Ariel Appreciation Fund is part of John W. Rogers‘ Ariel Investments. The fund, co-managed by Rogers and Timothy Fidler, has a long term horizon for its investments and believes in bottom-up, fundamental analysis for stock picking. It pays equal attention to risk management to generate superior return on its portfolio. The fund was initiated in 1989 and since then has provided 10.69% in annualized returns, according to a recent letter to investors.
The letter also revealed that in the third quarter, the fund generated returns of 7% and is up by 8.48% year-to-date. In addition, the fund discussed a number of its picks, including BOK Financial Corporation (NASDAQ:BOKF), in which the fund initiated a stake during the third quarter. The fund also discussed the future potential of Kennametal Inc. (NYSE:KMT) and Lazard Ltd (NYSE:LAZ). The letter reported about various setbacks faced by its other investments including J M Smucker Co (NYSE:SJM) and Viacom Inc. (NASDAQ:VIAB).
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Kennametal Inc. (NYSE:KMT) stock appreciated by 48% so far this year, mainly due to a 32% jump registered in the third quarter. The stock also has a healthy dividend yield of 2.82%. Heading into the third quarter, Ariel Investments held 10.39 million shares of Kennametal worth $229.74 million. Of the hedge funds in our database, 20 funds held $344 million worth of Kennametal shares at the end of June. In its letter to investors, Ariel Appreciation Fund stated that Kennametal stock is expected to benefit from the company’s modernization efforts. The company is also consolidating its position by focusing on high-margin clients. Kennametal is looking to make its processes more automated, which will further enhance its profitability by cutting costs, the letter added.
Lazard Ltd (NYSE:LAZ) stock has lost over 15% since the beginning of the year. Ariel held 6.54 million shares of Lazard at the end of June, the stake being valued at $194.75 million. Among the funds we track, 18 funds held $364 million worth of Lazard Ltd’s stock in aggregate at the end of June, having amassed 9.40% of the float. In the letter, Ariel pointed out that Lazard Ltd (NYSE:LAZ) reported better-than-expected results for the second quarter mainly due to net inflows of $453 million. It also reported encouraging restructuring revenue, which made up for its sluggish advisory revenue.