Bill Miller Portfolio: 5 Picks From Legendary Value Investor

In this article, we discuss 5 picks from Bill Miller’s portfolio. If you want to read our detailed discussion on Miller’s market outlook and investment strategies, head over to Bill Miller Portfolio: 12 Picks From Legendary Value Investor. 

5. Chico’s FAS, Inc. (NYSE:CHS)

Number of Hedge Fund Holders: 17

Miller Value Partners’ Stake Value: $7,319,372

Chico’s FAS, Inc. (NYSE:CHS) is an omnichannel specialty retailer in the United States, Puerto Rico, Virgin Islands, and Mexico. They offer women’s private-branded clothing, intimates, and accessories under the Chico’s, White House Black Market, and Soma brands. In Q2 2023, Bill Miller held 1.36 million shares of Chico’s FAS, Inc. (NYSE:CHS) worth $7.3 million, representing 4.81% of the total 13F securities. 

On September 28, Chico’s FAS, Inc. (NYSE:CHS) experienced a prominent stock price increase after announcing its agreement to be acquired by Sycamore Partners for $7.60 per share. The deal received unanimous approval from Chico’s FAS, Inc. (NYSE:CHS)’s board of directors and is expected to finalize by the end of the first quarter in 2024, pending standard closing requirements and regulatory approvals, including those related to antitrust laws.

According to Insider Monkey’s second quarter database, 17 hedge funds were bullish on Chico’s FAS, Inc. (NYSE:CHS), compared to 16 funds in the prior quarter. Chuck Royce’s Royce & Associates is the largest stakeholder of the company, with 3.1 million shares worth $16.7 million. 

Miller Value Deep Value Select Strategy made the following comment about Chico’s FAS, Inc. (NYSE:CHS) in its Q3 2023 investor letter:

“Chico’s FAS, Inc. (NYSE:CHS) was also a strong contributor, with a share price up close to 40%. Late in the quarter, Chicos announced that Sycamore would be acquiring the company for $7.60/share, a 65% premium to the previous day’s close. Three years ago, in our Q3 2020 letter, Value: A Timely Opportunity we highlighted our initial investment in Chicos. At that time, Chicos was trading close to $1/share, under significant pressure due to the Covid outbreak. New CEO, Molly Langenstein has been successfully executing the new transformation plan, closing unprofitable stores, streamlining their operations, expanding digital and omnichannel efforts and significantly enhancing their branded merchandise. With the take-out price more than 6x above our initial cost, Chicos has been one of our strategy’s top positive contributors over the past 3 years.”

4. CTO Realty Growth, Inc. (NYSE:CTO)

Number of Hedge Fund Holders: 16

Miller Value Partners’ Stake Value: $7,488,466

CTO Realty Growth, Inc. (NYSE:CTO) is a real estate investment trust specializing in the ownership and management of a collection of premium retail properties, primarily located in rapidly expanding American markets. In Q2 2023, Bill Miller held 436,900 shares of CTO Realty Growth, Inc. (NYSE:CTO) worth nearly $7.5 million. It is one of the top stocks in Bill Miller’s portfolio. 

On October 16, CTO Realty Growth, Inc. (NYSE:CTO) sold the Westcliff Shopping Center in Fort Worth, Texas for $14.8 million, resulting in a 5.2% exit cap rate and a loss of around $0.9 million on the sale. The company plans to use the proceeds to pay down a part of their outstanding balance on their unsecured credit facility.

According to Insider Monkey’s second quarter database, 16 hedge funds held stakes in CTO Realty Growth, Inc. (NYSE:CTO), compared to 15 funds in the prior quarter. 

3. OneMain Holdings, Inc. (NYSE:OMF)

Number of Hedge Fund Holders: 26

Miller Value Partners’ Stake Value: $7,938,473

OneMain Holdings, Inc. (NYSE:OMF) is a financial services holding company involved in consumer finance and insurance. The company provides personal loans secured by collateral, credit cards, and insurance products, including life, disability, and unemployment insurance, as well as asset protection coverage and membership plans. At the end of June 2023, Bill Miller’s hedge fund shed 92% of its stake in OneMain Holdings, Inc. (NYSE:OMF). Still, with a position worth nearly $8 million, it remains one of Miller’s top stocks. 

On October 13, OneMain Holdings, Inc. (NYSE:OMF) filed an SEC document announcing its intention to offer different financial instruments, including common stock, preferred stock, depositary shares, debt securities, warrants, stock purchase contracts, and stock purchase units.

According to Insider Monkey’s second quarter database, 26 hedge funds were bullish on OneMain Holdings, Inc. (NYSE:OMF), compared to 33 funds in the last quarter. Glenn Greenberg’s Brave Warrior Capital is the largest stakeholder of the company, with 5.35 million shares worth $233.8 million. 

