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The son of legendary value investor Bill Miller appeared on CNBC’s “Closing Bell” Wednesday to discuss the transition in ownership at Miller Value Partners and some stock views and ideas.
Bill Miller IV is now 80% owner of Miller Value Partners. His father, who is famous for beating the S&P 500 for 15 years in a row from 1991 through 2005 at Legg Mason, will maintain a 20% stake in the money management firm.
What’s New At Miller Value Partners? Miller IV said the overall investment philosophy at the firm will not be changing dramatically, but he is hoping to increase transparency and ensure the firm and its outside investors are aligned in the most optimal way possible.
The elder Miller will continue to be an investment advisor to his son, who said he wants his dad to be as active in the business as he “wants to be.”
Why Miller Isn’t Chasing Nvidia: Miller IV next spoke about individual stocks and noted the entirety of the market’s gains in 2023 have been concentrated in a handful of big-cap tech stocks.
The entire stock market is incredibly concentrated at the top, with 25% of the market being comprised by the largest market-capitalization companies, he said: Apple Inc AAPL, Amazon.com, Inc. AMZN, Alphabet Inc GOOG, NVIDIA Corporation NVDA and the other usual suspects.
While other investors have been riding these names in 2023, Miller IV said he remains skeptical — and would absolutely not be chasing a name like Nvidia higher at a $1-trillion valuation.
Fund managers who are looking to outperform the indices will need to be patient and probably look to put capital to work in the out-of-favor, beaten-down sectors where values still exist, he said.
Fed tightening measures are removing capital from the system, and this is benefiting the less capital-intensive businesses, Miller IV said, giving the examples of Alphabet and Meta Platforms Inc META, which he said do not require significant capital investment to run their core businesses.
Big tech has already had another big run, he said, adding that he doubts outperformance in the coming years will be driven by piling on big-cap tech at present valuations.
Miller On Stellantis, Verizon: Stellantis NV STLA is cheap, Miller IV said, adding that shares trade at 1x operating income and upon further inspection, Stellantis has an EBITDA/market cap yield of above 55%. The automaker’s revenue growth trends over the last few years have been very attractive, he said, and he called its 9.42% dividend yield “safe.”
The second name that he mentioned was Verizon Communications Inc VZ, which he called undervalued on a historical basis.
The telecom is a safe bet if the economy is going into a recession, he said.
This is not a stock that is going to make anyone wealthy, but it is a very strong name for investors to park money in the equity market, Miller IV told CNBC: it’s big, stable, cheap and is yielding above 7%.
Photo via Pixabay.
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