In this article, we discuss the legendary value investor Bill Miller’s top 10 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., valued at over $115.5 million. The hedge fund increased its position in the company by 3% in the quarter. Facebook, Inc. represents 2.75% of the fund’s 13F portfolio.
In September, RBC Capital initiated its coverage on Facebook, Inc. 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. 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. 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. 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. grew to 43, compared with 34 in the previous quarter. These stakes are valued at $606.6 million.
Like Facebook, Inc., Alibaba Group Holdings Limited, Amazon.com, Inc., Alphabet Inc., and General Motors Company, Norwegian Cruise Line Holdings Ltd. 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, 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 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., 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. 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., Alibaba Group Holdings Limited, Amazon.com, Inc., Alphabet Inc., and General Motors Company, investors and analysts are also paying attention to Diamondback Energy, Inc. 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. 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. to $185, while keeping an ‘Outperform’ rating on the shares. In Q2 2021, Splunk Inc. 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., up from 41 in the previous quarter. These stakes are valued at over $1.18 billion.
Miller Value Partners also mentioned Splunk Inc. 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.”
5. OneMain Holdings, Inc. (NYSE:OMF)
Miller Value Partners’ Stake Value: $129,910,000
Percent of Miller Value Partners’ 13F Portfolio: 3.09%
Number of Hegde Fund Holders: 41
OneMain Holdings, Inc. (NYSE:OMF) is an American financial service holdings company and operates through Consumer & Insurance and other segments. It ranks fifth on our list of the legendary value investor Bill Miller’s top 10 stock picks.
As of Q2 2021, Miller Value Partners holds over 2.1 million shares in OneMain Holdings, Inc., valued at over $129.9 million. The company represents 3.09% of the hedge fund’s 13F portfolio.
As of Q2 2021, 41 hedge funds tracked by Insider Monkey have positions in OneMain Holdings, Inc..
4. Alibaba Group Holdings Limited (NYSE:BABA)
Miller Value Partners’ Stake Value: $131,868,000
Percent of Miller Value Partners’ 13F Portfolio: 3.13%
Number of Hegde Fund Holders: 146
Alibaba Group Holdings Limited ranks fourth on our list of the legendary value investor Bill Miller’s top 10 stock picks. It is a Chinese multinational technology company specializing in e-commerce, the internet, and retail.
In Q2 2021, Miller Value Partners increased its stake in Alibaba Group Holdings Limited significantly by 40%. The hedge fund holds 581,480 shares in the company, valued at $131.8 million. The company accounts for 3.13% of the hedge fund’s 13F portfolio.
As of Q2 2021, 146 hedge funds tracked by Insider Monkey have positions in Alibaba Group Holdings Limited, up from 135 in the previous quarter. These stakes are valued at over $16.7 billion.
Polen Capital Management mentioned Alibaba Group Holdings Limited in its Q2 2021 investor letter. Here is what the firm has to say:
“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”
3. Amazon.com, Inc. (NASDAQ:AMZN)
Miller Value Partners’ Stake Value: $137,953,000
Percent of Miller Value Partners’ 13F Portfolio: 3.28%
Number of Hegde Fund Holders: 271
Amazon.com, Inc. is an American multinational technology company that specializes in e-commerce, cloud computing, retail, and artificial intelligence. The company stands third 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 Amazon.com, Inc.. The hedge fund owns 40,101 shares in the company, valued at $137.9 million. The company represents 3.28% of the hedge fund’s 13F portfolio.
On October 5, JPMorgan listed Amazon.com, Inc. as one of its attractive long-term stock picks. The firm’s analyst Doug Anmuth noted that the company is an attractive entry point for long-term investors, even though it suffered supply chain disruptions due to Covid-19.
As of Q2 2021, 271 hedge funds tracked by Insider Monkey have positions in Amazon.com, Inc., up from 243 from the previous quarter. These stakes are valued at over $60.4 billion. Citadel Investment Group is the company’s leading shareholder with shares worth $13.12 billion.
ClearBridge Investments mentioned Amazon.com, Inc. in its second-quarter 2021 investor letter. Here is what the firm has to say:
“The Strategy’s goal of generating strong risk-adjusted performance while investing in companies that can make a positive impact on society and the environment is often supported by holdings that are companies with significant customer bases, making our engagements with them effective platforms for driving change. This is the case with new holding Amazon.com, the leading retail e-commerce site and provider of web hosting and related cloud services that continues to benefit from the migration of commerce from offline to online. We initiated a position in Amazon based on its strength in several areas, including retail, its Amazon Web Services cloud business and advertising; from a valuation perspective, Amazon has become more attractive as profitability has improved and the stock has gone sideways in an up market.
