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John Rogers says there are signs of market excess and economic pressure, but he’s optimistic about Oracle and bullish on two much smaller companies.
The chief investor and co-CEO of Ariel Investments, which manages over $13 billion of client assets, told Business Insider there are “some signs of markets getting ahead of themselves.” He pointed to some large-cap growth stocks trading at “astronomical” valuations, and the buzz around cryptocurrencies and Trump Media stock as evidence of “frothiness” and “overenthusiasm.”
Rogers, who founded Ariel in 1983 at age 24, said he wasn’t worried about Oracle’s valuation even after the enterprise-software giant’s stock surged as much as 43% on Wednesday, boosting Oracle’s market value by nearly $300 billion at its peak.
The Nike and New York Times Company director said Oracle is a “real company” that has “created a lot of shareholder value” over the past year. He added that Oracle’s vast size means its stock should be “pretty efficiently priced,” and a flurry of large and lucrative AI contracts should pave the way to “great success.”
Rogers told Business Insider the US economy appears to be in good shape, and if the Federal Reserve cuts interest rates in the coming months as expected, that should help keep it on track.
The fund manager added that the Supreme Court could soon rule that President Donald Trump’s sweeping tariffs this year are illegal and must be rescinded, which would be a “positive backdrop for the markets going forward, too.”
Rogers underscored that many lower-income Americans are “struggling,” a trend that’s been highlighted by fast-food chains such as McDonald’s as well as supermarkets.
But many affluent consumers are still splurging on cruises and live entertainment such as theater shows and sports games, which could “continue to give a nice stable backdrop to our economy,” he said.
They’re still spending partly because they’re feeling flush, Rogers said: “You feel more confident when your stocks are making new highs and you’re doing well in your 401(k).”
Picking stocks
Rogers, a value investor in the mold of Warren Buffett, touted two stocks to Business Insider.
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Madison Square Garden Entertainment has a strong competitive moat because its flagship arena is “truly special,” he said.
MSGE also owns or leases iconic venues including Radio City Music Hall, leaving it “terrifically well positioned to grow, and grow consistently, over time,” Rogers said.
The market veteran said the proposed Penn Station redevelopment was a “bit of a wild card” for the stock, as it could result in one of MSGE’s theaters being bought and the company monetizing the air rights it owns above its crown-jewel venue. The stock also looks cheap as it trades at about a 30% discount to Ariel’s estimate of private market value, he said.
Rogers praised Prestige Consumer Healthcare, which owns many household brands including Chloraseptic, Clear Eyes, and Dramamine. PCH has rejigged its supply chain after enduring disruptive shortages of Clear Eyes, and is working to buy a manufacturing company to avoid future issues.
He also praised the company for becoming more discerning with its acquisitions. Its managers have “got religion” and are being more disciplined in allocating capital, paying off debts, and repurchasing shares, contributing to the company’s long-term value. Once again, Rogers said the stock trades at a 30% discount to its private market value.
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