As the main consolidator and leading distributor in the landscaping supply industry-with a strong track record of M&A-the company has solid pricing power that allows it to continue to grow margins. Even though “inflation is front and center” in the current environment, SiteOne has largely offset pressures thanks to its large scale and position as a “dominant market leader,” Zhang says. Zhang also likes “long-term compounder” SiteOne Landscape Supply, which is the largest nationwide wholesale distributor of its kind in North America.
“We think there is even more upside ahead next year-it’s not a really well known story yet and future growth hasn’t been fully priced in,” Zhang says. While the bank’s core business remains solid, another “exciting growth engine” is its Signet digital payments platform, a real-time exchange which leverages blockchain technology and gives clients exposure to cryptocurrency. Even as shares rose nearly 120% in 2021, valuations still remain compelling, with Signature Bank trading at a discount to and growing faster than many of its peers. With a favorable backdrop for banks next year amid a rising interest rate environment, that should provide a boost to earnings, Zhang predicts. Zhang likes this New York-based commercial bank, which is set to benefit “not only from a cyclical recovery boost but also exposure to the early innings of a more secular crypto economy.” Signature Bank, which builds “premier relationships” with clients using a unique “single point of contact” and customer-centric approach, has seen massive deposit growth in recent years. YCHARTS Amy ZhangĪlger Mid-Cap Focus Fund: Focused portfolio of around 50 mid-size companies.Ģ021 return: 6%, Average annual return since inception (2019): 31.4% Madison Square Garden Entertainment has had a rough year but Ariel's John Rogers thinks the stock is cheap and poised for a turnaround. Going into next year, Rogers is watching the naming rights for the Vegas Sphere: “You could just see a hot tech company getting naming rights, which is bound to be a huge deal.” The stock has been a poor performer in 2021, however, falling over 37% amid concerns about rising coronavirus cases potentially leading to another shut down of live events. “This will be a big big deal-there will be nothing like it in the world,” he says, adding that if MSGE pull this off, it could franchise the model and build similar venues in other parts of the world including London or Hong Kong. What Rogers is most excited about is the MSG Sphere, the company’s new arena in Las Vegas which is scheduled to open in 2023. Beyond owning New York’s iconic Madison Square Garden, the company has other assets that are not being priced in by the market, including the Rockettes and Radio City, the regional sports network that broadcasts the Knicks and the Rangers and several premium hospitality groups. The Ariel Fund’s cheapest and largest holding currently is Madison Square Garden Entertainment, which sells at over a 50% discount to private market value, according to Rogers. Madison Square Garden Entertainment (MSGE) While the stock peaked at nearly $100 per share earlier this year, it has slumped during the second half of 2021-with Ariel steadily building up a position during that time. With the company making large investments in streaming, Rogers especially likes Paramount+ and is keeping a close eye on the platform’s subscriber growth.
ViacomCBS has a “broader set of content that many of its competitors simply don’t have,” he says, including the likes of streaming service Paramount+, CBS-affiliated stations, Showtime and Pluto TV. While the stock has been “going nowhere for quite a bit of time,” falling over 20% in 2021, he sees great value in the company going into next year.
Rogers likes media and entertainment giant ViacomCBS, which is among the cheapest holdings in the Ariel Fund today.
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