ClearBridge has been holding interactive engagements with Amazon on several ESG issues for several years, including labor and environmental issues, and we have seen improvements over that time. From a sustainability perspective, Amazon has made meaningful ESG commitments and improved labor practices and it faces fewer regulatory issues than many large tech peers. Labor management remains a key focal point and the company has made
increased commitments to its labor force, including in December 2018, when Amazon increased its minimum wage standard to $15 an hour in the U.S., well above the federal minimum wage standard. Amazon is also taking steps toward environmental sustainability that would put it ahead of peers if goals are achieved. In June 2019, Amazon set new targets to be carbon neutral by 2040 and to use 100% renewable energy by 2030.
Amazon has a long track record of innovation that benefits consumers and third-party sellers and has raised the bar multiple times on delivery and selection within its e-commerce business. In 2018, 58% of Amazon’s gross merchandise value (GMV) was generated by third-party sellers on the Amazon platform.
Given the colossal size of Amazon’s operations — it has over one million employees and ships nearly three billion packages each year — we see Amazon as a significant impact opportunity through continuous improvements in its operations, such as its net-zero carbon by 2040 goal.”
2. ADT Inc. (NYSE:ADT)
Miller Value Partners’ Stake Value: $147,396,000
Percent of Miller Value Partners’ 13F Portfolio: 3.5%
Number of Hegde Fund Holders: 21
ADT Inc. (NYSE:ADT) stands second on our list of the legendary value investor Bill Miller’s top 10 stock picks. It is an American company that provides electronic security to residential areas and small businesses. The company also provides alarm monitoring services throughout the U.S.
As of Q2 2021, 21 hedge funds tracked by Insider Monkey have positions in ADT Inc., up from 16 in the previous quarter. These stakes are valued at $417.8 million.
Ariel Investments is the company’s leading shareholder, with over 15.3 million shares. The firm also mentioned ADT Inc. in its Q2 2021 investor letter. Here is what the firm has to say:
“During the quarter, we initiated a position in ADT, Inc. (ADT) in Ariel Fund and Ariel Appreciation Fund. Buying the same position across both strategies is rare but shows our enthusiasm for the name. Here, we have a 140-year old company that has been in and out of public ownership and as a result, everyone has looked right past it. In our view, ADT’s brand and national presence in the security industry is unmatched, resulting in leading market share, a high recurring revenue base and attractive free cash flow generation. While some are concerned do-it-yourself competition will erode the installation and technology-driven moat around the business, we believe the company is well-positioned to benefit from the secular growth of smart home adoption along with strategic partnerships with companies including Google.”
1. DXC Technology Company (NYSE:DXC)
Miller Value Partners’ Stake Value: $224,298,000
Percent of Miller Value Partners’ 13F Portfolio: 5.34%
Number of Hegde Fund Holders: 30
DXC Technology Company (NYSE:DXC) tops our list of the legendary value investor Bill Miller’s top 10 stock picks. It is an American technology company that provides B2B technology services to its consumers.
As of Q2 2021, Miller Value Partners owns 65,200 shares in DXC Technology Company, valued at $224.2 million. The hedge fund increased its stake by 4% in the company, which now accounts for 5.34% of the fund’s 13F portfolio. This September, BMO Capital lifted its price target on DXC Technology Company to $385, while keeping a ‘Market Perform’ rating on the shares.
As of Q2 2021, 30 hedge funds tracked by Insider Monkey have positions in DXC Technology Company, up from 28 in the previous quarter. These stakes are valued at $851.2 million.
Miller Value Partners also mentioned DXC Technology Company in its Q2 2021 investor letter. Here is what the firm has to say:
“DXC Technology Company (DXC) continued to climb higher during the quarter gaining 24.57%. The company reported solid Fiscal Year 4th quarter (FY4Q) results with revenue of $4.385B beating consensus of $4.29B and earnings per share (EPS) of $0.74 ahead of expectations for $0.70. The company guided for fiscal 2022 revenue of $16.6-$16.8B, below the Street at $16.9B and adjusted EPS of $3.45-3.65, ahead of the consensus of $3.43. By FY2024, the company expects organic revenue growth of 1-3%, adjusted earnings before income and taxes (EBIT) margin of 10-11%, adjusted diluted EPS of $5.00-$5.25 and free cash flow (FCF) of $1.5B. Later in the month, the company held an investor day where management highlighted their confidence that they can hit all of their targets while also stressing the progress they have made on their turnaround to date.”
You can also take a look at Larry Robbins’ Top Stock Picks and Billionaire Izzy Englander’s Top 10 Stock Picks
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This article is originally published at Insider Monkey.
