He had his chance in early 2008, when the Auers decided to take their strategy public. They launched SBAuer Funds LLC and raised $33 million. But their timing couldn't have been worse. Within the year, the market began its worst descent since the Great Depression.
It's not the first time the Auers have stumbled. During the tech bubble back in 1998, investors were dumping high-growth companies for technology-related stocks, depressing the prices of stocks that otherwise might have been doing well, Robert Auer says. They were down 15% that year.
"People hated 'old economy' companies that year. Good, profitable companies? That was so yesterday. You needed something with a Web site," Robert Auer says.
For now, the Auers remain confident, realizing that in this market downturn, even the most brilliant stockpickers have struggled. Indeed, the fund is already up for the year. As of mid-June, the Auer Growth Fund was up 28% while the Dow Jones Industrial Average was down 0.1%.
"I'm comfortable because I know they have nothing but stellar companies in their portfolio," says Jeff Basch, one of Robert Auer's advisory customers from his days at Dean Witter, which was later aquired by Morgan Stanley. "I also think they do an outstanding job with research, and they're extremely disciplined."
Basch is obviously impressed. He has all of his money invested with the Auers.
"I'm willing to roll the dice. If I'm going to be in equities, and I am, then I think they're the best pick," says Basch, the CFO of IBJ Corp., which publishes the Indiana Business Journal.
So how does Auer find the companies in which his fund invests? He starts by reading every earnings report that comes out. During earnings season, just after the end of each quarter, the Auers can find themselves reading hundreds of research reports a day. If a company fits the criteria, the Auers create a 14-page dossier for it.
Robert Auer, now 48, says they're looking for three key ingredients: How much did earnings rise in the quarter, compared to the comparable period last year, how much did sales rise, and what's the stock's P/E ratio.
"It's a very unique process. I don't know of any fund that looks at every single stock," says Robert Auer, adding, "We buy every single stock that meets our criteria."