January 1, 2005
Inspiring Black Investors
At 46, John W. Rogers Jr. is a master wealth builder. At such a young age, you might think this shrewd fund manager is unworthy of being called an investment legend. But his entrepreneurial roots run deep. In the 1910s, Rogers’ grandfather J.B. Stradford owned a 65-room hotel, a savings and loan firm, and other real estate in Tulsa, Oklahoma — a thriving community dubbed the “Black Wall Street.” During the Tulsa Race Riot of 1921, roughly 10,000 armed whites looted and burned down this early model of black affluence.
Almost a century later, his grandson is one of the most powerful blacks on Wall Street. In 1983, Rogers’ asset management firm, Ariel Capital Management, launched the first family of equity mutual funds managed by African Americans. Along the way, Rogers developed a novel brand of value investing that produced blockbuster returns for millions of institutional and individual investors. And this visionary didn’t stop there. He created the first and only survey, in partnership with Charles Schwab & Co., to compare investing habits of African Americans and whites.
Over the past two decades, Rogers has boosted his clients’ net worth through a philosophy based on an old Aesop fable: Slow and steady wins the race. That attitude and some rather astute stock picking — identifying out-of-favor or undiscovered small and mid-cap companies that became investment gems — has taken Ariel from a newsletter to the No. 1 firm on the BE ASSET MANAGERS list with more than $16 billion in assets under management. And throughout the years, Rogers has maintained his laser-beam focus on performance.
As of Oct. 31, 2004, his flagship funds, Ariel and Ariel Appreciation, received four-star ratings from Morningstar and gained recognition from Lipper Analytical Services in the areas of capital preservation and total return. As of Sept. 30, 2004, the average annual five-year returns for Ariel Fund and Ariel Appreciation Fund were 14.70% and 11.14%, respectively.
Rogers has been a student of the financial markets since the age of 12. On his birthday, his father converted him into an active investor through the gift of stock. For the next six years, while his friends received the usual birthday and Christmas presents, the budding asset manager obtained securities. By 18, he was fully managing his holdings.
After college, Rogers worked as an analyst for a Chicago brokerage for two years before launching Ariel. Only 24 at the time, he was ready to take the entrepreneurial plunge.
In 1983, he developed a newsletter, The Patient Investor, which described his stock picks, and arranged for several clients to invest $500,000 in the Ariel Fund. By 1986, it had grown to $2 million. Rogers brought on Calvert Group Inc., a financial services company, to serve as the distributor and transfer agent. But eight years later, in a bold move to gain independence, he paid $4 million as part of a separation agreement with Calvert and assumed responsibility for all of the fund’s operations. “We went from managing $2.3 billion to $1.1 billion over a short period of time,