| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.5% | 3.2% | 14.2% |
| 2025 |
|---|
| 14.2% |
Ariel Fund delivered a +3.22% return in Q4 2025, roughly in line with small-cap value benchmarks, capping a strong year with +14.15% annual returns that outperformed both the Russell 2500 Value and Russell 2000 Value indices. The fund benefited from strong performance in live entertainment holdings, particularly Sphere Entertainment and Madison Square Garden Entertainment, driven by robust consumer demand for concerts and live shows. Oil services company Core Laboratories also contributed positively with sequential revenue growth and improved financial positioning. However, headwinds in housing-related names like Mohawk Industries and automotive supplier Gentex weighed on returns. The managers added dental equipment manufacturer Dentsply Sirona during the quarter, viewing the dental market favorably despite near-term challenges. Looking ahead to 2026, the team maintains a measured and cautious view on U.S. equities, citing elevated market volatility and concentration in large-cap stocks as key risks. The fund remains positioned with a disciplined value approach, focusing on companies with strong balance sheets and durable fundamentals to navigate an uncertain environment.
Ariel Fund maintains a disciplined value approach focused on small- and mid-cap companies with robust balance sheets, durable fundamentals, and attractive valuations, positioning to capture upside as market leadership evolves beyond current large-cap concentration.
We enter 2026 with a measured and cautious view on U.S. equities. While moderating inflation and generally resilient corporate fundamentals offer areas of support, markets continue to experience elevated volatility and index performance remains heavily concentrated in a small number of large-cap stocks. Against this backdrop, we remain disciplined and long-term in our approach, grounding our decisions in bottom-up fundamentals rather than macro assumptions. On balance, we believe our portfolios are well-positioned to navigate this environment.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 18 2026 | 2025 Q4 | ATGE, CLB, GNTX, MHK, MSGE, SPHR, XRAY | Autos, Entertainment, healthcare, industrials, Oil Services, small caps, value |
CLB ATGE MHK GNTX XRAY |
Live entertainment companies like Sphere Entertainment and Madison Square Garden Entertainment showed strong performance driven by robust consumer demand for concerts and live shows. The… |
| Oct 15 2025 | 2025 Q3 | MANU, MAT, PBH, PSKY, REZI, SPHR | Artificial Intelligence, Media, small caps, Smart homes, Value rotation | - | Ariel highlights strong small-cap performance amid AI-driven enthusiasm and resilient U.S. growth. The fund benefited from holdings like Sphere Entertainment and Resideo Technologies, while focusing… |
| Jul 17 2025 | 2025 Q2 | ATGE, CLB, LESL, NTRS, SJM, SPHR | cyclicals, Recovery, small caps, valuation, value |
SPHR ATGE NTRS CLB SJM LESL |
The letter reiterates a classic value philosophy amid persistent growth outperformance. Management argues that pessimism around cyclical and smaller companies has created attractive entry points.… |
| Mar 31 2025 | 2025 Q1 | ATGE, BIO, LESL, OSW, PARA, RCL, SJM, SPHR | - | - | - |
| Dec 31 2024 | 2024 Q4 | ATGE, CG, LESL, MHK, MSGE, RCL | - | - | - |
| Sep 30 2024 | 2024 Q3 | BIO, CLB, GNTX, JLL, LAZ, LESL, MHK, MIDD, SRCL | - | - | - |
| Jul 31 2024 | 2024 Q2 | ADT, ATGE, LESL, NVST, RCL, SPHR | - | - | - |
| Apr 15 2024 | 2024 Q1 | ATGE, MHK, MSGE, NVST, PARA, SNA, SPHR | - | - | - |
| Jan 31 2024 | 2023 Q4 | ATGE, CLB, JLL, MAT, RCL | - | - | - |
| Mar 10 2023 | 2023 Q3 | ATGE, GNRC, IPG, LESL, MAT, PBH, SPHR | - | - | - |
| Jun 30 2023 | 2023 Q2 | CBRE, CG, LESL, MSGE, PARA, RCL | - | - | - |
| Mar 31 2023 | 2023 Q1 | BOKF, LESL | - | - | - |
| May 3 2023 | 2022 Q4 | BOKF, CG, ZBRA | - | - | - |
| Jul 12 2022 | 2022 Q3 | GCMG, GNRC, KEYS, MHK, PARA | - | - | - |
| Mar 31 2022 | 2022 Q1 | CLB, LAZ, MAS, MHK, MSGE, PARA, TGNA | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AutosGentex Corporation faced headwinds from mix-shift towards lower-end vehicle production due to tariff impacts in Europe and China. However, the Ford Bronco launch marked an important milestone for Full Display Mirror technology, which remains the company's most reliable growth driver as automakers increasingly adopt advanced technologies. |
Auto Parts Autos Auto Aftermarket Electric Vehicles Auto Dealers |
