Miller Value Partners’ Bill Miller holds the record for being the only mutual fund manager to beat the market for 15 years in a row. One way he did it is by investing in new technologies that the Wall Street establishment thought were crazy at the time – Amazon, Google, and Facebook among them. His latest “crazy” idea: Bitcoin.
WEALTHTRACK Episode #1431; Originally Broadcast on January 19, 2018
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- Santa Fe Institute: The world headquarters for research and education on complexity science “Money and Currency: Past, Present, and Future”. Download the .pdf
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BILL MILLER
- Chairman, Chief Investment Officer, Portfolio Manager,
- Miller Value Partners
What makes a great investor? I have interviewed several of this rare breed over my career, including some of the greats of the previous generation: the late Sir John Templeton, Peter Lynch, and Warren Buffett. They share several traits, a passion for investing and research, discipline, healthy skepticism about Wall Street and popular opinion, insatiable curiosity, voracious reading and independent thinking.
Sir John Templeton once said: “It is impossible to produce superior performance unless you do something different.”
One measure of doing something different is known asactive share, discovered by researchers at the Yale School of Management. Active share is a measure of the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index. The researchers found that mutual fund managers with high active share outperform their benchmark indexes. Specifically the researchers found that funds with an active share of 80% or higher beat their indexes by 2-2.71% before fees and by 1.49-1.59% after fees.
The active share of this week’s guest runs close to 100% most of the time. His portfolio is nothing like the S&P 500’s.
He is legendary value investor, Bill Miller, and the proof is in the pudding. Miller is still the only mutual fund manager who has beaten the market for 15 years in a row. The record setting winning streak occurred from 1991-2005 at his previous firm, Legg Mason, with his flagship Legg Mason Capital Management Value Trust Fund.
Miller is now the chairman and chief investment officer of his own firm Miller Value Partners where he and his long time co-portfolio manager, Samantha McLemore, run the mutual fund Miller Opportunity Trust which he launched in 1999 as Legg Mason Opportunity Trust. Miller Opportunity Trust continues to beat its benchmark with a 25% gain last year and five-year annualized returns of nearly 18%.
Never one to shy away from promising new technologies Miller recently made headlines with his hedge fund, MVP 1 which invested in cryptocurrency Bitcoin at an average cost of around $350 per coin. At one point it accounted for over 50% of the hedge fund because of its spectacular rise. Miller will explain how he has handled that enviable problem. He will also share his rationale for not investing in Bitcoin in his mutual fund.
That decision does not mean he hasn’t owned securities in his mutual funds that the Wall Street establishment has considered to be “crazy” over the years. One of them isAmazon, which Miller bought when it first went public in 1997, at a split adjusted stock price of under $2 a share. It’s risen more than 600-fold since then with many fits and starts and vocal skeptics along the way.
What drew him to Amazon in the first place is where we start this week’s interview.
If you’d like to see the show before it airs, it is available to our PREMIUM subscribers right now. We also have anEXTRA interview with Miller about his current research project, the future of money, available exclusively on our website.
Thank you for watching. Have a great weekend and make the week ahead a profitable and a productive one.
Best regards,
Consuelo
IF YOU WANT TO OWN BITCOIN OR OTHER HIGHLY SPECULATIVE CRYPTO RELATED ASSETS ONLY INVEST WHAT YOU DON’T MIND LOSING ENTIRELY
[one_fourth]
Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money
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The Construction of Social Reality
[one_fourth]
Denationalisation of Money: The Argument Refined (LvMI)
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[one_fourth_last]
Cryptonomicon
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HUGE MARKET, FAST GROWTH
Amazon.com, Inc. (AMZN)
Facebook, Inc. (FB)
FB data by YCharts
Alphabet Inc. Class A (GOOGL)
Intrexon Corporation (XON)
XON data by YCharts
Delta Air Lines Inc. (DAL)
Valeant Pharmaceuticals International, Inc. (VRX)
VRX data by YCharts
JP Morgan Chase & Co (JPM)
Bank of America Corporation (BAC)
Citigroup Inc. (C)
OneMain Financial (OMF)
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THE FUTURE OF MONEY
What is the future of money? Legendary value investor Bill Miller, an early investor in Bitcoin in his hedge fund MVP 1 has given himself an assignment to find out.
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