In a recent article for Barron’s, author William Green shares an edited version of a conversation with famed investor Bill Miller, whose story is included in his new book, Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life.
During his fifteen years as manager of Legg Mason Value Trust, Bill Miller rose “inexorably from obscurity to stardom, famously beating the S&P 500 index for 15 years running.” Then, the article notes, it all fell apart” when he made a “disastrous contrarian bet on toxic stocks like Bear Stearns and AIG,” which resulted in a $77 billion drop in his assets under management.
Now running his own firm, Miller Value Partners, Bill Miller is again generating exceptional returns, the article reports. As of March 31, the Miller Opportunity Trust ranked in the top 1% of Morningstar’s Mid-cap Blend category and from the market’s March 23rd low, the fund has returned 201% (compared to 78% for the S&P 500).
Green reports that Miller “supercharged his personal bet on Amazon during the financial crisis” of 2008-2009. As a result, Miller believes he is now the “single largest individual shareholder of Amazon ‘whose last name isn’t Bezos’”(other than Jeff Bezos’ ex-wife McKenzie Scott). Miller also revealed to Green that his investment in Bitcoin now exceeds his Amazon holdings: “I started buying around $200 to $300 per Bitcoin, and my average cost is around $500” —the price of Bitcoin has ballooned to $53,000 (as of the end of April).
Here are excerpts from Green’s conversation with Miller:
Regarding the current investment climate, Miller said, “The economy is accelerating, inflation isn’t a problem,” and “the Fed is going to keep interest rates pegged at zero for the indefinite future.” Miller expresses some concern about inflated valuations but adds that earnings will probably grow rapidly this year and next. He adds, “we can still find lots of stocks that are not just attractive, but also very cheap, and we don’t have to play in ones that are super expensive.”
Miller mentions inflation risk, noting that it is “higher than it’s been in a long time.” He adds that efforts to raise the minimum wage, while “all to the good,” could lead to profit margins being under some pressure. His main concern, however, is a situation in which stock prices escalate: “If there’s a runaway market, it’s going to be tougher. If we have a 5% or 10% correction—or more—because of some external event, that’s good. Prices will be more attractive.”
On his Amazon stake, Miller says he has no plans to sell. “I still think Amazon is a double in three years, so why would I sell?” He doesn’t view the stock as expensive, noting that it’s trading “right in the middle of its historical range.”
Regarding his rationale for owning Bitcoin, Miller explains that the cryptocurrency offers a solution that has haunted economies since their beginning: “government monopoly over the money supply and the banking systems, leading to serial defaults, confiscation with nationalization, inflation and 25% money growth even in the U.S.” Regarding its value, Miller argues, “There’s only going to be 21 million Bitcoins in the world, and 18.5 million have already been mined and circulated. So, we’ve got 2.5 million to go. It’s Economics 101. The supply grew 2.5% last year; it’s growing 2% this year.”
Miller’s bets on both Amazon and Bitcoin have, in Green’s words, had a “startling impact on his fortune.” When he asked Miller if it’s fair to say he’s now a billionaire, he replied, “Yes, that’s fair.”