EntertainmentLive entertainment companies like Sphere Entertainment and Madison Square Garden Entertainment showed strong performance driven by robust consumer demand for concerts and live shows. The success of The Wizard of Oz at Sphere demonstrates the venue's potential for scalable franchise opportunities both domestically and internationally. |
Live Sports Entertainment Media Event Ticketing Venues | |
Oil ServicesCore Laboratories delivered sequential revenue growth propelled by strong global demand for its proprietary services and products. The company strengthened its financial position by reducing leverage to a nine-year low while expanding internationally through acquisitions, positioning for long-term growth in energy development cycles. |
Oil Services Oilfield Services Energy Trading Oil Equipment Completion | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
MediaEntravision was the fund's top performer in Q4, owning 49 television stations and 44 radio stations targeting Hispanic audiences. The company also operates a rapidly growing Advertising Technology & Services segment through Smadex subsidiary. Deregulation in broadcast television and radio should encourage industry consolidation. |
Advertising Media Broadcasting | |
Small CapsThe fund invests in a portfolio of competitively advantaged small and medium-sized businesses, which remained out of favor for most of the quarter. The strategy of owning leading small-cap businesses has been the foundation since inception, delivering 354 basis points of annual outperformance over the benchmark since inception despite recent headwinds. |
Growth Outperformance Benchmark Russell Businesses | |
| 2025 Q2 |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 17, 2025 | Fund Letters | John W. Rogers | SPHR | Sphere Entertainment Co. | Communication Services | Movies & Entertainment | Bull | NYSE | Content, Immersive, leverage, operating leverage, Pricing power, restructuring, Sponsorship, Venue economics | Login |
| Jul 17, 2025 | Fund Letters | John W. Rogers | ATGE | Adtalem Global Education Inc. | Health Care | Education Services | Bull | NYSE | buybacks, Enrollment, Free Cash Flow, Healthcare education, Portfolio simplification, Pricing power, Regulatory risk, ROIC | Login |
| Jul 17, 2025 | Fund Letters | John W. Rogers | NTRS | Northern Trust Corporation | Financials | Asset Management & Custody Banks | Bull | NASDAQ | asset management, Capital strength, Custody, dividend, efficiency, Fee revenue, Re-rating, Technology investment | Login |
| Jul 17, 2025 | Fund Letters | John W. Rogers | CLB | Core Laboratories Inc. | Energy | Oil & Gas Equipment & Services | Bull | NYSE | asset-light, Cycle normalization, EBITDA margins, Free Cash Flow, high-ROIC, International, Offshore, Reservoir optimization | Login |
| Jul 17, 2025 | Fund Letters | John W. Rogers | SJM | The J.M. Smucker Co. | Consumer Staples | Packaged Foods & Meats | Bull | NYSE | Branded staples, Cost synergies, dividend, Free Cash Flow, Hostess, Integration, Margin recovery, Pet snacks | Login |
| Jul 17, 2025 | Fund Letters | John W. Rogers | LESL | Leslie's, Inc. | Consumer Discretionary | Specialty Retail | Bull | NASDAQ | Consumables, Gross margin, Inventory, Loyalty, Omnichannel, Pool care, Specialty retail, turnaround | Login |
| Jan 18, 2026 | Fund Letters | John W. Rogers | CLB | Core Laboratories Inc. | Energy | Oil & Gas Equipment & Services | Bull | New York Stock Exchange | Free cashflow, International, Margins, Oilservices, ROIC | Login |
| Jan 18, 2026 | Fund Letters | John W. Rogers | ATGE | Adtalem Global Education Inc. | Consumer Discretionary | Education Services | Bull | New York Stock Exchange | buybacks, Education, Enrollment, Execution, healthcare | Login |
| Jan 18, 2026 | Fund Letters | John W. Rogers | MHK | Mohawk Industries Inc. | Consumer Discretionary | Household Durables | Bull | New York Stock Exchange | buybacks, Cycles, Housing, Margins, restructuring | Login |
| Jan 18, 2026 | Fund Letters | John W. Rogers | GNTX | Gentex Corporation | Consumer Discretionary | Auto Parts & Equipment | Bull | NASDAQ | Adoption, automotive, Freecashflow, innovation, Margins | Login |
| Jan 18, 2026 | Fund Letters | John W. Rogers | XRAY | Dentsply Sirona Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | Dental, innovation, Margins, Secular, turnaround | Login |
| TICKER | COMMENTARY |
|---|---|
