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2017 GuruFocus Value Conference: America’s “Farmer On Wall Street,” Jeff Auxier, Shares Insights From 31 Years Negotiating the Markets

Jun 27, 2017

Ethics, the Power of Compounding and a Life Changing Call to Warren Buffett Help GuruFocus Attendees Understand How to Add Value

 

Omaha, NE (June 2017) Fresh out of college, in 1982, Jeff Auxier, made a pie in the sky call to his financial superhero, Warren Buffett. Thirty-one years later, that timeless advice, continues to guide Auxier’s investment philosophy. Echoing Buffet, Auxier told a packed crowd at the 2017 GuruFocus Value Conference, “Investors have got to know and understand what they own. Too many people are following the easy money flowing into unwise speculative investments.”

Auxier is an experienced market historian and business analyst. He served on the first national, separate accounts board with Jamie Dimon and is founder of the Auxier Focus Fund. Auxier is also a profitable farmer, growing hazelnuts and raising cattle on Auxier Family Farms, outside Portland, Oregon.

Aggressive Savings Unleashes the Wonders of Compounding

At the GuruFocus conference, Auxier evangelized the power of compounding. “It’s hard to beat a well-nurtured business with attractive economics, exceptional management and purchased at bargain practices. Buy the business, not the market!” said Auxier, who offered up some enviable examples:

  • $1,000 invested in Costco in 1985 is now worth over $800,000.
  • $1,000 invested in the Nike IPO in 1981 is now worth over $720,000.
  • $1,000 invested in Starbucks in 1992 is now worth over $230,000.
  • One share of Coca-Cola bought on the 1919 IPO cost $40. Today that one share, with dividends reinvested, is worth over $10 million.

Choose Your Heroes Carefully

Auxier stressed the importance of setting goals, good habits, ethics and following “ledgers” for personal growth. “Track your saving and spending, as John D. Rockefeller did to build the world’s largest oil company; Ben Franklin followed a behavior ledger of high grade morals and ethics; and Bill Gates is an example of following a ledger to be a voracious learning machine. He reads a book a week,” said Auxier.

Always Question, Especially When Urged Not to Think

Not following the investment herd is another tenant of Auxier’s philosophy. “In 1999, passive investment practices peaked in popularity. Within two years, the Nasdaq suffered an 80 percent decline. Always question what sounds like a sure thing,” said Auxier. He cited Enron, which, in 2001 and at 80 dollars a share, was touted by some financial media as a company with “best practices.” It later collapsed under massive, hidden, off-balance sheet debt.

Companies, Sectors and Industries on the Auxier Watch List

  • Use of data analytics – UnitedHealth, Anthem
  • Power of the network and transition to digital – Visa, MasterCard
  • Digitizing health care – Cerner
  • Cloud consulting – Cognizant
  • Getting in front of the millennial demand – Monster Beverage
  • Consolidation of media content by John Malone – Discovery
  • Use of mobile ordering, delivery, improved ingredients – Panera, Dominos and McDonalds
  • Medical device providers – Zimmer Biomet, Medtronic. 10,000 Americans are turning 65, daily
  • Low cost producer for natural gas and chemical companies – LyondellBasell, Celanese

To read The Auxier Report, a detailed analysis of the market, click here.

About Jeff Auxier and the Auxier Focus Fund

Auxier is a contrarian schooled by his investment heroes, long before they became today’s financial rock stars. Fresh out of the University of Oregon School of Business, Auxier called Warren Buffet, Sir John Templeton, and others. Auxier is still amazed they answered his calls and, in some cases, met with him. To this day their advice guides Auxier’s investment philosophy. Auxier went onto become Senior VP of Investments and Senior Portfolio Mgt. Director for Foster Marshal/Smith Barney. He served with Jamie Dimon (now head of JP Morgan) on the first board to set national policy managing client accounts. In 1993 Auxier received the Consulting Group Bob Dwyer Award honoring “integrity and knowledge.” In 1999 he founded Auxier Asset Management and the Auxier Focus Fund. Auxier says, “I wanted to create and run a fund that matched my own investment philosophy, with a focus on compounding and a goal of protecting over the long haul.” Auxier researches 8-10 hours daily and many of the client portfolios he manages still hold some of the 130 plus stocks he bought decades ago, including Costco’s climb from 17 cents to 136 dollars, and Precision Castparts’ rise from one dollar to 235 dollars. “We strive for those kinds of returns by relentlessly hunting for good businesses with good managers,” says Auxier. Whether he’s researching what crops to harvest on his Oregon farm, or which stocks to grow for his clients, the 32-year investor takes the long view. “It takes a passion for the necessary and daily, grind-it-out research. There are no shortcuts. It’s a mission to help people that still drives me today.”

IMPORTANT INFORMATION

Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by calling (877) 328-9437 or visiting the Fund’s website. Please read the prospectus carefully before you invest.

The Fund may invest in value stocks, which are subject to risk that their intrinsic value may never be realized, and growth stocks, which may be susceptible to rapid price swings. Investments in mid-sized companies generally carry greater risk than is customarily associated with larger companies. Moreover, if the Fund’s portfolio is overweighed in a sector, any negative development affecting that sector will have a greater impact on the Fund than a fund that is not overweighed in that sector. An increase in interest rates typically causes a fall in the value of a debt security (Fixed Income Securities Risk) with corresponding changes to the Fund’s value. Foreign securities are subject to additional risks including international trade, currency, political, regulatory and diplomatic risks. There can be no guarantee of success with any technique, strategy, or investment. All investing involves risk, including the loss of principal.

As of 5/31/2017, the Fund’s top 10 equity holdings were: Phillip Morris International (4.0%); PepsiCo Inc. (3.8%); Bank of New York Mellon (3.7%); United Health Group Inc. (3.4%); Medtronic PLC (3.2%); Johnson & Johnson (3.0%); Microsoft Corp. (2.7%); Merck & Co Inc. New (2.7%); Mastercard Inc. (2.6%); Kroger Co. (2.5%).

Foreside Fund Services, LLC Distributor.

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