John Rogers: The Art of Security Selection and Value Investing
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John Rogers on the Art of Security Selection
These days if you talk to people about the stock market, they might talk to you about the effect of the Fed. Or they'll talk about the Mag 7 and AI capex spend. Or they'll extoll the virtues of passive, low-cost investing. It seems like you hear less and less about the art of security selection: Finding cheap diamonds in the rough that have been overlooked by other investors. But some people are still keeping that world alive. John Rogers is the founder and co-CEO of Ariel Investments, and in his primary mutual fund he invests only in mid- and small-cap companies. Recorded live on stage at the Future Proof Festival in Huntington Beach, CA, we talk about his approach. He explains why he believes value investing still works, and the process he uses to select individual names. We also discuss what he looks for and how he researches stock picks. Among other things, he tells us why he's invested in The Sphere (yes, that Sphere in Vegas) as well as the company that makes the McFlurry machines for McDonald's. The transcript has been lightly edited for clarity.
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Ariel Investments' John Rogers on How You Can Still Win With Value Investing
These days if you talk to people about the stock market, they might talk to you about the effect of the Fed. Or they'll talk about the Mag 7 and AI capex spend. Or they'll extoll the virtues of passive, low-cost investing. It seems like you hear less and less about the art of security selection: Finding cheap diamonds in the rough that have been overlooked by other investors. But some people are still keeping that world alive. John Rogers is the founder and co-CEO of Ariel Investments, and in his primary mutual fund he invests only in mid- and small-cap companies. Recorded live on stage at the Future Proof Festival in Huntington Beach, CA, we talk about his approach. He explains why he believes value investing still works, and the process he uses to select individual names. We also discuss what he looks for and how he researches stock picks. Among other things, he tells us why he's invested in The Sphere (yes, that Sphere in Vegas) as well as the company that makes the McFlurry machines for McDonald's.
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John Rogers, founder of Ariel Investments, shares insights on security selection and value investing strategies in a changing market landscape. He emphasizes the importance of patience and thorough research in achieving long-term success.
The Value Investing Maestro
John Rogers, the founder and co-CEO of Ariel Investments, has long been a proponent of value investing. In a recent interview, he shared his insights on the art of security selection and how investors can still find success in today's market
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. With over four decades of experience, Rogers has weathered various market cycles and continues to advocate for a patient, research-driven approach to investing.The Importance of Patience
Rogers emphasizes that patience is crucial in value investing. He argues that many investors make the mistake of constantly checking their portfolios and making frequent trades based on short-term market movements. Instead, he advises investors to take a long-term view, often holding positions for years rather than months
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.Thorough Research: The Key to Success
At the heart of Rogers' investment philosophy is thorough research. He believes that by deeply understanding a company's fundamentals, investors can identify undervalued opportunities that others might overlook. This approach involves analyzing financial statements, industry trends, and competitive landscapes to gain a comprehensive view of a company's potential
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.Adapting to Changing Markets
While Rogers remains committed to value investing principles, he acknowledges that the market landscape has changed significantly over the years. The rise of passive investing and the dominance of growth stocks in recent bull markets have posed challenges for value investors. However, Rogers maintains that opportunities still exist for those willing to do the work
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.Focus on Small and Mid-Cap Stocks
One area where Rogers sees particular promise is in small and mid-cap stocks. He argues that these companies are often overlooked by larger institutional investors and analysts, creating opportunities for diligent value investors to find hidden gems. By focusing on this segment of the market, Rogers believes investors can potentially achieve superior returns over the long term
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The Role of Contrarian Thinking
Rogers is known for his contrarian approach to investing. He often looks for companies that are out of favor with the broader market but have strong fundamentals and potential for turnaround. This strategy requires conviction and the ability to withstand short-term volatility, but Rogers believes it can lead to significant outperformance over time
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.Lessons for Individual Investors
For individual investors looking to apply Rogers' principles, he recommends starting with a thorough understanding of one's own risk tolerance and investment goals. From there, he advises developing a disciplined approach to research and analysis, focusing on companies with strong fundamentals and potential for long-term growth. Above all, Rogers emphasizes the importance of staying the course and not being swayed by short-term market fluctuations
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