Miller Value Partners recently released its Q1 2021 Investor Letter, a copy of which you can download here. The Miller Opportunity Trust posted solid gains, with Class I up 16.67%, outperforming its benchmark, the S&P 500 Index which returned 6.17% in the same quarter. You should check out Miller Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the Q1 2021 Investor Letter, the fund highlighted a few stocks and Rocket Companies Inc. (NYSE:RKT) is one of them. Rocket Companies Inc. (NYSE:RKT) is a provider of home mortgages and other loan products via its digital lending platforms. In the last three months, Rocket Companies Inc. (NYSE:RKT) stock lost 14%. Here is what the fund said:
“We own Rocket Companies which we think is a great mortgage finance company with a successful history of innovation, growth, and cash generation. We think Rocket has several competitive advantages, including its technology and marketing platforms. One way this manifests is retention rates far superior to the rest of the industry (client and refinance retention rates of 80%+ versus less than 20% for the industry).
Rocket went public last year amidst record low interest rates that led to record revenues, margins, and profits. Rising interest rate concerns have kept a lid on the stock. We bought it last year after doing work on what the longer term potential looked like, as well as what earnings might be in a more normalized environment. We think Rocket is a great example of “time arbitrage.” We are taking the long view when others focus on the coming quarters.
The stock is in the $20s, and we believe it could be worth many multiples of that over the next decade. We intend to be longterm owners. This quarter, the price surged 70%+ in one day and more than doubled over 3 days. This brought it close to our estimate of its present value. Given our assessment of the risk (downside in scenarios of quickly increasing rates) relative to our upside, we exercised our “liquidity option,” so to speak, and sold 21% of our position during the surge. We don’t love to trade around our positions, but we do intend to capitalize on volatility to create value when we get the chance.”
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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