Markets worldwide began 2020 on a high note, underscored by broad optimism around an improving global economic outlook and a phase 1 trade deal between the U.S. and China. However, in a swift and sudden reversal, the coronavirus pandemic unleashed massive economic shocks as governments across the globe enacted strict containment policies, which shuttered businesses, halted commerce and imposed “social-distancing” measures confining regional populations to their homes. Uncertainty over the duration of the virus threat and magnitude of its impact prompted policymakers and central banks in the world’s largest economies to deliver fiscal stimulus and monetary relief packages in hopes of easing the damage on Wall Street and Main Street. Amidst this extreme volatility, Ariel Fund traded -35.14% lower during the quarter, trailing the Russell 2500 Value Index and Russell 2500 Index, which returned -34.64% and -29.72%, respectively.

Leading manufacturer of consumer food products, J.M. Smucker Co. (NYSE:SJM) was the top contributor to results in quarter. In the midst of COVID -19, SJM’s staple products were met with high consumer demand. In response, the company began maximizing production at its manufacturing facilities, all of which remained open, to make its most in-demand people and pet products. SJM also expanded the hours of distribution centers so retailers could continually replenish inventories. Additionally, the company enacted substantial measures to help support its employees as well as coronavirus relief efforts for people and pets within the community. At today’s valuation, we continue to see the risk/reward skewed sharply to the upside.Warning! GuruFocus has detected 3 Warning Signs with SJM. Click here to check it out.SJM 30-Year Financial DataThe intrinsic value of SJMPeter Lynch Chart of SJM

Alternative asset manager, KKR & Co. Inc. (NYSE:KKR) also aided relative returns. KKR possess the size and organizational structure to benefit not only from the continued high level of institutional interest in alternative assets, but also from attractive corporate valuations in certain industries and geographies in the midst of historically low interest rates. KKR retains an extensive track record of strong performance across all types of economic and financial conditions and, in our view, should continue generating alpha for its clients post the COVID-19 crisis. Additionally, the company has a record of uncalled commitments and stands ready to take advantage of attractive valuations as it shops for future years of returns.

Moreover, global financial franchise, Northern Trust Corp. (NASDAQ:NTRS) benefitted performance in the quarter. NTRS is a trusted name in private banking and wealth management as well as a leader in the asset servicing industry with over 125 years of history and 25 years of consecutive profits. The bank operates in a favorable industry with a diversified product offering and high barriers to entry. While the macro low interest rate environment and recent Fed rate cuts are pressuring net interest margin and net interest income across the banking industry, NTRS has proven the quality of its franchise and the value of its conservative, operating approach. At current levels, NTRS is trading at a -49% discount to our estimate of private market value.

Alternatively several positions weighed on performance during the period. Global cruise vacation company Royal Caribbean Cruises Ltd. (NYSE:RCL) traded materially lower due to the global pandemic. RCL has voluntarily suspended all cruising, which will have a material impact on its financial results. While pricing and demand may be impaired for short period of time, we believe RCL’s balance sheet will enable the company to weather the storm and recover from this event. As patient, long-term investors, we view the risk/reward to be extremely favorable at current levels.

Shares of ViacomCBS Inc. (NASDAQ:VIAC) also experienced a sharp decline in the quarter, as COVID -19 added to the existing challenge of merger integration efforts. Cancellations in sports programming, softness in ad revenues, production delays, and a disruption in the upfront process will negatively impact near-term financial results. Nonetheless, we believe premium video content is the most valuable part of the media ecosystem. Based on our sum of the parts analysis, VIAC is currently trading -75% below our estimate of private market value. At today’s valuation, we view the risk/reward to be extremely skewed to the upside.

Lastly, television broadcaster and magazine advertiser, Meredith Corporation (NYSE:MDP) traded lower in the quarter, as COVID-19 added to the existing challenge of generating cost synergies from the TIME acquisition. The stock was also impacted by being removed from a high dividend yield index. While we acknowledge the challenging fundamentals in its business, local news viewership is up tremendously in the midst of the pandemic and we believe MDP’s profitable local television stations provide a margin of safety1 at today’s valuation level.

The sell-off in March provided us an opportunity to initiate positions in global dental supplier, Envista Holdings Corporation (NYSE:NVST) and America’s largest ski resort operator, Vail Resorts Inc. (NYSE:MTN) . NVST Recently spun out of global science and technology conglomerate Danaher Corporation and maintains a market leadership position in an industry with favorable growth dynamics. NVST benefited from research & development investments pre-spin and is launching several new products in high-growth segments within the dental end -market. Looking ahead, we expect revenue growth and margin expansion as the company benefits from facility consolidation, top-line leverage and previous technological investments. By comparison, MTN is a high quality business with a clear moat2 and scale advantage in a niche market managed by a team that has demonstrated smart capital allocation decisions, maximizing strong recurring cash flows. We believe the headwinds the travel and leisure industry are currently experiencing will soften and think MTN’s robust balance sheet will weather the storm.

Meanwhile, we sold out of money transfer and payment services provider Western Union Company (NYSE:WU) as the name was approaching our estimate of private market value. We also exited manufacturer of testing systems and sensor technologies, MTS Systems Corporation (NASDAQ:MTSC) in the quarter, to pursue more compelling opportunities.

While it may get worse before it gets better, we expect COVID-19 to be a transitory event. In our opinion, the U.S. will undergo a sharp, brief recession but believe this economic cycle will be ‘cured’ by extensive monetary and fiscal stimulus as the risks associated with the threat of the virus recede. We expect a solid recovery for equities and earnings as early as the fourth quarter of 2020 or first quarter of 2021. Meanwhile, we are taking advantage of the extreme volatility in the market to methodically and thoughtfully shop for years of future returns. We strongly believe the dedicated, contrarian, patient investor that stays the course and consistently owns differentiated business models with solid competitive positioning and robust balance sheets will deliver superior returns over the long-run.

1 Attempting to purchase with a margin of safety on price cannot protect investors from the volatility associated with stocks, incorrect assumptions or estimations on our part, declining fundamentals or external forces.

2 An economic moat is a perceived competitive advantage that acts as a barrier to entry for other companies in the same industry. This perceived advantage cannot protect investors from the volatility associated with stocks, incorrect assumptions or estimations, declining fundamentals or external forces.

This commentary candidly discusses a number of individual companies. These opinions are current as of the date of this commentary but are subject to change. The information provided in this commentary does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security Also check out: John Rogers Undervalued StocksJohn Rogers Top Growth CompaniesJohn Rogers High Yield stocks, andStocks that John Rogers keeps buying About the author:

Sydnee Gatewood I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg