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Separately Managed Accounts
Ariel Micro-Cap Value
Invests in deeply undervalued micro-cap companies- > Ariel Small Cap Value
Invests in high quality, undervalued small companies
- > Ariel Small/Mid Cap Value
Invests in high quality, undervalued small- and medium-sized companies
- > Ariel Mid Cap Value
Invests in high quality, undervalued medium-sized companies
- > Ariel Focused Value
Invests in a concentrated number of high quality, undervalued medium- and large-sized companies
- > Ariel International Equity (DM)
Invests in undervalued, quality franchises in overseas markets
- > Ariel International Equity (DM/EM)
Invests in undervalued, quality franchises in overseas and emerging markets
- > Ariel Global Equity
Invests in undervalued, quality franchises in markets around the world
Mutual Funds
- > Ariel Fund
Invests in high quality, undervalued small- and medium-sized companies
- > Ariel Appreciation Fund
Invests in high quality, undervalued medium-sized companies
- > Ariel Focus Fund
Invests in a concentrated number of high quality, undervalued companies across all market capitalization ranges
- > Ariel Discovery Fund
Invests in deeply undervalued small companies
- > Ariel International Equity Fund
Invests in undervalued, quality franchises in overseas markets
- > Ariel Global Equity Fund
Invests in undervalued, quality franchises in markets around the world
- Performance
Our patient investment philosophy
A Patient View
"Time is the friend of the wonderful company, the enemy of the mediocre."- Warren Buffett
- Compels us to wait for the perfect pitch - differentiated companies with strong cash flows, low debt, high quality products or services, significant barriers to entry and low reinvestment requirements.
- Allows us to take a long-term view and look past short-term noise with a 3-5 year time horizon in mind.
A Focused Approach
"Invest within your circle of competence." - Warren Buffett- Augments our conviction, especially during crunch time when it matters most.
- Leads us to isolate key issues of importance to a company in the midst of market noise.
- Results in our portfolio concentration in a limited number of names and industries.
A Team of Independent Thinkers
"If you buy the same stocks as everyone else, you get the same results."- Sir John Templeton
- Encourages us to buy out of favor, misunderstood and ignored stocks.
- Leads us to perform our own original, proprietary research.
- Persuades us to be benchmark agnostic with very different industry weightings.
[video] Find out how we use independent thinking in our research process.
Ariel Small Cap Value Tax-Exempt Composite as of April 30, 2013
| Inception date: September 30, 1983 | Annualized | |||||||
| One Month | Three Months | Year To Date | One Year | Three Years | Five Years | Ten Years | Since Inception | |
|---|---|---|---|---|---|---|---|---|
| Gross of Fees | -1.38% | 3.86% | 12.19% | 21.70% | 10.16% | 9.37% | 10.09% | 13.45% |
| Net of Fees | -1.46% | 3.60% | 11.82% | 20.50% | 9.07% | 8.28% | 9.00% | 12.33% |
| Russell 2000® Value Index | -0.10% | 5.25% | 11.52% | 19.71% | 9.58% | 6.60% | 10.28% | 10.94% |
| Russell 2000® Index | -0.37% | 5.38% | 11.98% | 17.69% | 11.25% | 7.27% | 10.47% | 9.02% |
| S&P 500® Index | 1.93% | 7.18% | 12.74% | 16.89% | 12.80% | 5.21% | 7.88% | 10.67% |
