NVESTMENT STRATEGY AND APPROACH
Ariel Focus Fund seeks long-term capital appreciation by investing primarily in common stocks of companies with market capitalizations in excess of $10 billion measured at the time of purchase. The Fund invests in undervalued companies that show strong potential for growth. To capture anticipated growth, the Fund holds investments for a relatively long period of time – generally five years.

Our Approach to Investing
Our investment philosophy depends upon three interrelated tenets: patience, focus, and independent thinking, which drive our contrarian approach. Our divergence from conventional wisdom allows us to add value by taking advantage of the market’s few and small pockets of inefficiency.

A Patient View
“Time is the friend of the wonderful company, the enemy of the mediocre.” — Warren Buffett

Compels us to wait for the perfect pitch—differentiated companies with strong cash flows, low debt, high quality products or services, significant barriers to entry and low reinvestment requirements.
Allows us to take a long-term view and look past short-term noise with a 3-5 year time horizon in mind.
Permits us to use the market’s short-term thinking to our advantage since our longer term approach allows us to be opportunistic as price dislocations arise.
Enables us to take our time to research a name and wait as long as necessary for it to possess the margin of safety we require.
Leads us to build extensive third party networks that inform our stock picking.

A Focused Approach
“Invest within your circle of competence.” — Warren Buffett

Allows us to build expertise and accumulate deep knowledge.
Augments our conviction, especially during crunch time when it matters most.
Enables us to learn from our mistakes and make fewer of them.
Leads us to isolate the key issues of importance to a company in the midst of the market noise.
Results in our portfolio concentration in a limited number of names and a limited number of industries.
Allows us to build and cultivate our third–party sources more effectively.
We don’t own a little bit of everything because we can’t know everything—we choose to go deep instead of broad.

A Team of Independent Thinkers
“If you buy the same stocks as everyone else, you get the same results.” — Sir John Templeton

Encourages us to buy out of favor, misunderstood and ignored stocks.
Compels us to buy when others are selling and to sell when others are buying.
Leads us to perform our own original, proprietary research.
Persuades us to be benchmark agnostic with very different industry weightings.
Permits us to take advantage of market psychology.