In this article, we discuss the legendary value investor Bill Miller’s top 10 stock picks. You can skip our detailed analysis of the billionaire’s hedge fund and investment philosophy, and go directly to read the Legendary Value Investor Bill Miller’s Top 5 Stock Picks.
Bill Miller is an American value investor, philanthropist, and hedge fund manager. He founded Miller Value Partners in 1999 and is currently serving as the Chairman and CIO of the firm. Before founding his own hedge fund, Miller worked as the Chairman of Legg Mason Capital Management and also served as the director of research from 1981 to 1985 at the firm. His investment strategies beat the benchmark S&P 500 index for several years before getting hit by the financial crisis of 2008. Bill Miller earned his economics degree from Washington and Lee University in 1972. After graduating with honors, he enrolled in graduate studies in philosophy in the Ph.D. program at the John Hopkins University.
Bill Miller’s Investment Philosophy
While investing in a stock, Bill Miller focuses on factors that are crucial to the stock’s long-term performance. He invests in stocks that are traded at discounts and are mostly overlooked by other investors, holding onto the shares long-term. He also performs a meticulous evaluation of the stock by considering the fundamentals, strategy, management, and capital allocation to peel open new investment opportunities.
Due to these investment strategies, Miller Value Partner was able to deliver a 120% return in 2019, compared with the S&P 500’s gains of 29% during the same year. As Bloomberg Hedge Fund Indices reported, in 2019, Miller Value Partners outdone its peers as the returns of an average hedge fund stood at 9% that year. In 2020, when the stock market crashed in the face of the Covid-19 pandemic, Miller’s hedge fund returned 36%, whereas S&P 500’s gains for the year stood at 16%.
As of Q2 2021, Miller Value Partners invests heavily in services, technology, healthcare, basic materials, and the financial sector. The hedge fund’s 13F portfolio has over $4.1 billion in managed securities and the portfolio’s value grew by 1.09% in the second quarter. Some of the most notable stocks in Miller’s 13 F portfolio include Facebook, Inc. (NASDAQ: FB), Alibaba Group Holdings Limited (NYSE:BABA), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and General Motors Company (NYSE:GM).
Our Methodology:
Let’s analyze our list of the legendary value investor Bill Miller’s top 10 stock picks. We took into account Miller Value Partner’s 13F portfolio as of Q2.
Bill Miller of Miller Value Partners
Why pay attention to hedge fund sentiment while choosing stocks?
Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by wide margins. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Legendary Value Investor Bill Miller’s Top 10 Stock Picks
10. Facebook, Inc. (NASDAQ:FB)
Miller Value Partners’ Stake Value: $115,539,000
Percent of Miller Value Partners’ 13F Portfolio: 2.75%
Number of Hegde Fund Holders: 266
As of Q2 2021, Miller Value Partners owns 332,285 shares in Facebook, Inc. (NASDAQ:FB), valued at over $115.5 million. The hedge fund increased its position in the company by 3% in the quarter. Facebook, Inc. (NASDAQ:FB) represents 2.75% of the fund’s 13F portfolio.
In September, RBC Capital initiated its coverage on Facebook, Inc. (NASDAQ:FB) with an ‘Outperform’ rating and a $425 price target.
Of the 873 hedge funds tracked by Insider Monkey, 266 hedge funds have positions in Facebook, Inc. (NASDAQ:FB) in Q2 2021, up from 257 in the previous quarter. The total value of these stakes is over $42.3 billion.
First Eagle Investment Management mentioned Facebook, Inc. (NASDAQ:FB) in its second-quarter investor letter. Here is what the firm has to say:
“Leading contributors in the First Eagle Global Fund this quarter included Facebook, Inc. Class A. Facebook has continued to post impressive results for both revenue and active users of its traditional platforms. In the meantime, the social media giant continues to make progress on new initiatives—like Facebook Horizon (virtual reality) and Facebook Shops (e-commerce)—and maintains attractive monetization optionality around services like Messenger and WhatsApp.”
9. Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH)
Miller Value Partners’ Stake Value: $117,308,000
Percent of Miller Value Partners’ 13F Portfolio: 2.79%
Number of Hegde Fund Holders: 43
Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is an American cruise company that owns a fleet of over 28 ships. The company ranks ninth on our list of the legendary value investor Bill Miller’s top 10 stock picks.
In Q2 2021, Miller Value Partners increased its stake in Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) by 4%. The hedge fund owns over 3.9 million shares in the company, worth over $117.3 million.
As of Q2 2021, the number of hedge funds having positions in Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) grew to 43, compared with 34 in the previous quarter. These stakes are valued at $606.6 million.
Like Facebook, Inc. (NASDAQ:FB), Alibaba Group Holdings Limited (NYSE:BABA), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and General Motors Company (NYSE:GM), Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) is also gaining investors’ attention in 2021.
8. Farfetch Limited (NYSE:FTCH)
Miller Value Partners’ Stake Value: $117,386,000
Percent of Miller Value Partners’ 13F Portfolio: 2.79%
Number of Hegde Fund Holders: 63
As of Q2 2021, Miller Value Partners owns over 2.3 million shares in Farfetch Limited (NYSE:FTCH), valued at $117.3 million. The company represents 2.79% of the hedge fund’s 13F portfolio.
