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."
