SCI Exclusives: A Candid Interview with Legendary Fund Manager John W. Rogers, Jr.

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This is the first in a new series of live interviews (SCI Exclusives) undertaken by Small-Cap Institute’s Amanda Gerut, where SCI will be spending time together with renowned investors, capital markets experts, and seasoned small-cap leaders. Though the videos are archived and available for members to review at their leisure, from time to time SCI will also publish excerpts of the interviews – together with some commentary – for the benefit of non-members.

SCI was fortunate to spend time speaking with John W. Rogers, Jr.*, Chairman, Co-CEO, and Chief Investment Officer of Ariel Investments.  Ariel manages in excess of $11 billion and started in 1983 with a core focus on small- and mid-cap companies.

On corporate governance  

We are constantly asked by small-cap officers, directors, and service providers whether corporate governance is something investors care about as much as they read in major business media.  Rather than paraphrase, you can just listen to Mr. Rogers for yourself; pay particular attention to the part where he discusses the nexus between subpar boards and… selling your stock.

On assessing management teams

Part of being a successful small-cap investor is being a forensic observer.  Since so many small-caps aren’t covered by high quality equity research analysts, investors are left to uncover all the value – and risks – on their own.  If you think the term “forensic observer” is a bit overstated, you might think differently when you hear Mr. Rogers discuss who they hire to train their portfolio managers to expertly interview management teams.

There’s a lot more to it than numbers

We all know and appreciate the old adage: “great minds think alike.” 

If you listen to SCI’s interview with Garry Ridge, the high-performing CEO of WD-40, you will hear Mr. Ridge talk about the importance of corporate culture, and the importance of CEOs knowing what they don’t know. 

Now listen to Mr. Rogers, and you’ll immediately assimilate the “great minds.”

Takeaways

Whether it’s your board of directors, your management team, corporate culture, business model, or operating ethics, there is nowhere to hide when you’re a public company.  Sooner or later, savvy investors – like John W. Rogers, Jr. – are going to relentlessly assess every aspect of your company.

We created SCI to educate small-cap officers and directors about what’s on that test, and to help them pass it with flying colors.

* John W. Rogers, Jr.: Chairman, Co-CEO & Chief Investment Officer, Ariel Investments. Lead Portfolio Manager of the Ariel Fund, which he started 30 years ago; Co-Portfolio Manager, Ariel Small Cap Value, Ariel Small Cap Value Concentrated, Ariel Small/Mid Cap Value, Ariel Mid Cap Value and Ariel Appreciation Fund. Mr. Rogers also serves as a director on the boards of McDonald’s, Nike and The New York Times Company and beat Michael Jordan in a one-on-one game at Jordan’s basketball camp in 2003. The video is on YouTube and has been viewed six million times.