As of Q2 2021, 63 hedge funds tracked by Insider Monkey have positions in Farfetch Limited (NYSE:FTCH), up from 57 in the previous quarter. These stakes are valued at over $4.25 billion. ROAM Global Management is the company’s leading shareholder, with shares worth $7.7 billion.
Polen Capital mentioned Farfetch Limited (NYSE:FTCH) in its second-quarter 2021 investor letter. Here is what the firm has to say:
“We also started a new position in Farfetch. Farfetch is the market-leading, global luxury fashion, e-commerce marketplace and is also a technology partner for many luxury brands and boutiques. The luxury fashion industry has been slow to adopt technology, and ecommerce penetration is in the very low single digits today. Juxtapose this with the data that the luxury industry is growing at its fastest pace where digitization is the most well established (China and the U.S.). To us, it becomes clear that penetration will increase going forward, providing a massive secular tailwind for Farfetch. We believe Farfetch is particularly well-positioned to capitalize on this opportunity not only because they have a scale advantage, but also because the industry dynamics are such that trust and relationships are paramount. Farfetch has carefully cultivated partnerships with leading fashion brands like Chanel, Richemont, and Kering. Based on our research, we expect the company to grow intrinsic value at approximately a 30% CAGR going forward in our base case, but we also recognize that the business is highly innovative and in the early stages of penetrating a large total addressable market, making the range of possible outcomes wide, albeit heavily skewing to our benefit.”
7. Diamondback Energy, Inc. (NASDAQ:FANG)
Miller Value Partners’ Stake Value: $119,824,000
Percent of Miller Value Partners’ 13F Portfolio: 2.85%
Number of Hegde Fund Holders: 41
Diamondback Energy, Inc. (NASDAQ:FANG) ranks seventh on our list of the legendary value investor Bill Miller’s top 10 stock picks. It is an American energy company that is engaged in the exploration, acquisition, and development of hydrocarbon. The company’s headquarters are in Texas, U.S.
This September, Truist lifted its price target on Diamondback Energy, Inc. (NASDAQ:FANG), while keeping a ‘Buy’ rating on the shares.
Of the 873 hedge funds tracked by Insider Monkey, 41 hedge funds have positions in Diamondback Energy, Inc. (NASDAQ:FANG) in Q2 2021, compared with 43 in Q2 2020. The total value of these stakes is $149.6 million. Harris Associates is the company’s leading shareholder, with over 3.2 million shares.
Like Facebook, Inc. (NASDAQ:FB), Alibaba Group Holdings Limited (NYSE:BABA), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), and General Motors Company (NYSE:GM), investors and analysts are also paying attention to Diamondback Energy, Inc. (NASDAQ:FANG) in 2021.
6. Splunk Inc. (NASDAQ:SPLK)
Miller Value Partners’ Stake Value: $129,798,000
Percent of Miller Value Partners’ 13F Portfolio: 3.09%
Number of Hegde Fund Holders: 47
Splunk Inc. (NASDAQ:SPLK) is an American technology company that develops software for searching, monitoring, and analyzing machine-generated data. The company ranks sixth on our list of the legendary value investor Bill Miller’s top 10 stock picks.
In Q2 2021, Miller Value Partners started building its position in Splunk Inc. (NASDAQ:SPLK) with 897,758 shares, valued at over $129.7 million. The company accounts for 3.09% of the hedge fund’s 13F portfolio. In August, Baird’s analyst Jonathan Ruykhaver appreciated the company’s vision and execution as it transitions its business model. The firm lifted its price target on Splunk Inc. (NASDAQ:SPLK) to $185, while keeping an ‘Outperform’ rating on the shares. In Q2 2021, Splunk Inc. (NASDAQ:SPLK) posted an EPS of -$0.62, beating the estimates by $0.07. The company’s cloud revenue grew by 73% from the prior-year quarter, at $217 million.
As of Q2 2021, 47 hedge funds tracked by Insider Monkey have positions in Splunk Inc. (NASDAQ:SPLK), up from 41 in the previous quarter. These stakes are valued at over $1.18 billion.
Miller Value Partners also mentioned Splunk Inc. (NASDAQ:SPLK) in its Q2 2021 investor letter. Here is what the firm has to say:
“Our largest new position is Splunk Inc. (SPLK$138.373). Splunk typifies one of our favorite types of opportunities: a company well positioned secularly that is facing short-term business pressures. We believe there’s the opportunity to profit as the business normalizes and then compound capital beyond that. SPLK is a leading provider of security software, a growing market due to exploding cyber threats.
Splunk is in the middle of a multi-year business model transition that has negatively impacted financials and increased uncertainty. We believe we are finally past the worst of the transition with revenues troughing in FY2020. We expect the company to return to positive free cash flow generation in the second half of this year.
SPLK trades at half the multiple of comparables. We believe that gap will close as the market gets more certainty that the transition is working. The stock recently jumped on the announcement that Silver Lake, an excellent tech investor, invested $1B in a convertible senior note and the company announced a $1B repurchase authorization. We believe the stock is worth well more than its old high (~$2204) creating significant upside potential for those patient enough to hold through the transition.”
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Disclosure. None. Legendary Value Investor Bill Miller’s Top 10 Stock Picks is originally published on Insider Monkey.
