Few mutual fund managers can claim to have a market-beating record as impressive as former Legg Mason portfolio manager Bill Miller III. With 15 straight years of outperforming the S&P 500 Index, Miller’s investment prowess is well-respected in the financial world. After joining Legg Mason in 1982, Miller co-managed the Legg Mason Value Trust before taking over as sole manager in 1990. His early investments in companies like America Online and Amazon.com propelled his success, but an overweight position in financial stocks during the 2007-2009 recession led to his eventual stepping down as manager in 2012.
Post his tenure at Legg Mason, Miller made a significant investment in bitcoin after attending an enlightening lecture in 2012, which proved to be a massive win for him. Today, his firm, Miller Value Partners, managed by his son Bill Miller IV, focuses on value stocks and runs several investment vehicles including the Miller Income mutual fund and two ETFs. With approximately $290 million in total assets under management, the firm has established a solid reputation in the financial industry. In 2023, Miller’s partnership sold the Opportunity Trust, with over $1 billion in assets, to Patient Capital Management led by Samantha McLemore, a longtime Legg Mason analyst and manager.
In a recent interview, the 74-year-old Miller shared insights on his successful investing career and his current views on the market. Reflecting on his humble beginnings with a negative net worth and a modest salary, Miller credits his father’s introduction to stocks at a young age for sparking his interest in investing. His military background as an Army Intelligence Officer shaped his intellect and analytical skills, which later proved invaluable in his investment decisions. Adopting a value investing approach, Miller focused on companies with high return on capital, free cash flow, and smart capital allocation strategies, seeking to identify undervalued opportunities with growth potential.
Miller delved into some of his most successful investments, highlighting his early backing of companies like IBM, Dell, and Amazon. He shared how he identified opportunities in these companies based on their financial metrics and growth prospects, resulting in significant returns for his portfolio. Discussing his foray into bitcoin, Miller revealed his investment rationale and the unique characteristics of the cryptocurrency that attracted him to the asset. He emphasized the fixed supply of bitcoin as a key factor in predicting its future demand and price appreciation, advocating for its inclusion in investment portfolios as an insurance against financial risks.
Reflecting on his biggest disappointment in investing, Miller pointed to his experience with Kodak during a technology transition from film to digital. Despite Kodak’s strengths as a company, the emergence of digital technology led to a decline in the stock’s value, teaching him valuable lessons about adapting to technological change in the market. Addressing the financial crisis of 2008, Miller admitted to staying overweight in financial stocks, which proved costly during the recession. However, he managed to recover and profit from investments in major financial institutions like Wells Fargo and JPMorgan after the crisis.
Offering advice to young investors, Miller stressed the importance of having an edge in the market, whether through information, analysis, or behavioral insights. He recommended reading a range of books on investing, psychology, and philosophy to develop a broad understanding of the market and enhance decision-making skills. Miller’s strategic insights, investment philosophy, and successful track record serve as a valuable guide for investors looking to navigate the complexities of the financial markets and achieve long-term investment success.