Miller Value Partners Income Strategy made the following comment about OneMain Holdings, Inc. (NYSE:OMF) in its second quarter 2023 investor letter:

“OneMain Holdings, Inc. (NYSE:OMF) was another top performer during the quarter. The company reported 1Q23 Adjusted EPS of $1.46, compared to 1Q22 EPS of $2.35, below consensus of $1.65, and a net charge-offs ratio of 7.72%, +214bps Y/Y (+84bps sequentially), above consensus of 7.6%. Consumer & Insurance (C&I) capital generation for the quarter came in at $179MM, compared to $282MM in 1Q22, while managed receivables rose 5.8% Y/Y (-0.5% sequentially) to $20.6B with a loan portfolio yield of 22.3%. Personal loan originations totaled $2.8B in 1Q23, down 5% from $3.0B in 1Q22. The company maintained a quarterly dividend of $1/share, or an annualized yield of ~9.2%, and repurchased 683K shares for $27MM (0.5% of market cap) during the quarter. As of quarter-end, the company’s net leverage ratio stood at 5.4x, compared to 5.5x at the end of 4Q22. Management indicated that post-tightening originations now represent 38% of the company’s receivables (vs. 27% in 4Q22) and are expected to represent 65-70% of receivables by YE23.”

2. Viatris Inc. (NASDAQ:VTRS)

Number of Hedge Fund Holders: 42

Miller Value Partners’ Stake Value: $8,238,490

Viatris Inc. (NASDAQ:VTRS) is a global healthcare company that functions through four segments – Developed Markets, Greater China, JANZ, and Emerging Markets. Viatris Inc. (NASDAQ:VTRS) is one of the top Bill Miller stocks to monitor. In Q2 2023, Miller’s fund held 825,500 shares of the company worth $8.2 million, representing 5.41% of the total portfolio. 

On September 27, Viatris Inc. (NASDAQ:VTRS) and Ocuphire Pharma received FDA approval for RYZUMVl, a topical eye drop for treating dilated pupils during eye examinations and surgery. It is expected to be available in the US by the first half of 2024.

According to Insider Monkey’s second quarter database, 42 hedge funds were bullish on Viatris Inc. (NASDAQ:VTRS), compared to 46 funds in the last quarter. James E. Flynn’s Deerfield Management is the largest stakeholder of the company, with 17.70 million shares worth $176.6 million. 

Miller Value Partners Income Strategy made the following comment about Viatris Inc. (NASDAQ:VTRS) in its Q1 2023 investor letter:

“Viatris Inc. (NASDAQ:VTRS) dropped in the quarter after it reported 4Q22 net sales of $3.87B, -10.7% Y/Y (-2% excluding foreign exchange impact), below consensus of $3.96B, and EPS of $0.83, compared to a 4Q21 net loss per share of -$0.22, ahead of consensus of $0.72. The company generated FY22 FCF of $2.55B, or a FCF yield of 22.1% and paid down $3.3B of debt in 2022, bringing total debt reduction to $5.4B since 2021. Management maintained its annual dividend at $0.48/share for FY23, or a ~5.0% yield, and repurchased ~$250MM worth of shares in January and February of 2023, or ~2.2% of the company’s market cap. For FY23, management is guiding for revenues of $15.8B (-2.9% Y/Y), Adjusted EBITDA of $5.2B (33.0% margin), and FCF of $2.5B, at the respective midpoints. The company also announced that Scott Smith, a board member of Viatris since December 2022, has been appointed as the company’s new CEO effective 4/1/23. Smith has previously served as the president and chief operating officer at Celgene Corporation, and most recently held the position of President at BioAlta, a publicly traded biotechnology company focused on the development of Conditionally Active Biologics antibody therapeutics.”

1. Stellantis N.V. (NYSE:STLA)

Number of Hedge Fund Holders: 27

Miller Value Partners’ Stake Value: $8,699,840

Stellantis N.V. (NYSE:STLA) designs, manufactures, and sells automobiles, commercial vehicles, and engines. Stellantis N.V. (NYSE:STLA) is one of the top picks of Bill Miller. In the second quarter of 2023, Miller added Stellantis N.V. (NYSE:STLA) to his portfolio by purchasing 496,000 shares worth $8.7 million. This stake represents 5.72% of the total holdings. 

On October 24, Stellantis N.V. (NYSE:STLA) announced that it is forming a collaborative partnership with nuclear energy company Orano to recycle used electric vehicle batteries and leftover materials from gigafactories across Europe and North America.

According to Insider Monkey’s second quarter database, 27 hedge funds were long Stellantis N.V. (NYSE:STLA), same as the prior quarter. SRS Investment Management is the leading position holder in the company, with 8.46 million shares worth $148.5 million. 

Miller Value Partners Income Strategy made the following comment about Stellantis N.V. (NYSE:STLA) in its second quarter 2023 investor letter:

“We initiated a starter position in Stellantis N.V. (NYSE:STLA), which makes Jeep, Dodge and Fiat cars. The company has a nearly 8% dividend yield with enough net cash (cash minus debt) on the balance sheet to cover the dividend for almost five years. The company trades at 1.7x operating profits, which means the market is already expecting a likely drop in cash flow. Still, the shares appear to be worth meaningfully more than where they trade, and management is heavily aligned with stockholders with a 14% stake. They share our view that the valuation is compelling, as the company plans on repurchasing ~3% of shares outstanding this year.”

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