| ATGE | Alternatively, global leader in for-profit education, Adtalem Global Education (ATGE) declined despite delivering a top- and bottom-line earnings beat. Total enrollment remained a bright spot, though growth slowed at Chamberlain due to execution challenges in marketing and conversion. Management reiterated that nursing education demand is strong and expects improvements in the coming few quarters. Meanwhile, fiscal 2026 guidance was reaffirmed, disappointing some investors and prompting profit-taking amid macro concerns. To underscore confidence in long-term growth, management accelerated its remaining share repurchase program and authorized a new buyback. We believe these actions, combined with strong fundamentals in healthcare education, position ATGE for durable growth once near-term execution issues are resolved. |
| CLB | Oil services company, Core Laboratories (CLB) also traded higher after reporting another quarter of sequential revenue growth, propelled by strong global demand for its proprietary services and products. Operating income, margins and EPS improved, while the Company enhanced its international presence through the acquisition of Brazil-based Solintec. CLB also strengthened its financial position by reducing leverage to a nine-year low and returning capital to shareholders through dividends and buybacks. With a strong balance sheet and a disciplined focus on free cash flow, debt reduction and improving return on invested capital, the company is positioning itself for long-term growth. In our view, CLB's global footprint and specialized services offer an attractive way to participate in future energy development cycles. |
| GNTX | Finally, leading supplier of automatic-dimming mirrors for the automotive industry, Gentex Corporation (GNTX) weighed on returns after missing earnings expectations, caused by a mix-shift towards lower end vehicle production, particularly driven by tariff impacts in Europe and China. However, guidance was largely in line and the company maintained its improved gross margin floor. A key positive was the Ford Bronco launch, marking an important milestone for Full Display Mirror (FDM), which remains Gentex's most reliable growth driver. Longer term, we think GNTX is a high-quality niche franchise with strong growth prospects as automakers increasingly adopt its advanced technologies, including next-generation FDM. With a proven track record of innovation, best-in-class margins, and robust free cash flow generation, we believe Gentex is well-positioned to deliver shareholder value over time. |
| MHK | Manufacturer and distributor of floorcovering products, Mohawk Industries, Inc. (MHK) also traded down during the period as housing market headwinds continued to pressure consumer demand, pricing and input costs. While earnings results were relatively in-line, management provided lower near-term guidance versus the Street expectations amid macro uncertainty. We believe MHK remains better positioned than peers, with domestically sourced products and ongoing cost restructuring. Meanwhile, new product momentum is driving mix and share gains in North America and the company increased its buyback authorization, reinforcing confidence in its long-term outlook. |
| MSGE | Madison Square Garden Entertainment was a positive contributor in the quarter. |
| SPHR | Live entertainment, media and technology company, Sphere Entertainment Co. (SPHR) was the top contributor over the period, supported by strengthening business fundamentals due to robust consumer demand for The Wizard of Oz. Financial results continue to ramp as Sphere scales its concert residencies, attracts greater interest in immersive original films and drives higher utilization across show types. We believe the success of The Wizard of Oz will help accelerate discussions with partners for future Spheres, both in the U.S. and internationally. In our view, Sphere's Las Vegas venue and its scalable franchise potential represent a compelling long-term opportunity for growth. |
| XRAY | Also during the quarter, we added Dentsply Sirona (XRAY), a leading global dental manufacturing company, to the portfolio. Since acquiring Sirona Dental in 2016, the company has faced challenges, particularly in its core capital equipment business, which has come under pressure from lower-cost technology alternatives. Despite these headwinds, we view the dental market favorably given its attractive dynamics: steady growth, lower reimbursement risk, and higher out-of-pocket spending compared to other healthcare segments. Management is executing a strategic reset focused on innovative product development and portfolio expansion, operational efficiencies, emerging market growth and bolt-on acquisitions to strengthen competitive positioning. With these initiatives underway, we believe XRAY is well-positioned to capitalize on secular growth trends, improve margins and drive long-term shareholder value. |
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