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What to Look for When Picking Stocks

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    American Independence Fund’s Jeff Miller on the factors he looks at when considering a stock.

  • Duration 3:48
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-- because it shows that.

Managed funds don't usually do that well there are only eight funds that have beaten the S&P 500 for ten years.

One fund ten years wasn't enough in fact -- outperformed the S&P eleven years in a row.

In a Fox Business exclusive we're joined by the manager of one of those -- Jeff Miller.

Portfolio manager of the American independence fund Jeff.

Congratulations.

But after all that great news about how -- you argue war and I I assume you will continue to be 2011 was not one of those -- -- you -- you beat the S&P why not.

-- -- 2001 was pretty difficult if a lot of active managers the type that we are we.

Underperform by a couple couple of percent but I'm we're make a lot of them have already in 2012 what what sets out to 2011 -- stumped you.

It was -- -- more of a macro driven market and normally was particularly would have earlier and we fell behind fairly early in the year and then.

Caught up a little bit near the end but didn't quite make it back by by the end of the year.

Early in the year when particularly Egypt kind of in the Middle East -- up in flames with the Arab Spring.

Lot of oil stocks on did extremely well and and it was a bit of a flight to.

Kind of safer defensive names like utilities and health -- And our fund is typically underweight utilities and health care because the returns on capital most businesses are low so those are those Mary if you notice and -- -- we actually have -- zero waiting utilities almost constantly.

And instead they were one of the stronger performers last year so was a bit of an anomaly with what was going on in the Middle East -- the normal market so it.

It Stoxx Europe anomaly I mean that was just reading this article in the New Yorker Magazine about how poorly most fund managers have done over the past decade and including not just.

-- mutual funds but hedge funds where you pay so much in fees so you are one of of -- select few.

What is your secret is there's some certain way that you actively manage a fund.

Move out of certain stocks move into others how do you pick a stock.

You know we we're we're very active -- as value managers -- your typical value manager will.

-- they're -- own stock for five or ten years and they they're looking for great companies made accountable collections of great companies instead what we're looking for.

Our great stocks for investors and so we start with great companies -- then we're we're very very price sensitive so what's what's a little different is that we are.

Very focused on the price that we pay.

I think you know that there's there's kind of a blend between yields now Benjamin Graham where he just purely focused on the price of the security and then.

Warren -- focus a lot more on the quality of the company were kind of in the middle -- We want really really good companies but at a at a very cheap price so once -- buy -- stock where we're expecting to or hoping to have the solid.

In the near term because the -- going up to our price target and no longer be cheap and we can reinvest in something else so.

It's it's a very active process where we have about -- 200 great companies out there that in the US that we thinker are really worthwhile investments but.

Only forty or so or -- any given time so we'll try to just on the forty that are -- reasonable 200 well it works in progress and -- now you have stocks and you have some cash.

You have no treasuries why no treasuries that's -- From what we were were stock funds or stock pickers and down we we don't own treasuries and our fund.

We we could have some we just think that -- these -- you about 185 on the ten year.

So you're gonna get paid you know -- when he 5% for ten years I don't think that's what my investors are investing with us for they're -- better returns than that.

Over time so will we own cash from time to time as a defensive position or when -- getting expensive for someone actually -- and so we.

If you have a move up in the stock market it's it's fairly sharp -- 45 week period how we -- hold more cash naturally.

But then that it has a soft market comes back down we will we will reinvest that cash fairly quickly.

-- top fund holdings Walt Disney oxy petroleum Viacom DR geo committee and the it's great to see somebody do -- like this Jeff thank you grass death.

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