Ariel Investments' John Rogers: 'America always bounced back, stay patient'

Ariel Investments Co-CEO and Chairman John Rogers joins Yahoo Finance's Alexis Christoforous and Brian Sozzi to discuss what he says is the 'most stunning, deepest, most heart-wrenching' crisis that he's seen in his 37 years since he began the Ariel fund. Rogers also shares what the fund is investing in and his outlook for the markets.

Video Transcript

BRIAN SOZZI: Our next guest has seen it. He started Ariel Investments nearly 38 years ago. That is John Rogers. He is chairman and co-CEO of Ariel Investments. John, good to speak with you. Thanks for taking some time this morning. You've seen a lot of financial crises. What do you-- where do you make it-- what do you make out of the cycle we're in now? And where do you see value in this market?

JOHN ROGERS: Well, you're right. We have seen a lot of crises over the 37 years of Ariel's existence, but this has been the most stunning, you know, the deepest, sort of the most heart wrenching that I've been through, but as Warren Buffett talked about this weekend, the America that we have, the magic that we have in America always brings us back from the precipice. And so we're in there buying. We're in there leaning in, looking for opportunities. And it's been a great opportunity to find some iconic brands that have really gotten hit.

Madison Square Garden Entertainment that owns Madison Square Garden, that iconic part of America-- we bought Vail resorts. You know, we think there's no substitute for Vail. And it's just been a great time to be able to add to wonderful businesses like that.

BRIAN SOZZI: John, have you started kicking the tires on any of these cruise lines. Now, I just-- I talked with Carnival's CEO last Friday, and he said they're-- they're looking to raise a good amount of debt, but he's-- came away hopeful that they might begin sailing before year end. Have you got any interest in these cruise lines?

JOHN ROGERS: You know, we already have a modest exposure. Royal Caribbean was one of our best stocks coming out of the financial crisis and did extraordinarily well. You know, Richard Fain is-- is a terrific, terrific CEO. Donald Arnold's a very good CEO at Carnival.

So we have a modest exposure. The one thing we've added to the most, though, has been one spa, which does the spa treatments for passengers on all the cruise lines. They have about a 90% market share. It's a very asset light business, unlike the cruise lines. That's sort of an asset heavy business. So one spa's been our way of adding to the sector without taking some of the overall risk of the major-- major cruise lines.

ALEXIS CHRISTOFOROUS: I also love your take on media companies right now, John. You have the Viacom/CBS merger happening, I guess, [INAUDIBLE] before this pandemic really hit, but do you think that they're on-- they're on track for good things post this pandemic? We know that advertising has taken a hit. Hollywood has been shut down. What do you make of the media companies right now?

JOHN ROGERS: You know, we're still optimistic longer term. We think clearly right now, as you suggest, you know, advertising has been devastated in this environment. But at the same time, content matters, and companies like Viacom, CBS have extraordinary, extraordinary content through Showtime, through Paramount, through all the brands that Viacom brought along, from Nickelodeon, et cetera. So we think, ultimately, whether people are actually tuning in always to the Viacom stations, they can sell their content to all the others-- most of the other live streaming businesses.

So we think that, over time, these companies will work out. We also think the local news is a powerful, powerful engine today, especially with all the political advertising that's going to continue to come, and it's going to grow as we move into the fall. So companies like Tegna, and Meredith that have local broadcasting stations we think will do quite well once this-- once we get past this COVID crisis.

BRIAN SOZZI: John, I've always known you to be very plugged in to corporate America. You're still on the McDonald's board, but as you take a step back here, what are-- what is one biggest concern that you're hearing from leaders in corporate America in moving beyond this crisis?

JOHN ROGERS: You know, in the boards that I'm in I think people are concerned about the virus coming back in the fall, and, you know, the worry that maybe all the things you do to get things back on track will be derailed in that period. And you know, waiting anxiously for the vaccine-- I think that's been the sort of the theme that I've been hearing-- is that-- you know, and also the theme is that people aren't going to come back as fast as maybe a lot of us have been hoping and that we have to sort of be cautiously conservative, make sure we have the balance sheet-- balance sheet strength to weather the storm, and just prepare for the worst, even though hopefully the worst doesn't happen.

ALEXIS CHRISTOFOROUS: You know, John you started this fund way back in 1983, and you lived through lots of financial downturns and upswings. You say it's really important to remain patient right now. What are you telling clients? How can they remain patient during such an uncertain, anxiety ridden time?

JOHN ROGERS: You know, I just remind people-- you know, it's-- you know, Warren talked about this weekend that I referred to earlier, but he talks about it every year, how, in the last-- last century, we had a great pandemic in 1918. We had two world wars. We had the Vietnam War, many, many recessions. You know, horrific things happened, but America always bounced back, and the market always marched higher.

And so that's why I always tell our investors, just look out over the horizon, stay the course, be patient. You know, believe in slow and steady wins the race. And it's always worked. And you know, it's great to be-- to hear it being reinforced this weekend by the oracle of Omaha, and so I think that gets people-- when they sort of look back with that historical perspective, people are able to be more patient and understand that it-- it works if you can stick with it and lean in during the tough times.

BRIAN SOZZI: John, based on what you did hear from Warren Buffett this past weekend-- and I understand there are-- there are sectors in this market-- there are opportunities, potentially, but do you think he indicated some short term top in the market?

JOHN ROGERS: You know, he didn't seem to have quite as, you know-- you know, he was being very cautious, but he constantly reminded us that no one knows where the market's going to go in the short term, but he also was very clear that certain sectors are going to be profoundly impacted. The airlines being the number one, but I think he was also sort of alluding to the travel area will be tough. And so I would be somewhat concerned about business travel coming back the way it used to be, and therefore it may be you don't have the same kind of hotel occupancy that we've seen in the past, because as we know, businesses drive hotel occupancy at many, many of the major chains. So I think he was alluding to certain sectors really will have a profoundly difficult time coming back to normal.

BRIAN SOZZI: All right, let's leave it there. John Rogers, Ariel Investments chairman, co-CEO, and chief investment officer. I appreciate you taking the time, and please do stay safe out there.

JOHN ROGERS: Well, thank you.