laboratories (CRL), China Mobile (CHL), EOG Resources (EOG), GlaxoSmithKline plc (GSK), Generac Holdings (GNRC), Houlihan Lokey (HLI), Keysight Technologies (KEYS), Masco Corp. (MAS), Molson Coors (TAP), Nokia Corp (NOK), Omnicom Group (OMC), Progressive Corp (PGR), Royal Caribbean Cruises (RCL), Simpson Manufacturing (SSD), The Madison Square Garden Sports (MSGS), Verizon Communications (VZ), Willis Towers Watson (WLTW), and Zebra Technology (ZBRA): These small positions (less than ~1.5% 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), Ballantyne Strong (BTN), Brink’s Co (BCO), Capital Southwest (CSWC), Cumberland Pharma (CPIX), Cowen Inc. (COWN), Century Casinos (CNTY), EMCORE (EMKR), GAIA Inc. (GAIA), Glassbridge Enterprises (GLAE), GSI Technology (GSIT), Kindred Biosciences (KIN), MTS Systems (MTSC), 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 Q2 2020:Regulatory filings thru 6/14/2020: 13G/A – 6/10 – RNWK – 3.45M shares - ~9% of business."