The markets are losing it right now in the midst of high-level volatility. This might become an opportunity to salvage reduced stock value. This is the view of Ariel investments’ John Rogers.

Like the Good Old Days

Ariel Investments Chairman said on Wednesday that he is trying to find low-selling stocks. The chairman who spoke at a Bloomberg conference said the stocks should be selling at private-market rates. The companies should also have a strong moat and balance sheets.

He said further that the firm is standing with its tried and trusted principles. The value has not changed over the years, he said.

Rogers’ position is in contrast with that of David Einhorn earlier in the week. The hedge-fund principal said the strategy might no longer be in vogue. He added that a lot of value investors were losing business as a result.

The said strategy was brought into popularity by the lead investors, Benjamin Graham and Warren Buffett. It is about buying stocks with underestimated value in the market. 

It is possible for investors to become hyper-focused on near-term trends, according to Rogers. But those willing to stake out for there to five years might get opportunities. 

Time to Simply Buy More

Rogers said the market has never seen this type of volatility. It goes up and down, the intraday movements and all. It is simply what has never been experienced before this time, he said at the conference.

However, Rogers said he thinks volatility should be everybody’s friend. He said he likes the Madison Square Entertainment Corp which currently sells at more than 70% discounted price. He said it is a rare occurrence at Ariel Investments.

The last time it happened at the firm was around 2008 and 2009. The firm has a fascinating property, he said. People are equally looking forward to resuming sports and concert attendance. 

Rogers equally likes Paramount Global. He cited some recent analyst downgrades of the firm. Everybody disliked the analysis but then, it provides an opportunity for investors, he said.

Stocks of both firms have gone down by nearly 40% this year. This is in comparison with the 25% loss the S&P 500 has seen this year.

If investors are willing to do their homework and buy more of those names, it works out fine in the end. There is, then, more trading because the volatility creates more opportunity for it, he concluded.     

No Comments.