Value Investor John Rogers, Ariel Investments chairman, CEO & CIO, reveals his top stock bets and explains why a “slow and steady” strategy works best in an uncertain political environment. The video and a computer generated transcript are embedded below:
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welcome back to squawk box this morning. markets pulling back after a very strong start to the new year. is slow and steady the right strategy for an uncertain political environment? that’s our question. our what’s working series continues with arrow investment chairman john rogers. the current chairman of president obama’s advisory council on financial capability, and we are twliled to have you here this morning, john. great to be back. so what is working in this environment? or what do you think is going to be working in 2013? well, i think that the housing rate of stocks are going to continue to do very well. warren buffett’s talked about the fact of how important the recovery in the housing market is for the overall economy. jobs get creative because of it. and i think that momentum is going to continue into 2013. okay so let’s go through a couple names. names of companies that you really like. in the housing worlds. we’ve had a lot of success from carpet manufacturers like mohawk and inner face. we also own first american financial which is one of our best performers last year. and we’re looking for any of the companies that have any ties to housing markets. we think that can really have a real impact on our performance in 2013. i see you’re also interested in financial services. what’s the back story? well, you know, that’s a favorite area. warren always talks about investing in the circle of confidence. something that you understand. i serve on a number of investment committees. i run an investment management company about 30 years. so we feel like we know that world really well. so our favorite stocks are some of the alternative investment companies that have really made a difference in more and more investors going to alternatives. subpoenas like lazard i think they do a great job. companies like blackstone or kkr. a huge name in private equity. and janus, a controversial name but we think janus is going to benefit from the economic recovery. let’s walk through some media companies. we work for a media company so i’m happy to see you’re interested in something in this world. but, i don’t think you’re necessarily recommending comcast right this second. you like cbs. cbs has done a wonderful job over the last several years. les moonves, a very powerful ceo, very effective ceo. really made a big difference there. they’ve got great programming. great shows. great content. and at the same time, benefiting by the fact that people are continuing to advertise on television. and you think that holds up when nbc prime-time really kicks into gear? come on. yeah, yeah, i’d give some kind of spread. it’s still the best way to get a mass audience. it really is. newspapers. i hear you got a newspaper company you like. that, you know, i love that. the net has been one of our favorites for a number of years. it’s done very well since the bottom of the market in 2009. does it hold up? it’s held up very well. usa today is doing well. but also there are smalltown newspapers where the local content matters. i think that’s something that’s really been a powerful profit and. is that a long-term play? or you say for yourself i’m going to do this for a year or two, see how it goes or then i might have to get out because i don’t know how sustainable this is. we’re in it for the long run. even after the big run-up, still less than 10 times earnings. has strong cash flows, and they also have television. they have career builder. they have other internet assets. so we think they’re well noised for 2013, 2014. we’re long-term investors. we want to own stocks for the long run. john i appreciate you’re an investor for the long run. over the next two months, however, things may get a little more volatile before they get better. conversation we have often around this table is about the politics at the moment and what’s going on in washington. you have a role in all of that. your sense on how everything’s going to play out and how it’s more importantly going to impact the markets. well, i think that the kind of ups and downs, kind of volatility that we’ve seen over the last several months, it will continue to have some big up days, and some big down days. but in the long run, you know, our capitalist democracy is the best economic system ever invented. even with all of our wars, with all of our problems, we’ll find a way to solve these problems, get this budget crisis solved, and you know, when we look back in 2014 we’ll look back at this as a distant memory and won’t have had any real impact. because there’s a grand bargain? because what happens that does that? and the reason i ask is there’s a sense that we’re now going to have a series of fiscal cliffs in to perpetuity almost. but again, you know, eventually we do find a way to get through our problems. you look out throughout history, you know, and warren talks about this, you know, we get through the oil embargoes. we get through the swineflu. we get through the horrible wars that we’ve had in this country. you know, things that are much more problematic, these short-term man made crises that have happened in the congress. so things will be better as we go forward. and i’m extremely optimistic on the power of america to solve its problems, and do very, very well. okay. john rogers, we’re going to leave it there. we thank you for joining us this morning.