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Jeff Auxier of Auxier Asset Management Is Taking GuruFocus Readers Questions

Holly LaFon

Holly LaFon

261 followers
GuruFocus welcomes Jeff Auxier, president and CEO of Auxier Asset Management, an investment advisor firm with about $524 million in assets under management, to answer our readers' questions about investing. To ask your question, post it in the comments section below.

Jeff has been managing the Auxier Focus Fund since 1999, achieving a cumulative 127.71% return versus 26.64% for the S&P 500, and an annualized return of 6.68% versus 1.87% for the S&P, since inception.

Jeff’s aversion to risk and dedication to companies whose fundamentals promise long-term performance has helped him earn consistent returns through a period that includes the worst decade for U.S. stock returns in history. In his first quarter letter, he shares his fund’s current positioning:

“The current portfolio is comprised of businesses that have strong free cash flow and, we believe, the ability to increase dividends. The average earnings yield of the portfolio is well in excess of bond yields. Returns on invested capital are high, while mandatory capital spending tends to be low. Generally our buys are bargain priced, and ‘hopelessly out of favor,’ on the flip side of momentum-driven markets in which IPOs are the focal point.”

He is avoiding Apple (AAPL) and IPOs, as they remind him of 1983, the year he learned the beauty of boring when blue chips such as Waste Management (WM) and Pepsico (PEP) were stumbling and selling cheap, while 30 glitzy PC stocks went public and soared. Since then, the blue chips have overcome their problems and rose in value again, and most of the PC companies are gone.

These are his top holdings:

Company % of Assets
Pepsico (PEP) 3.4
Philip Morris (PM) 2.3
Tesco PLC ADR (TSCO) 2.1
Molson Coors Brewing (TAP) 2.1
Microsoft (MSFT) 1.9
Merck (MRK) 1.9
Procter & Gamble (PG) 1.8
Avon Products (AVN) 1.6
Wal‐Mart (WMT) 1.6
Medtronic 1.6
Hospira (HSP) 1.5
BP (BP) 1.4
Medco Health Solutions (MHS) 1.3
Johnson & Johnson (JNJ) 1.3
Unilever NV (UL) 1.3


Jeff is also optimistic about natural gas and believes the recession in Europe could be setting up "a generational buying opportunity."

To learn more about Jeff and his outlook on the economy, read his quarterly letter here. Also see more of his holdings in his portfolio here.

Ask Jeff your investing question by leaving them in the comments box below. We'll be posting his answers soon.


Rating: 3.6/5 (17 votes)

Comments

The Science of Hitting
The Science of Hitting premium member - 2 years ago
Jeff,

Thanks for taking our questions. What are your thoughts about P&G's moat in terms of some increasingly commodity-like industries such as hand soap, cough syrup, etc., which are subject to private label competition?

Considering Paul Polman's prior work experience and track record to date as the company's CEO, he seems like the right guy for the job at Unilever. With PG and UL both in your top 15 holdings, I would assume that you think the prospects of a price war is minimal; could you explain why? Is the brand equity strong enough in most categories to result in a sustained preference for branded products over increasingly comparable private label offerings? Thanks!
tonyg34
Tonyg34 - 2 years ago
I second the question posed by "The Science of Hitting" and would extend it to include not just PG and UL, but also JNJ, TAP and possibly PM (PEP is of the hook b/c the marginal value b/t the name brand and generic is so slight).

Follow up question since no one else is asking: Your portfolio seems to suggest that you are in support of the "play emerging market growth by means of established consumer brands" theme (PG, UL, PEP, PM, JNJ, etc). Is this a conscious investment theme? If it is, what is your view on the potential for rising input costs and (or) price competition (i.e. private label competition) to diminish returns for this thesis versus investing in more cyclical stocks (commodities, industrials, energy)? And why invest in American or European brands instead of the powerhouse brand names in Brasil or China?

Also, if you are optimistic about nat gas how are you investing in it, and what is your outlook for fossil fuels vs alternative fuels?

Finally PEP, etc may have been out of favor in the tech years, but defensive names (specifically US and EU domiciled internationals with emerging markets growth potential like PEP) are very much the rage today. Is your portfolio tilted toward consumer defensive names because of your macro economic views? Seems the more contrarian approach today would be a bullish bet on cyclicals like Arcelor-Mittal or Fiat.

And thank you excessively for lending your time to us
Priceratio
Priceratio - 2 years ago
Mr. Jeff,

Two quick questions regarding the macro-economy:

1) Where do you see the Eurozone "situation" going...do you see any of the nations defaulting?

2) Where do you see the US housing market going? (I know nobody can predict the future, but we'd like to know your opinion).

Your response(s) will be greatly appreciated.

Thank you.
Freemoney8
Freemoney8 - 2 years ago
How do you feel about opk: Opko Health Inc. Insiders have purchased shares and It is at a good purchase price. Can you give me your opinion on where you see this stock going?
Wizhi
Wizhi - 2 years ago


Hi, first I wanna thanks for this generous move!.

I have some question about your early stage of career (don't feel "obligated" to answer if you think it's to private!!!).

I guess you had mentors through your life path. Which? and maybe you have some special some "special" moments where they changed your view/become eyeopener?

What is your school background and how important do you think the school education has been for you?, what advise would you give to someone that is thinking to run a fund? Is there any pitfall you would share?

Many thanks in advance!!

regarding//

Jonathan S
valueman2112
Valueman2112 premium member - 2 years ago


Jeff,

What do you think of Windows 8? Do you think Microsoft is making a mistake with a such a radical departure from previous versions of Windows?

Dan

Central Point, Oregon

Please leave your comment:


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