7 Top Holdings of Ariel Investment's John Rogers

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 |  Includes: CBG, GCI, IPG, JLL, LAZ, MHK, ZBH
by: The Keating Letter

John Rogers started Ariel Investments in 1983 with just $100,000. The firm now manages $5.5 billion and runs four mutual funds: Ariel Fund, Ariel Appreciation Fund, Ariel Focus Fund, and Ariel Discovery Fund. Rogers is the lead portfolio manager for the Ariel Fund and Ariel Appreciation Fund. Ariel Investments is the largest minority-run mutual fund firm. You might recognize Rogers from Forbes Magazine, where he is a regular contributor. You can read his columns here.

Below are the combined seven top holdings from the Ariel Fund and the Ariel Appreciation Fund as of June 30:

Interpublic Group (NYSE:IPG): This $6.1 billion market cap advertising agency is the top holding in the Ariel Fund, constituting 4.1% of the portfolio. It also makes up 3.5% of the Ariel Appreciation Fund. He’s held the company for at least five years, adding to the position as the stock fell all the way below $4 during the economic crisis. Interpublic Group was on J.P. Morgan’s summer rally list in early June. It has a forward P/E of 16 and is near its 52 week highs.

Zimmer Holdings (ZMH): Zimmer Holdings is a newer pick from Rogers. He bought into it in Q2 2009. It makes up 3.6% of the Ariel Fund and 3.9% of the Ariel Appreciations Fund. This medical device manufacturer is also near its 52 week high. Rogers significantly increased his position in the first quarter of this year. Though earnings have been steady but stagnant over the past five years, the company’s book value has grown by 50% and it has a strong balance sheet.

Lazard (NYSE:LAZ): Rogers significantly increased his position in this investment bank in Q1 2010. The stock makes up 3.7% of the Ariel Fund. Just recently Lazard poached a managing director from Greenhill and a managing director from Cowen and company. The stock has a 1.8% yield after raising its dividend earlier this year.

Jones Lang LaSalle (NYSE:JLL): This commercial real estate firm makes up 3.7% of the Ariel Fund and 3.4% of the Ariel Appreciation Fund. Rogers has been a long-time holder of the stock, though he has been trimming his position over the past few years. Noted investor Chuck Royce also holds a significant stake in the company. The company is set to release earnings next week, and analysts are expecting an EPS rise of more than 30%.

Gannett (NYSE:GCI): Gannett is the second largest position in the Ariel Fund, making 3.8% of the net assets. This media company was a big winner for Rogers as he bought more than 17 million shares in the first quarter of 2009 when shares traded for less than $5. They’re now above $13. Gannett announced earnings this past Monday and doubled its quarterly dividend from 4 cents to 8 cents. Shares now yield 2.3%.

CB Richard Ellis Group (NYSE:CBG): This competitor to Jones Lang LaSalle makes up 3.7% of the Ariel Fund. Rogers was a big buyer of the stock in late 2008 and early 2009 as the stock cratered to below $4 per share. He’s ridden it up to where it is now, above $23, though he has trimmed his position over the past year. Analysts are expecting a 50% rise in quarterly EPS and close to that for the year. John Paulson is also a big owner of CB Richard Ellis.

Mohawk Industries (NYSE:MHK): This carpet and floor seller makes up 3.6% of the Ariel Fund. Rogers has been a long-time holder of the stock, going back more than five years. This $3.9 billion market cap company is also a big favorite of value shop Ruane Cunniff, who own more than 12% of the company. Rogers owns more than 4%. The company has rebounded well from the economic crisis after posting a huge loss in 2008. Mohawk currently has a forward P/E of less than 14.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.