Jeff Auxier Manages the Portfolio and the Farm

As an investor and farmer, the hard work pays off

Jeff Auxier’s first call to Warren Buffett was “on a Saturday” he says, adding that Buffett was not as well-known in those days as he is today. Auxier is not your run-of-the-mill portfolio manager—he’s a farmer, too—near Portland, Oregon.

Auxier, president and CEO of Auxier Asset Management and the Auxier Focus Fund (AUXFX) was not long out of college when he called Buffett, something that might have intimidated others. But an earlier mentor, he said, sitting down with AdvisorOne.com at Schwab Impact in late October, was the former CEO of Georgia-Pacific, Bob Pamplin. Auxier mowed Pamplin’s “four-acre” lawn when he was a boy, and Pamplin took Auxier under his wing, teaching him about running a company and the importance of ethics. He urged Auxier to, “get an accounting degree,” which Auxier did, from the University of Oregon.

Early interactions with the likes of Buffett and Pamplin shaped his views on investing.

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A “voracious” consumer of company research, when Auxier looks at companies to add to his portfolio he looks not simply at the fundamentals but at the company’s leaders:  “What are their day-to-day habits? What takes them out of the game? How [could they] lose their way?” He watches out for, “ego; overpaying/overborrowing…a bad balance sheet.” Ultimately he wants to find out what price to pay for shares that that will provide, “value…[with a ] margin of safety. Sometimes he will uncover a company he wants to buy and wait for the price.

Right now he is looking at healthcare as a sector that is interesting—the “restructuring—opportunity.”

When the market’s overpriced,” Auxier says, he looks for “undervalued companies, event-driven workout,“ situations and “capital structure plays.” He likes to buy things that have “25%-30% free cash flow.” A farm analogy: Auxier wants “the tennis balls, not the chicken eggs—things that bounce.”

Returns

The technique appears to have served the find’s long-term capital appreciation objective well: through Nov. 30, the 10-year cumulative total return for the Auxier Focus Fund is 90.44% versus 8.39% for the S&P 500. Over the five-year period, the fund returned 17.99%, compared with 5.01%, and the three-year period, -1.98% versus -14.66%.

The fund has no load, a 1.25% expense ratio and a redemption fee (if not held for six months) of 2%. As of Sept 30, 67% of the fund was invested in U.S. stocks; 5% Non-U.S. stocks; 19% in U.S. bonds and 9% in cash.

Financial Re-Regulation

When you are “dealing with someone’s life savings, it’s a life-and-death serious endeavor,” Auxier asserts. There are “too many unqualified people managing money. It’s a privilege to manage someone’s life savings.” To back that up, Auxier says he invests “his entire personal retirement,” about “$2 million,” according to the firm’s website, invested in the Auxier Focus Fund.  

If he was could advise legislators or regulators, he’d “bring back” Glass-Steagall, “mandate capital requirements.”  Auxier would advocate for “free markets—with responsibility.”

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