Fund manager takes a liking to companies in Baltimore

February 04, 2005|By Bill Atkinson

JOHN ROGERS wasn't born here, didn't go to school here, didn't even set foot here for most of his life. But from 700 miles away, he sees something special in Baltimore that many people here don't.

Sure, he likes the Inner Harbor, the small-town feel, the city's rich history. But Rogers, chairman and chief executive of mutual fund adviser Ariel Capital Management in Chicago, likes something even better - Baltimore's companies.

He likes them so much he's invested about $700 million into three local businesses: McCormick, T. Rowe Price and Black & Decker. Plus he had a stake in the Rouse Co. worth $694 million when it was bought out last fall.

As of September, his group, which has $21 billion in mutual funds and private accounts, was the sixth-largest shareholder in Black & Decker (more than 4 percent), the third-largest in Price (2.8 percent) and fourth-largest in McCormick (3.9 percent).

His first investment here was in spice and flavor maker McCormick in 1986, then Black & Decker in 1991, Rouse in 1992 and Price in 1999. And it's no coincidence.

"Fifteen to 20 years from now they will be out there chugging along, growing faster than the overall market, doing things the right way," he said.

"They really want to be good at what they do," Rogers said. "These are people who care about their customers. When you walk into McCormick and you smell the spices and you ... hear the history ... this is something to be treasured and something to be valued."

Rogers isn't certain how Baltimore popped up on his radar. He doesn't remember visiting before he started investing here.

It might have helped that one of his portfolio managers, Franklin Morton, used to work at Alex. Brown, but he left Baltimore about 14 years ago. The company's president, Mellody Hobson, worked a summer as an intern at T. Rowe Price, but that was long ago, too.

He thinks he became interested in companies here by researching them and looking at what other investors were putting their money into.

Now, when he visits the city about twice a year, he is always looking for new companies in town to invest in. "We like it so much we do feel like it is a good place to search for ideas," Rogers said.

He likes Baltimore companies' innovation, ingenuity and strong financials.

Black & Decker, the largest maker of power tools and accessories, revolutionized the industry with the first portable power drill in 1916. It later unveiled the Dustbuster and SnakeLight, two big hits with consumers. The company had record earnings last year, and its stock has risen 63 percent in the past 12 months to $83.42.

Price, founded in 1937, has become one of the largest mutual fund companies in the country. Its straight-laced, conservative approach has kept it out of the industry scandal and on a rapid growth pace. Shares are up nearly 13.6 percent in the past 12 months to $59.20.

McCormick, the granddaddy of the three in its 116th year, is still aggressively expanding with acquisitions. It racked up record sales and earnings last year, and the stock is up 25 percent in the past 12 months to $37.57.

Rogers invested heavily in Rouse, too, buying the stock at about $15 a share in 1992, and cleaning up when the company sold last summer for $67.50.

Rogers thinks the companies feed off each other's successes.

"If you have a leadership group that sets high standards it helps encourage others to meet those standards," Rogers said. "I think when those guys look around they see the kind of legacy that T. Rowe Price himself has left or a Jim Rouse. They can see that kind of leadership of people who did things the right way, and it pushes them to do things the right way."

Rogers kicks himself for not jumping on another Baltimore company - Legg Mason. Legg's shares are up 30 percent in the past 12 months to $76.68. They're too rich for Rogers, who picks up stocks when they are cheap.

"I feel dumb that I missed the stock," Rogers said.

Bill Atkinson's column runs Tuesdays and Fridays. Contact him at 410-332-6961 or by e-mail at bill.atkinson@balt

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