Jeff Auxier of Auxier Asset Management discussed his long-term investment approach and shared his thoughts on intelligent investing in a speculative market environment at Best Ideas 2026.
Overview:
Jeff shares key insights drawn from a career spanning over four decades, starting with a cold call to Warren Buffett in 1982. Jeff offers a sobering yet constructive analysis of the current financial landscape, which he argues is characterized by historic levels of speculation, record margin debt, and a dangerous disconnect between price and value in “no-revenue” companies.
Jeff details his philosophy of “tenacious research,” focused on uncovering the “operating reality” of a business rather than following market sentiment. He explains his strategy of hunting for the “double play” — buying high-quality, cash-generating businesses at distressed multiples when they face temporary, fixable problems. The discussion moves beyond general philosophy into specific actionable analysis, comparing the risks of holding high-multiple compounders like Costco in the current environment against the opportunities available in beaten-down sectors such as medical devices and payment processors.
Furthermore, Jeff provides a nuanced take on the consumer staples sector, analyzing how the rise of GLP-1 weight-loss drugs and shifting alcohol consumption habits are disrupting traditional defensive moats. He also discusses the macro risks posed by Chinese deflationary exports and the potential unwinding of private equity valuations. Ultimately, this conversation serves as a guide on how to maintain discipline and protect capital during periods of market exuberance while preparing for the opportunities that inevitably arise when leverage unwinds.
Highlights:
Fiserv Thesis: Double-digit FCF yield, management change, fixable problems, and the potential for a “double, triple play”.
Navigating Speculative Bubbles: Why current margin debt levels and leveraged ETFs create a fragile market structure similar to past historic peaks.
The “Double Play” Strategy: How to identify companies with fixable problems to capture returns through both earnings recovery and multiple expansion.
Valuation Discipline: Why Auxier is trimming positions in high-quality compounders like Costco and avoiding “torpedoes”—stocks with high expectations and high valuations.
Sector Opportunities: An analysis of value pockets in healthcare (Zimmer, Becton Dickinson) and payments (Fiserv) versus the risks in footwear (Nike).
The GLP-1 Disruption: How weight-loss drugs and changing social habits are fundamentally altering the thesis for food, beverage, and alcohol stocks.
Global Macro Risks: The impact of China’s deflationary export pressure on global commodities and chemicals.
The Farmer’s Mindset: Lessons on humility, work ethic, and patience drawn from owning and operating a working farm.
Thesis summary:
Fiserv (US: FISV) is a prominent provider of back-office processing and financial services technology, distinguished by a nearly four-decade track record of double-digit earnings growth. Historically, the company has commanded a premium valuation due to its consistency, with a P/E ratio averaging over 30x during the last decade and trading as high as 91x earnings in 2000. The company strengthened its market position through the acquisition of First Data, integrating merchant services with its core banking infrastructure capabilities. Jeff identifies this as a high-quality business model that has recently fallen out of favor due to short-term operational headwinds in a speculative market environment that currently penalizes earnings misses severely.
The core opportunity arises from a recent growth deceleration where the company missed double-digit targets, delivering approximately 4% growth instead. This deviation from historical performance caused the stock to decline roughly 40%. Jeff views this sell-off as a classic overreaction, noting that the market is currently disregarding quality in favor of speculative momentum. The thesis is predicated on the idea that the underlying issues causing the growth slowdown are fixable rather than structural. The company possesses a robust balance sheet and a business model that generates substantial cash flow, characteristics that historically protect capital during market downturns.
A key driver for the potential turnaround is the appointment of a new management team, which Jeff believes is capable of correcting the operational stumbles. The strategy involves purchasing the equity when the company faces “fixable problems,” allowing for a “double, triple play” scenario driven by both earnings recovery and multiple expansion. Jeff contrasts this opportunity with other high-quality names like Nike, arguing that Fiserv offers a superior risk-reward profile because the valuation has already compressed significantly, providing a wider margin of safety compared to consumer stocks that remain priced for perfection.
Regarding valuation, the shares recently traded at approximately 7x to 8x earnings, representing a historic discount relative to the company’s long-term average P/E of over 30x. Jeff noted that the firm began accumulating shares when the multiple compressed to 12x earnings as the price dropped into the $120s. In addition to the depressed earnings multiple, the stock offers a double-digit FCF yield. This valuation disconnect suggests that the market is pricing Fiserv as a permanently impaired asset rather than a proven compounder experiencing a temporary cyclical trough.
Disclaimer
Best Ideas 2026 was held from January 6-23, 2026. The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
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