Bill Miller: This is one of the 5 greatest buying opportunities of my life

davfor

A couple of big name fund guys are bullish on stock market opportunities...

Miller said only four other times have stocks have been as attractive: In 1973-1974 when the Vietnam War was going on and Richard Nixon had resigned as president; in 1982 after Mexico defaulted on its debt; in 1987 following Black Monday; and in 2008-09 during the last financial crisis. "If you missed the other four great buying opportunities, the fifth one is now front and center," wrote Miller, who is now the chief investment officer and founder of Miller Value Partners in Baltimore.

Justin Thomson, a chief investment officer for T. Rowe Price Group Inc. (NASDAQ: TROW) who oversees international equities, also offered some guidance to help investors thrive.....he sees a buying opportunity...."I should emphasize that truly great companies are rare," Thomson wrote in a white paper. "Opportunities to buy great companies at great prices are even rarer. We are currently at one of those moments."

https://bizjournals.com/baltimore/news/2020/04/21/bill-miller-this-is-one-of-the-5-greatest-buying.html?ana=yahoo&yptr=yahoo

LewisBraham

From this guy: https://morningstar.com/funds/xnas/lmopx/performance

Charles

By March of 2009, Miller's flagship had drawn down about 80 percent. He only drew down half that 11 years later. How does he get the new capital to take advantage?

Oh, but this, gotta love: He cited economist John Maynard Keynes who once said it was “the duty of every serious investor to suffer grievous losses with great equanimity.”

Mark

Thanks, but I'll pass for now.

davfor

Me too. I should have posted a Buyer Beware disclaimer or a link to M* with the article excerpts.....

Baseball_Fan

...but doesn't he have a real nice boat somewhere?

Would have been better off laddering CDs and investing in 90 day Tbills over the past 5 years...and you wouldn't have had to pay state taxes on the Tbills, nor his management fees.

...maybe he's going to return the management fee monies like Harvard U?

MikeM

He may be right, but it certainly wouldn't be his fund to increase equity in.

Part of the reason I transferred my stake in DSENX into other funds was to give it to managers that do hold cash and have track records of knowing how to and when to apply it correctly, AKREX an YAFFX. Also bought BRK/B for the very same reason. Lot's of cash there. Now, fingers crossed.

VintageFreak

I hope it is also one of the best 5 buying opportunities of his investors life. He will always earn management fees and buy yachts regardless of what's happening in the markets or the price of oil.

Shostakovich

Bill Miller is still buying Bear, Stearns.

hmgodwin

Bill Miller was not just whistling dixie....

Sven

By March of 2009, Miller's flagship had drawn down about 80 percent. He only drew down half that 11 years later. How does he get the new capital to take advantage?

That is a sure way to fund his yacht while his investors stay poor. Glad I never invest with Bill Miller. He still paddles his investment view on WealthTrack.

LewisBraham

Props to Miller: He got the call right. But I think the problem with his funds isn’t his financial acumen, which I believe he has, but a structural one. One great John Bogle saying is “Strategy follows structure.” The design of an investment product influences its manager’s strategy. What that means in this case is a high fee fund requires a money manager to take on more risks to beat its benchmark and Miller’s funds have always been high fee. The fee acts as a hurdle the manager must overcome before breaking even with the no fee S&P 500 or now no fee index funds. In Miller’s case his style is to concentrate his portfolio in an eclectic mix of high risk stocks— deep value ones everyone hates and market tech darlings most value managers misunderstand. This strategy works well in bull markets and is like a leveraged play on a strong or recovering economy, but it works terribly in most bear markets and is like a leveraged play on the downside. This could be fine if most investors understood his style, but investors tend to chase performance, buying at the top and selling at the bottom. Concentration only tends to work for most investors in high quality stocks that outperform on the downside and hold their own on the upside, not low quality deep value stocks or small caps that get hammered in sell offs and cause fund investors to panic. Miller would in this regard probably be better off running a hedge fund for sophisticated investors with the wealth and understanding to ride out the very rough patches than a mutual fund for ordinary folk.

Shostakovich

@LewisBraham; interesting points. Makes me thing of Oakmark's philosophy, in particular their highly focused offer (which favors higher quality names, IIRC).

LewisBraham

I haven't seen evidence that concentration works very well at Oakmark either with Oakmark Select's spotty record during sell-offs and its legacy of holding a double digit position in Washington Mutual in the 2008 financial crisis. Where I think this concentration has for the most part worked is at Yacktman Fund (YACKX). And though it has lagged recently in a go-go growth environment, Jensen Quality Growth (JENSX) is concentrated but has also proven good in downturns, a defensive concentrated fund. The more concentrated a fund is, the more idiosyncratic stock specific risk affects a fund's performance. Any blowups in an individual stock crush the fund. That's why high quality makes more sense in concentrated funds. Low quality value stocks makes more sense in a very well diversified portfolio because it's hard to tell which of the cheap stocks are going to come back and which will end up bankrupt. There is a case to be made for a concentrated portfolio of high quality value stocks--what Yacktman's approach is.

BenWP

I think @MikeW has it right. AKREX has 20 holdings at present and a enviable record, despite M*'s four-star rating. I cannot think of a concentrated value fund where I'd put my money with anywhere near the same degree of confidence as I have in the Akre method. YAFFX has 47 stocks, with Samsung far and away the biggest holding at 13+%. I see only one alcoholic beverage stock, and, thankfully, no tobacco. For me, at least, the Yactman fund is not terribly concentrated. Oakmark Select and Global Select have given concentrated investing a bad name.

dstone42

I hope the Akre method continues to work well after Charles Akre leaves in two weeks.
David

Observant1

I think @LewisBraham makes a good point regarding holding high quality stocks in concentrated funds.
For example, PRILX is a relatively concentrated fund with 38 holdings as of 11-30-20.
It has a good long-term record and has performed well during downturns.
The fund tends to hold a large percentage of stocks that have "moats".

BenWP

I think @MikeW has it right. AKREX has 20 holdings at present and a enviable record, despite M*'s four-star rating. I cannot think of a concentrated value fund where I'd put my money with anywhere near the same degree of confidence as I have in the Akre method.