The Value of

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The Value of

Cumulative Research



A Competitive Advantage

Lessons of the Masters


Jeff Auxier

President, Auxier Asset Management LLC

Founder/Manager, Auxier Focus Fund

Back to the Basics: Researching the
Lessons of America’s Greatest
Investors


Warren Buffett: An early call in 1982



Ben Graham:
The Intelligent Investor


and
Securities
Analysis



John Templeton:
The Humble Approach



Phil Fisher:
Conservative Investors Sleep Well



Robert B.
Pamplin
: The valuable lawn job
-

$100 grows to $3,000

Framework to Endure





A rational, businesslike approach



Price, Value, Margin of Safety



The double play vs. the torpedo


Investing: The Craft of the Specific



Focus on the important and the knowable



The importance of determining odds



Price dictates capital allocation



Get far away from the emotions of Wall Street


Templeton, Buffett

Investing: The Craft of the Specific



A long
-
term focus is invaluable


A long
-
term orientation is one of the greatest edges an investor has in the
current market



Ego and emotion are the enemy


Isaac Newton, arguably one of the smartest investors of his generation,
was wiped out in the South Sea bubble. Why?


Importance of humility


Recurring sins of over
-
paying and over
-
borrowing


Long
-
term Capital Management


a lethal combination of ego and
excessive borrowing



Compounding is the most underappreciated concept


Slow & Steady wins the race


“Understanding both the power of compound return and the difficulty of
getting it is the heart and soul of understanding a lot of things.”










Charlie
Munger



Accounting :

The Language of Business



The importance of ledgers



Pamplin
: Training your brain to be the calculator


The importance of manual marking



John D. Rockefeller: “As I began life as a bookkeeper,
I learned to have respect for figures and facts no matter
how small they were. Ledgers are sacred books that
guide decisions and save us from fallible emotions.”

Accounting :

The Language of Business



Bernard Baruch: “Facts are facts even in the height of
emotion.”



Jim
Sinegal
, CEO of Costco: “Retail is detail.”



Sam Walton of Wal
-
Mart reviewed weekly ledgers
starting at 2 am every Saturday before the company
meeting



Ben Franklin kept a “moral ledger” where he would
track his virtues and vices every day


The Misperceptions of Risk


Buffett: “Risk is not knowing what you are doing.”


Try to avoid risks, not take them



Carlos Slim: “In my opinion I never take risk.”


In 1982 buys companies at 3
-
5% of book value as Mexico
defaults on debt



The four most dominant Texas oil families, Cullen,
Richardson, Murchison & Hunt, boldly move as oil
drops to 3 cents a barrel over a 60
-
month period


(1930
-
1935)



The Misperceptions of Risk


1930, J. Paul Getty sets up Tidewater to buy oil stocks


Never paid over book value



2009 U.S. distressed debt market discounts a 50% loss
projection, while the worst case, 1930s, was 5%


The corresponding rally of 50% marked the strongest
performance for any domestic fixed income index since the
early 1950s


The Misperceptions of Risk


Diversification does not work during periods of
extremely easy money when assets are inflated



Define circle of competence



Thorough research on the entire capital
structure of each company


Wipe
-
out risk of extreme leverage



Get adequately compensated for the risk taken


Understanding Supply and Demand



Be mindful of the dangers of bubbles resulting
from easy money


Beware of “600% in six” phenomenon



Avoid the hottest companies in the hottest
industries


Torpedoes kill compounding



You want the inspired management, in the
uninspiring industry


Top performing stocks in the S&P 500 since 1950

Crisis Is Opportunity



Since 1947 recessions have occurred less than
5% of the time



Carlos Slim comes alive
after

Mexico defaults on
their government debt



1940s, Joe Kennedy buys the Chicago
Merchandise Mart for 30 cents on the dollar



Following the last thrift crisis in the late 1980s


1991
-
1998 small banks were the number one
performing asset class


1992
-
2000 small and midsized banks appreciated
between 400%
-
800%







“Warren Buffett is one of the best
learning machines on earth. The
turtles which outrun the hares are
learning machines. If you stop
learning in this world, the world
rushes by you.”








-

Charlie
Munger







Does it work?

The history lesson is
informative, but does this
fundamental research
approach work in today’s
highly competitive global
marketplace?

Auxier Focus Fund

As of 12/31/2011

Inception**

Ten Years

Five Years

Three Years

One Year

Auxier Focus*

113.49%

76.91%

15.71%

45.02%

5.57%

S&P 500 Index

12.48%

33.35%

-
1.24%

48.59%

2.11%

Inception **

Ten Years

Five Years

Three Years

One Year

Auxier Focus*

6.27%

5.87%

2.96%

13.19%

5.57%

S&P 500 Index

0.95%

2.92%

-
0.25%

14.11%

2.11%

* Investor Shares ** Fund inception: July 9, 1999

ANNUALIZED

CUMULATIVE

Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower o
r h
igher than the
performance data quoted. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, ma
y b
e worth more or
less than original cost. As stated in the current prospectus, the Investor Class Share’s annual operating expense ratio (gros
s)
is 1.32%. The
Adviser has contractually agreed to reduce a portion of its fee and reimburse Fund expenses to limit Total Annual Fund Operat
ing

Expenses to
1.25% through at least October 31, 2015. Other share classes may vary. The Fund charges a 2.0% redemption fee on shares rede
eme
d within
six months of purchase. Returns shown for less than six months do not reflect the 2.0% redemption fee. For the most recent
mon
th
-
end
performance, please call (877)328
-
9437 or visit the Fund’s website at
www.auxierasset.com
. Foreside Fund Services, LLC, Distributor.


Q & A

May 3
-

4, 2012

Mammel

Hall

Omaha, Nebraska