John Rogers Jr. Richard Driehaus. Ralph Wanger.
If you do business in Chicago, their names should be familiar. People have entrusted each of them with billions of dollars. They even might have managed your money without your ever knowing it. (If one had money in the now $20.5 billion Acorn mutual fund between 1970 and 2003, that's Wanger.)
In a new book, Swedish hedge fund manager Magnus Angenfelt has named the three Chicagoans among "The World's 99 Greatest Investors." The book was the perfect excuse to ask the three men about their careers, the risks inherent in the stock-picking business and how they've weathered the financial crisis.
John Rogers Jr.
John Rogers Jr. met his first real swindler on "The Oprah Winfrey Show."
Onstage with Rogers in April 1987 was Barry Minkow, who had taken public a carpet-cleaning company called ZZZZ Best. Minkow's net worth, at age 20, was pegged at more than $100 million on paper, at least.
The two men could not have been more different. The logo for Rogers' investment firm, Ariel, is a turtle. The motto: "Slow and steady wins the race." Minkow, meanwhile, told Winfrey that he intended to "Think big! Be big!" Minkow has been sent to prison twice for fraud. He's there now.
"He was so boastful," Rogers, 55, said. "If you look at the video, it's absolutely hilarious. He talked about hiring his parents. He talked about how much money he was making. So this was to me clearly an obvious fraud, but he'd gotten the company public. He had fooled the auditors. He was on 'Oprah.'"
After the show Rogers said he called up his friend Eric Kuby and advised him to short ZZZZ Best stock.
As of Thursday, Ariel Investments managed more than $8 billion in assets.
Best investment: CBS Corp.
Ariel bought more during the financial crisis. The media company is now among the best performing post-crisis stocks, rising from about $3 per share in 2009 to nearly $60 per share last week. "Our core belief was that Les Moonves was a terrific leader," Rogers said.
Worst investment: Lee Enterprises
Rogers said he missed so much here. He didn't see the coming destruction of the classified advertising market, and he overlooked some of Lee Enterprises' self-inflicted wounds, including the sale of broadcasting stations and the ill-timed purchase of newspaper publisher Pulitzer Inc.
Wished he had bought: NCR Corp., a financial technology company.
Most unusual experience while doing due diligence:
Touring a warehouse of caged rats while researching an investment in Charles River Laboratories. The health care company, among other things, supplies rats for drug testing.
At President Mellody Hobson's urging, Ariel launched a new fund in 2011 that invested in foreign companies. That required the hiring of experienced talent and the opening of a New York office. Rogers said Ariel dipped into its "rainy day fund" to do it.
Scariest moment during the financial crisis: