Chicago, IL: In the first quarter of 2024, Ariel Focus Fund reported a return of +7.45%, falling short of the Russell 1000 Value benchmark’s +8.99% increase and the S&P 500 Index, which rose by +10.56%. The fund’s strategy of focusing on value stocks, particularly those trading at low earnings multiples, led to a performance that lagged behind growth stocks.

One of the fund’s largest holdings, Goldman Sachs Group Inc. (GS), was influenced by advice passed down through generations. The concept of “Buy ’em at one; Sell ’em at two” was shared by the investor’s grandfather, emphasizing the importance of buying bank stocks at 1.0x book value and selling them at twice that value.

Following this principle, Ariel Focus Fund initiated a position in Goldman Sachs in May of 2010 at $145.85 a share, close to the recommended 1.0x book value. Over the years, whenever Goldman traded at or below book value, its stock price tended to increase.

The fund’s portfolio also includes other bank holdings such as BOK Financial Corporation (BOKF) and Bank of America Corporation (BAC) trading near the 1.0x book target. Despite the attractive valuations, there is no guarantee of profitability, as market conditions and external factors can impact stock performance.

During the first quarter, commodity-related holdings like APA Corporation (APA), Barrick Gold Corporation (GOLD), and The Mosaic Company (MOS) detracted from the fund’s performance. Factors such as fluctuating oil prices, gold prices influenced by inflation concerns, and the fertilizer market’s complexities affected the performance of these stocks.

Despite short-term challenges, the fund remains optimistic about the long-term potential of its holdings, especially in the banking and commodity sectors. The fund’s disciplined approach to value investing, guided by timeless principles, aims to deliver long-term returns for investors.

Investing in equity stocks comes with inherent risks, especially when focusing on specific sectors like small- and mid-cap companies. The Ariel Focus Fund’s concentration in certain sectors may lead to increased volatility, impacting overall performance. As markets evolve, the fund continues to adapt its strategy to navigate changing conditions and deliver results for investors.