In an interview with CNBC, Chairman, co-CEO and CIO of Ariel Investments John Rogers predicts that 2022 is going to be a great year for value. While technology stocks have had a good run, he said he expects that higher interest rates will bring a severe downturn for that sector in the coming months.
When asked how value will work in a high-interest rate environment, Rogers said that the economy is still quite strong. With that momentum continuing, higher rates won’t be enough to slow down that recovery, and undervalued stocks that are selling at such a discount are positioned to do extremely well.
Rogers told CNBC that he foresees more than three rate hikes next year; he and his colleagues have been concerned about inflation for the past few years and they don’t believe it will be transitory. Still, he reiterated that the economy will be able to withstand it.
Asked about some of his top picks, Rogers listed Viacom/CBS, which has tumbled to a 52-week low price of $60.26, as a valuable opportunity, given the continued success of the Paramount+ streaming service and that company insiders are buying their own stock. He also discussed Madison Square Garden Entertainment, which has had a difficult time given the pandemic and the transition to a direct-to-consumer model. But with gaming dollars coming in, and bringing in better advertisers and sponsorships, plus its tremendous real estate value in NYC, the company is well-positioned to have a more positive year than 2021’s disappointments. It’s all part of Ariel’s strategy, Rogers says, of buying more of their favorite companies when they’re on sale.