Ariel Small Cap Value Tax-Exempt Composite as of March 31, 2013
| Inception date: September 30, 1983 | Annualized | |||||||
| One Month | Three Months | Year To Date | One Year | Three Years | Five Years | Ten Years | Since Inception | |
|---|---|---|---|---|---|---|---|---|
| Gross of Fees | 3.15% | 13.76% | 13.76% | 20.27% | 13.19% | 9.99% | 11.06% | 13.54% |
| Net of Fees | 3.06% | 13.48% | 13.48% | 19.08% | 12.07% | 8.90% | 9.96% | 12.42% |
| Russell 2000® Value Index | 4.16% | 11.63% | 11.63% | 18.09% | 12.12% | 7.29% | 11.29% | 10.98% |
| Russell 2000® Index | 4.62% | 12.39% | 12.39% | 16.30% | 13.45% | 8.24% | 11.52% | 9.06% |
| S&P 500® Index | 3.75% | 10.61% | 10.61% | 13.96% | 12.67% | 5.81% | 8.53% | 10.63% |
Ariel Investments, LLC is a money management firm headquartered in Chicago, Illinois. Taking a long-term view and applying independent thinking to our investment decisions, we span the market cap spectrum from micro to large and cover the globe with our international and global offerings. Ariel claims compliance with the Global Investment Performance Standards (GIPS®). The Ariel Small Cap Value Tax-Exempt Composite seeks long-term capital appreciation by investing in small-sized undervalued companies that show strong potential for growth. The Ariel Small Cap Value Tax-Exempt Composite differs from its benchmark, the Russell 2000® Value Index, with holdings concentrated in fewer sectors. Index returns reflect the reinvestment of income and other earnings. Indexes are unmanaged, and investors cannot invest directly in an index. Performance results are net of transaction costs and reflect the reinvestment of dividends and other earnings. Net returns reflect the deduction of the maximum advisory fee in effect for the respective period, which is currently 1.00% per annum. Actual fees may vary depending on, among other things, the applicable fee schedule and portfolio size. Fee information is available upon request and may also be found in Ariel’s Form ADV, Part 2. Returns are calculated in U.S. dollars. The Ariel Small Cap Value Tax-Exempt Composite has been examined for the periods from October 1, 1983 through December 31, 2012. A copy of the examination report is available upon request. Past performance does not guarantee future results. Investing in small cap stocks is more risky and volatile than investing in large-cap stocks.
Click here to obtain a complete list of composite descriptions or a presentation that adheres to the GIPS standards. You may also contact Krista Rivers at 800-725-0140, or write Ariel Investments, 200 East Randolph Drive, Suite 2900, Chicago, Illinois, 60601.
The Russell 2000® Value Index measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. Russell® is a trademark of Russell Investment Group, which is the source and owner of the Russell Indexes’ trademarks, service marks and copyrights. The S&P 500® Index is the most widely accepted barometer of the market. It includes 500 blue chip, large cap stocks, which together represent about 75% of the total U.S. equities market.
Schedule of Holdings (Representative Portfolio) as of March 31, 2013
| Shares | Security Description | CUSIP | Ticker | Market Price | Market Value | % of Net Assets |
|
|---|---|---|---|---|---|---|---|
 |
|||||||
| 24,700 | Jones Lang LaSalle Inc. | 48020Q107 | JLL | 99.41 | 2,455,427 | 4.9 | |
| 109,900 | Gannett Co., Inc. | 364730101 | GCI | 21.87 | 2,403,513 | 4.8 | |
| 184,100 | Interpublic Group of Cos., Inc. | 460690100 | IPG | 13.03 | 2,398,823 | 4.8 | |
| 92,100 | First American Financial Corp. | 31847R102 | FAF | 25.57 | 2,354,997 | 4.7 | |
| 64,000 | International Speedway Corp. | 460335201 | ISCA | 32.68 | 2,091,520 | 4.2 | |
| 60,800 | Lazard Ltd | G54050102 | LAZ | 34.13 | 2,075,104 | 4.1 | |
| 45,700 | Charles River Laboratories Intl Inc. | 159864107 | CRL | 44.27 | 2,023,139 | 4.0 | |
| 28,700 | Littelfuse, Inc. | 537008104 | LFUS | 67.85 | 1,947,295 | 3.9 | |
| 207,000 | Janus Capital Group Inc. | 47102X105 | JNS | 9.40 | 1,945,800 | 3.9 | |
| 27,900 | Bristow Group Inc. | 110394103 | BRS | 65.94 | 1,839,726 | 3.7 | |
| 30,400 | Madison Square Garden Co. | 55826P100 | MSG | 57.60 | 1,751,040 | 3.5 | |
| 41,700 | Team, Inc. | 878155100 | TISI | 41.07 | 1,712,619 | 3.4 | |
| 31,200 | IDEX Corp. | 45167R104 | IEX | 53.42 | 1,666,704 | 3.3 | |
| 12,700 | Bio-Rad Laboratories, Inc. | 090572207 | BIO | 126.00 | 1,600,200 | 3.2 | |
| 79,000 | Interface, Inc. | 458665304 | TILE | 19.22 | 1,518,380 | 3.0 | |
| 49,500 | Brink's Co. | 109696104 | BCO | 28.26 | 1,398,870 | 2.8 | |
| 79,300 | Mitcham Industries, Inc. | 606501104 | MIND | 16.92 | 1,341,756 | 2.7 | |
| 38,025 | Brady Corp. | 104674106 | BRC | 33.53 | 1,274,978 | 2.5 | |
| 27,600 | Fair Isaac Corp. | 303250104 | FICO | 45.69 | 1,261,044 | 2.5 | |
| 40,000 | Simpson Manufacturing Co., Inc. | 829073105 | SSD | 30.61 | 1,224,400 | 2.4 | |
| 31,500 | Meredith Corp. | 589433101 | MDP | 38.26 | 1,205,190 | 2.4 | |
| 37,500 | DeVry Inc. | 251893103 | DV | 31.75 | 1,190,625 | 2.4 | |
| 27,100 | Contango Oil & Gas Co. | 21075N204 | MCF | 40.09 | 1,086,439 | 2.2 | |
| 15,500 | Anixter Intl Inc. | 035290105 | AXE | 69.92 | 1,083,760 | 2.2 | |
| 74,400 | Blount Intl, Inc. | 095180105 | BLT | 13.38 | 995,472 | 2.0 | |
| 25,900 | Sotheby's | 835898107 | BID | 37.41 | 968,919 | 1.9 | |
| 16,400 | City National Corp. | 178566105 | CYN | 58.91 | 966,124 | 1.9 | |
| 75,500 | Symmetry Medical Inc. | 871546206 | SMA | 11.45 | 864,475 | 1.7 | |
| Cash Balance | CASH | CASH-1 | 1.00 | 683,369 | 1.4 | ||
| 15,500 | HCC Insurance Holdings, Inc. | 404132102 | HCC | 42.03 | 651,465 | 1.3 | |
| 7,100 | Dun & Bradstreet Corp. | 26483E100 | DNB | 83.65 | 593,915 | 1.2 | |
| 3,700 | Middleby Corp. | 596278101 | MIDD | 152.15 | 562,955 | 1.1 | |
| 29,800 | PrivateBancorp, Inc. | 742962103 | PVTB | 18.89 | 562,922 | 1.1 | |
| 15,900 | Matthews Intl Corp. | 577128101 | MATW | 34.92 | 555,164 | 1.1 | |
| 19,900 | WMS Industries Inc. | 929297109 | WMS | 25.21 | 501,679 | 1.0 | |
| 975 | Markel Corp. | 570535104 | MKL | 503.50 | 490,913 | 1.0 | |
| 11,100 | Bob Evans Farms, Inc. | 096761101 | BOBE | 42.62 | 473,082 | 0.9 | |
| 21,900 | Horace Mann Educators Corp. | 440327104 | HMN | 20.85 | 456,615 | 0.9 | |
| Grand Total | $50,178,418 | 100.0% | |||||
The four-part investment process drives us to take a long-term view, focusing on what matters most through independent thought and research.
The Idea: We read extensively, monitor computer screens, meet with industry experts, and stay abreast of former holdings.
The Science: We seek to purchase companies that trade at a 40% discount to the PMV we have calculated, sell for 13x or less forward cash earnings estimates, or both.
