John Rogers, successful investor and industry titan, discusses his formative experiences, his investment philosophy focused on patience and long-term thinking, and his roles on corporate boards where he emphasizes the importance of diversity and equal opportunities for minority businesses.
Long-term thinking and contrarian investing can lead to success in value investing.
Building a strong network and seeking insights from various sources is critical for investment success.
Engaging in social issues can have a positive impact on society and attract talented individuals to organizations.
Deep dives
Early career and investment principles
John Rogers began his career with a passion for value investing and learned from thought leaders like Warren Buffett and John Train. He emphasized long-term thinking, believing in the efficiency of markets but recognizing opportunities for contrarian investing during periods of market irrationality. He also stressed the importance of building a strong network and constantly seeking insights from various sources. Rogers highlighted the value of a patient and disciplined approach to investing, using discounted cash flow analysis and a proprietary debt rating system to find undervalued companies. He also emphasized the need for a clear plan to win and thorough company research.
Lessons from Marked Volatility
Throughout his 40-year career, Rogers witnessed significant market events, reinforcing the importance of contrarian thinking and having a long-term perspective. He learned from Warren Buffett that capitalism and democracy are resilient, despite facing crisis after crisis. Rogers also embraced principles from behavioral finance, recognizing the impact of psychology on market behavior and staying aware of behavioral biases. The focus on disciplined questioning and challenging assumptions within his team helped improve decision-making. Rogers emphasized the value of capital allocation, advocating for buybacks only when stocks are significantly undervalued and maintaining a strong cash position to navigate economic downturns.
Insights from Board Membership
As a board member, Rogers leverages his investing experience to guide management on capital allocation and strategic decisions. He encourages CEOs to communicate a clear plan to win and surround themselves with thoughtful directors who challenge their assumptions. Rogers also emphasizes being a prudent steward of shareholder capital, advocating for buybacks at a substantial discount to private market value. His board experience allows him to understand the importance of effective corporate governance and effective communication with shareholders.
Investment Process and Idea Generation
The podcast episode discusses the investment process and idea generation for a portfolio. The speaker emphasizes the importance of analysts and portfolio managers having in-depth knowledge of the industries they cover. They rely on these analysts to identify potential investment opportunities and wait for stocks to fall into a valuation range that makes sense. Spinoffs and fresh ideas from new companies are also crucial in generating new investment options. Building a network and staying connected with industry experts and peers is deemed essential for new idea generation. Furthermore, research, reading, and analyzing comparable transactions in the sector are vital in evaluating company valuations and making informed investment decisions.
Lessons from Mistakes and Engaging in Social Issues
The podcast episode delves into the lessons learned from mistakes and the importance of engaging in social issues. When mistakes occur, the speaker describes the process of conducting post-mortems and learning from them. Poor capital allocation decisions and ill-timed acquisitions are identified as common mistakes that companies make. The podcast also highlights the speaker's social engagement and their efforts in promoting diversity and equal opportunities. They discuss the significance of providing minority businesses with opportunities in economically significant sectors. Engaging in social issues not only has a positive impact on society but also attracts talented individuals to the organization. The speaker acknowledges the responsibility to speak up and make a difference and draws inspiration from civil rights leaders and community activists.
John Rogers isn't just a successful investor; he's an industry titan. As the founder of a reputable investment firm, he's made a name for himself with his contrarian value investing strategies. But he's not just a practitioner; he's an educator, avidly reading and contributing to seminal works in investment literature. John’s journey began with an early fascination for finance from his youthful days. A Princeton alumnus, he entered the turbulent waters of the stock market and turned a calamity—the infamous crash of 1987—into a career-defining opportunity. In today's episode, John joins us to discuss his formative experiences, the philosophical underpinning of his investment strategy, and the importance of thinking long-term. We also delve into his roles on various corporate boards, where he weighs in on 401k plans, corporate governance, the pivotal role of diversity in creating equal opportunities for minority businesses, and so much more!
Key Topics:
An overview of John’s professional background (2:15)
John's journey from William Blair to founding Ariel Investments (07:42)
The 1987 market crash as a turning point for Ariel's value investing approach (10:04)
John's philosophy on patient, research-heavy, value-based investing (13:07)
How longevity in markets solidified John's faith in efficiency (19:15)
The mechanics of idea generation at Ariel Investments (23:30)
Ariel's methodology for dissecting investment errors (29:53)
Drawing teamwork and pressure-handling lessons from Coach Carril (35:20)
How board experience informs his investing (37:47)
John's focus on value investing and cautious approach to buybacks (42:20)
Why John is optimistic about The Sphere in Las Vegas and Adelum (46:18)
John's fulfillment from social engagement and its business impact (50:18)
What keeps John up at night and excited about the future (55:48)
