I’m far from the greed and emotion of Wall Street and able to conduct the kind of independent thinking that keeps us ahead of the pack, not chasing it. I love my job and consider it a stewardship of other people’s hard-earned money. I want to do this the rest of my life.
Jeff Auxier (Trades, Portfolio) is one of the favored gurus followed by GuruFocus. He is the president and chief executive officer at Auxier Asset Management and is in charge of the Auxier Focus Fund. The fund manager comes to the industry with 30 years of experience and in that time has mustered up quite a track record as well as insight into nearly every market bump or bubble.
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- TAP 15-Year Financial Data
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- Peter Lynch Chart of TAP
Biography and Career
According Auxier Asset’s website, Jeff Auxier (Trades, Portfolio) got his start in finance at the early age of 11, when he had a job mowing the long-time Georgia Pacific CEO Robert Pamplin’s lawn. He learned quite a bit from the CEO including what he considers to be a very important factor to running a business: “Mr. Pamplin always put his shareholders first and believed business should be transparent.” Moving on from these early years Auxier went on to graduate from the University of Oregon with a degree in Finance and an emphasis in accounting, and from then on Auxier went on working towards making connections with financial savants such as Warren Buffett (Trades, Portfolio).
Jeff Auxier (Trades, Portfolio) began his professional career in 1982 at Foster Marshall-American Express, or what is now known as Smith Barney, in Portland. Because of his connections and ties to Warren Buffett (Trades, Portfolio) and the likes, Auxier really connected with and made sense of Value Investing, so in the late 80s he assisted his company in creating the Portfolio Management Advisory Board which created policies that were aimed at better serving client and shareholder interests.
It was in 1998 when Auxier realized what he actually wanted to do for a living. The guru left Smith Barney to start his own investment fund, Auxier Asset Management, and not long after he began the Auxier Focus Fund. Auxier says that he wanted to start a fund where the manager is held “highly accountable,” so he put his money where his mouth is and remains one of the Auxier Focus Fund’s largest shareholders. Jeff owns over 166,000 shares of this fund, the entirety of his personal retirement fund, and he promised not to sell a single share until he is no longer manager. Not only is his money tied up in the fund but his family’s assets are also included in the money management portion of Auxier Asset Management, and not only that but members of the Auxier Asset Management team also maintain large percentages of their own net worth locked up in the Focus Fund.
Jeff Auxier (Trades, Portfolio) and his family live rather far away from the hustle of Wall St., maintaining a large farm on the outskirts of Portland as well as massive ranch in the high desert of Central Oregon.
Auxier Asset Management
“Our philosophy is based on the conviction that compounding is the most influential element of an investment program. We believe leading companies in slow growth industries often achieve the best performance over the long-term investment horizon. We look for value with a significant margin of safety relative to price. We continue to believe in a price/value strategy that helps eliminate emotional reaction to market panics.”
Auxier Asset Management was created by Jeff Auxier (Trades, Portfolio) in July 1998 in a suburb of Portland Oregon called Tualatin. As of its most recent quarterly reportings the company has over $400 million in assets under management and is debt free.
Jeff Auxier (Trades, Portfolio) has a small team behind him including Chrisi Badrick, his Director of Portfolio Services, who has 23 years experience in the investment management and brokerage industries; Lillian Widolff, the Operations and Compliance Manager who has 20 years experience in the Financial Services industry; Rita Miller , the Portfolio Administrator, who maintains 34 years of experience in the brokerage and investment consulting fields; and Peggy Straw, the fund’s Client Service Coordinator, who offers 31 years of experience in the securities industry.
The company has a very strict investment philosophy which focuses primarily on the fact that compounding is the most important element of an investment program. Auxier Asset Management focuses the majority of its time and energy on researching and analyzing stocks.
The Auxier Asset Management looks for the following in a company:
- A substantial advantage over competition
- A demonstrated ability to earn high rates of return on capital
- Understandable products
- Honest, competent shareholder-oriented management
- Intelligent capital allocation policies
The fund focuses on value investing in that one of their primary objectives is to buy and hold for long periods of time. The time they dedicate towards researching a stock has helped them hold a low turnover rate.
AAM states the following are typical for their portfolio characteristics:
- Low price/earnings
- Low price/sales
- Maximum stock weighting of 10%.
- Hold 15 to 35 core positions.
- Concentrations in sectors that offer the most favorable risk/reward.
Jeff Auxier (Trades, Portfolio) says about the stocks he chooses, “The ideal investment climate to allocate capital and identify significantly undervalued securities is one where the headlines are negative, fear and panic abound, and emotions are running high.”
In 1993, Jeff Auxier (Trades, Portfolio) won the Consulting Group Bob Dwyer Award which ultimately honors the Portfolio Manager whose “integrity, knowledge and commitment to the discipline of investment management exemplifies the highest standards.”
Also, in 1997 and 1998 Jeff won Money Magazine’s “All-Star Broker,” which was a national competition where Auxier faced off against several of America’s top money managers.
Also in 2010 the Auxier Focus Fund was named a Silver award winner by Standard & Poor in its first Mutual Fund Excellence Awards Program. Auxier was picked for its “performance, quality of holdings, manager tenure, risk and cost factors.”
The graph above shows the value of a hypothetical initial investment of $10,000 in the fund versus the same hypothetical investment in the S&P 500 on July 9, 1999 and held through December 31, 2013.
The performance of AFF by calendar year:
Quarter end average annual total returns:
Jeff Auxier (Trades, Portfolio) has not yet released his portfolio holdings for the fourth quarter but the following five companies represent Auxier’s top five largest holdings of the third quarter of 2013. As of the close of the third quarter the fund held on to 143 stocks valued at $432 million.
Top five holdings:
- Molson Coors Brewing Company (NYSE:TAP): 296,339 shares, representing 3.4% of his total portfolio and 0.16% of the company’s shares outstanding.
- PepsiCo (NYSE:PEP): 177, 947 shares, representing 3.3% of his total portfolio and 0.01% of the company’s shares outstanding.
- Philip Morris International (NYSE:PM): 158,439 shares, representing 3.2% of his total portfolio as well as 0.01% of the company’s shares outstanding.
- Bank of New York Mellon Corp (NYSE:BK): 355,754 shares, representing 2.5% of his total assets managed and 0.03% of the company’s shares outstanding.
- Telefonica SA (NYSE:TEF): 632,400 shares, representing 2.3% of his total portfolio and 0.01% of the company’s shares outstanding.
There’s a lot to learn from Auxier’s strategies and patience when it comes to the market. He goes to prove that research and a healthy distance away from Wall Street can be just the right combination to aid a successful investing career.
Check out Jeff Auxier’s complete list of stock picks here.
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