The Art: We surround companies to paint a long-term picture and identify what others are missing. The chief tool is our extensive independent verification network — the many experts we know well. We use strategic questioning of company management and outside experts to identify the key issues affecting an industry or company.
The Decision: We generally purchase only a few companies each year so we weigh our options carefully. Typically, key information is captured in a research report. Our research team vets the idea in a vigorous discussion and each senior research team member weighs in. After this step, the lead portfolio manager makes the final purchase decision.
Sector Weightings % (Representative Portfolio) as of March 31, 2013
| Ariel Small Cap Value | Russell 2000 Value | Russell 2000 | S&P 500 | |
|---|---|---|---|---|
| Financial Services | 27.91 | 37.86 | 24.02 | 17.19 |
| Consumer Discretionary | 27.36 | 12.61 | 14.80 | 13.61 |
| Producer Durables | 23.03 | 12.86 | 14.48 | 10.57 |
| Health Care | 9.07 | 4.67 | 12.38 | 12.37 |
| Materials and Processing | 5.54 | 7.09 | 7.76 | 3.78 |
| Energy | 4.91 | 6.02 | 6.00 | 10.93 |
| Technology | 2.19 | 9.95 | 13.34 | 15.65 |
| Utilities | 0.00 | 6.75 | 4.12 | 6.33 |
| Consumer Staples | 0.00 | 2.21 | 3.11 | 9.56 |
> View Historical Sector Diversification
Represents percentage of total equity holdings in the representative portfolio
Portfolio Characteristics (Representative Portfolio) as of March 31, 2013
| Market Capitalization | Ariel Small Cap Value | Russell 2000 Value | Russell 2000 | S&P 500 | |
|---|---|---|---|---|---|
| Market Capitalization | (In billions) | ||||
| Large Capitalization | 64.31 & Above | 0.0 | 0.0 | 0.0 | 48.1 |
| Medium/Large Capitalization | 18.65 -- 64.31 | 0.0 | 0.0 | 0.0 | 31.4 |
| Medium Capitalization | 6.39 -- 18.65 | 0.0 | 0.0 | 0.0 | 18.1 |
| Medium/Small Capitalization | 2.39 -- 6.39 | 42.3 | 12.5 | 18.7 | 2.4 |
| Small Capitalization | 2.39 & Below | 57.7 | 87.5 | 81.3 | 0.0 |
| Dollar-Weighted Average (BIL)* | $2.08 | $1.04 | $1.20 | $58.72 | |
| Valuation Metrics | |||||
| Forward Price/Earnings | 15.6 | 14.9 | 16.4 | 14.0 | |
| Trailing Price/Earnings | 18.7 | 23.3 | 26.3 | 17.0 | |
| Discount to Private Market Value | -15.7 | n/a | n/a | n/a | |
| Fundamentals | |||||
| 5 Yr. Estimated Earnings Growth ** | 12.3 | 10.1 | 12.9 | 10.8 | |
| Interest Coverage Ratio | 6.1 | 4.2 | 5.2 | 7.2 | |
| Portfolio Construction | |||||
| Number of Holdings | 37 | 1,403 | 1,952 | 500 | |
| Turnover | 20.8 | n/a | n/a | n/a | |
> View Historical Portfolio Characteristics
Market Capitalization data, Valuation Metrics, Fundamentals and Number of Holdings are obtained from BNY Mellon. Portfolio Turnover is generated internally through Fiserv APL.
*Market Capitalization is a dollar-weighted average natural log. Using the natural log of each stock’s market capitalization reduces the weight given to the largest companies in a simple averaging process.
The Russell 2000® Value Index measures the performance of the small-cap value segment of the U.S. equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000® Index representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. Russell® is a trademark of Russell Investment Group, which is the source and owner of the Russell Indexes’ trademarks, service marks and copyrights. The S&P 500® Index is the most widely accepted barometer of the market. It includes 500 blue chip, large cap stocks, which together represent about 75% of the total U.S. equities market.
