OB Report
March 2022
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From Hero to Zero and Back Again

zicherman By Steven Zicherman, MBA, CFA, Director, Equity Analyst


The path to legendary investor status is rarely a straight line. It takes gut-wrenching twists and turns. We were reminded of one such legend – Bill Miller – and his famous roller coaster career, when he announced his retirement in early January.

Bill Miller notably outperformed the S&P 500 Index for 15 consecutive years, an unmatched record that ran from 1991 to 2005. Michael Mauboussin, a former colleague of Mr. Miller’s, estimated the odds of such a streak at one in 2.3 million!

Miller ran a fund called the Legg Mason Value Trust. Despite the emphasis on value in the fund moniker, Miller invested heavily in technology (growth) stocks. Roughly 29% of his fund was invested in technology in 2000, which was the peak of the dot-com bubble. At that time, technology was considered well outside the purview of any self-respecting value investor. Sounds like a recipe for disaster, right? Well, Miller zigged when the market zagged. He reduced his technology holdings in the first half of 2000 and reinvested the proceeds into less popular and more attractively priced parts of the market.

When the technology sector entered a deep freeze, Miller made another couple of remarkable moves: he bought into the Google IPO in 2004, and he added to his Amazon.com position at depressed prices during the bust.

The sky was sunny for Bill Miller, and his fund grew by leaps and bounds for a few years. Then the Great Financial Crisis happened. This time Miller didn’t zig. He dug his heels in and relentlessly bought financial stocks into the 2007-2008 downturn. His stubbornness was so fervent that he was parodied in the 2015 film The Big Short as the Bear Stearns investor who ignored the signs that things weren’t so rosy.

The Legg Mason Value Trust declined by 55% in 2008. To add insult to injury, the fund’s assets shrank from $20.8 billion in 2006 to $2.8 billion in 2011.

Miller split with Legg Mason and became an independent fund manager in 2016, renaming his business Miller Value Partners. Since then, he has climbed back to the top. Over the last 10 years, he has ranked first place in Morningstar’s mid-cap blended fund category. Guess what his fund’s largest holding is? It’s Amazon.com, which he’s owned in some fashion or another for the last 20 years.

Holding Amazon.com might seem like a no-brainer, given the company’s success. Its shares have appreciated by 25,720%, or 32% compounded annually, over the past 20 years. But to achieve that return, one had to have the guts to hang on through some pretty terrifying corrections. Amazon.com’s stock fell by more than 90% during the dot-com bust in the early 2000s. After recovering, it dropped more than 50% during the 2008/09 Great Financial Crisis. If you want to be a legend, you need to have ice in your veins.

We admire Mr. Miller’s bold moves, conviction and perseverance. His ability to bounce back and still have an appetite for risk and contrarian stock-picking is unusual. Miller made his share of big mistakes. Still, his ability to evolve and retain conviction in the face of adversity separates him from the average professional investor. 

It’s nice to see Bill Miller go out on top. Well done! 

Annual Address 28

Thank you to all of our clients, partners and friends who joined us for our virtual Annual Address on March 2.

If you weren’t able to join us, would like to revisit something or wish to share with family and friends, we invite you view the recorded presentation here, featuring:

  • A conversation between President and CEO Debra Doucette and Executive Vice President, Investment Research, Murray Leith, moderated by Vice President, Odlum Brown Financial Services Limited, Michael Erez;

  • A presentation by Mr. Leith on navigating the current investment landscape; and

  • A panel discussion with our trusted team of Equity Analysts on the challenges and opportunities they see ahead.

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