The Fruits of Discipline

John W. Rogers Jr. and Ariel Capital Management have harvested huge returns through a 'slow and steady' approach to asset management

Every weekday, from his offices on the 29th floor of the AON building in Chicago, John W. Rogers Jr., chairman and CEO of Ariel Capital Management Inc./Ariel Mutual Funds, carefully plans and executes his “slow and steady” revolution. He and his asset management firm have been bucking investment trends on Wall Street for 19 years, managing the Ariel family of mutual funds through an unwavering commitment to the disciplined principles of value investing. They buy strong companies with solid management that have fallen out of favor and hold them until their stock prices climb to the true value.

This philosophy has meant that he has had to endure dry spells when his firm was out of sync with an investment community that didn’t value his approach to stock picking. That is, until now.

During one of the most difficult economic environments in more than a decade, the wisdom of Rogers’ patient approach to investing is bearing fruit. Lipper, the Denver-based mutual fund research firm, recently rated the flagship Ariel Fund (ARGFX), which Rogers manages, the No. 1 small-cap value fund in the country based on performance over the past 15 years. Morningstar, the Chicago-based mutual fund research firm, recently gave Ariel’s mutual funds its top five-star rating for performance.

These funds have performed so well that had you invested in the Ariel Fund or the Ariel Appreciation Fund (CAAPX), which invests in mid-cap stocks, you wouldn’t have felt the effects of the tech wreck and dotcom bomb, the recent recession and bear market, or the market volatility caused by Sept. 11. Lipper Research Analyst Jim Shirley says that as of April 11, 2002, the one-year return on the Ariel Fund was 25.09%, with a three-year average return of 17.62%. The Ariel Appreciation Fund had a one-year return of 25.53%, with a three-year average return of 12.90% for the same period. Those are stellar returns during a period when most mutual funds have been unable to harvest any positive returns.

Moreover, business is booming. The firm’s assets under management grew a bounteous 51.38%, from $5.165 billion in 2000 to $7.819 billion in 2001, making it the No. 1 company on the BE ASSET MANAGERS list. And the firm has already reached the $10 billion mark for 2002. Because of its phenomenal growth and emerging leadership in the investment community, Ariel has been named the 2002 BE Financial Company of the Year.

ROGERS’ SLOW AND STEADY STYLE
For years, the money management firm has managed equity and fixed-income investments for institutional and individual clients. In fact, roughly 75% of the firm’s managed assets have come from the pension funds of government agencies, foundations, public entities, and major corporations like Raytheon and Coca-Cola.

Ariel is driven by Rogers’ style of management. His strategic vision, competitiveness, and passion for precision have taken root in all operations of the firm. He has built the enterprise slowly, handpicking many employees himself while crafting a team culture that breeds loyalty, productivity, and performance. Leaning heavily on the leadership of Vice Chairman and Co-Chief

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