I'm always on the lookout for mutual funds that carry the names of their founders, which, research shows, outperform the fund universe on average. One such fund, Auxier Focus (AUXFX), carries the personal stamp of Jeff Auxier, a former Smith Barney portfolio manager who now runs his fund from a hazelnut farm in Oregon. The mandate of Auxier's fund allows him to invest in practically anything he wants and to concentrate on a few stocks, but lately he has been broadly diversified. His top holding, St. Paul Travelers Cos. (STA), the insurance company, represents only about 2.5 percent of total assets; meanwhile, about one-fourth of his portfolio is in cash. Practically every fund manager brags about being a contrarian, but Auxier really is one. "We look for slow-growing industries that are not magnets for capital," he told me on a visit to Washington last week. In fact, he prefers companies and sectors that are truly despised. Examples include Altria Group Inc. (MO), which makes Philip Morris cigarettes and carries a dividend yield of 5.4 percent; hospital stocks such as Health Management Associates Inc. (HMA), which trades at a price-to-earnings ratio, based on this year's expected profits, of 14; and companies that face large lawsuits, for example Wyeth Ltd. (WYE), the pharmaceutical firm, with a forward price-to-earnings ratio of 13. With all that cash, Auxier is ready to load up on a stock that he has followed and admired but that suffers a temporary setback. An example from a few years back was Guidant Corp. (GDT), the medical device maker, whose stock fell by more than half, then recovered the loss and then some. "We like really good companies with one identifiable problem," he said, "like Johnson & Johnson with Tylenol" -- a problem that can be fixed. Auxier is clearly doing something right. Morningstar gives the fund five stars (tops), and average annual returns for the past three years have been 8 percent, compared with a loss of 1 percent for the benchmark Standard & Poor's 500-stock index. So far, anyway, the fund has been significantly less risky, with consistent returns year by year. Auxier looks like an eponymous keeper. Check it out.
-- James K. Glassman