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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Auxier Asset Management 2023 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Auxier Asset Management)

Primary Source Intelligence • Q3 2023 Letter Analysis

Auxier Asset Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Auxier Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD-2.28%

Annualized+7.3%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"Auxier navigates historic bond bear market by focusing on energy beneficiaries and insurance hard market winners while avoiding debt-heavy utilities. Fund outperformed in Q3 decline with disciplined approach to businesses generating steady free cash flow."

Executive Summary

Jeff Auxier's Q3 2023 commentary focuses on the historic bond bear market as rates rise due to government deficits and defense spending, with 30-year Treasuries down over 50% from 2020 highs. The fund returned -2.28% versus the S&P 500's -3.27% decline. Energy was the best performing sector, benefiting fund holdings like Valero, BP, ConocoPhillips, Chevron and Phillips 66 from OPEC+ supply cuts. Property casualty insurers are experiencing a hard pricing market with rate increases across most lines, benefiting holdings like Berkshire Hathaway, Travelers and AIG. The manager discusses disruption from GLP-1 weight loss drugs potentially impacting food consumption patterns. Key risks include massive government debt accumulation and geopolitical tensions affecting oil markets. The fund maintains exposure to businesses with low capital requirements and steady free cash flow generation while avoiding utilities and companies dependent on government subsidies. Auxier sees attractive values emerging in smaller companies after two years of multiple compression.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

Manager names specific holdings across energy and insurance sectors with clear thesis explanations. Portfolio is concentrated with top 10 holdings representing significant allocations. Clear investment criteria stated around low capital spending and free cash flow generation, though some hedging language present.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The manager acknowledges we are in a grueling bear market for two years but sees attractive values emerging. Mixed signals with concerns about bond market deterioration but optimism about fiscal stimulus preventing recession in certain industries.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

Portfolio is 90.5% invested in stocks with only 9.5% cash, showing continued risk appetite. Manager is selectively adding to attractive values in smaller companies while maintaining sector exposures in energy and insurance.

Capital Deployment

20%

De-riskingDeploying

De-risking (20%)

Portfolio remains 90.5% invested in equities with only 9.5% cash, indicating continued deployment. Manager mentions ramped-up research effort and seeing attractive values in smaller companies, suggesting selective adding rather than major deployment or reduction.

Forward Guidance

25%

CautiousExpansionary

Cautious (25%)

Manager explicitly states they are seeing attractive values and references adding value through ramped-up research effort. Positive on finding opportunities in smaller companies coming out of the bear market.

Language Signal

10%

BearishBullish

Bearish (10%)

Balanced language with risk warnings about bond markets and government debt offset by opportunity language around attractive values, hard insurance market, and energy sector strength. Slightly more constructive than bearish overall.

Perceived Risk

72%

Low RiskElevated

Elevated Risk (72%)

Manager identifies multiple significant risks including worst bond bear market in US history, $20 trillion potential debt increase, utility fire liabilities, and geopolitical oil market risks. Substantial discussion of systemic and macro risks throughout the letter.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Manager sees attractive values emerging in many businesses, particularly smaller companies experiencing multiple compression. References specific opportunities in energy and insurance sectors while maintaining selectivity around investment criteria.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Manager references longer-term correlation between earnings and stock price returns, focuses on intrinsic value growth of individual businesses, and mentions coming out of bear markets historically. Multi-year perspective with patience for value realization.