Legendary investor Bill Miller says bitcoin and Amazon stock have made him a billionaire

Bill Miller
Bill Miller.

  • Bill Miller has become a billionaire thanks to Amazon and bitcoin.
  • The value investor’s Amazon stake made up 83% of his personal portfolio last year.
  • Miller’s bitcoin holdings are now worth more than his Amazon position.
  • See more stories on Insider’s business page.

Bill Miller, a star fund manager who was brought to his knees during the financial crisis, has staged a remarkable comeback and become a billionaire thanks to Amazon and bitcoin.

Journalist William Green interviewed the value investor for his new book, “Richer, Wiser, Happier: How the World’s Greatest Investors Win in Markets and Life,” and for a recent Barron’s article.

Miller beat the benchmark S&P 500 index for 15 straight years as manager of Legg Mason Value Trust. However, his fortunes soured when he made leveraged bets on Bear Stearns, Freddie Mac, and other hard-hit financial stocks in 2008, but the Federal Reserve failed to swoop in and help as much as he expected.

As a result, Miller’s flagship fund tumbled 55% that year, and an investor exodus slashed his assets under management from about $77 billion to $800 million, Miller told Green. The heavy losses, coupled with a recent divorce settlement, meant Miller’s personal fortune shrunk by around 90% in a matter of months.

Luckily for Miller, he had started investing in Amazon soon after it went public in 1997, and had boosted his stake in the e-commerce group after the dot-com bubble burst. Although he was forced to sell some of his shares when investors pulled money out of his funds in 2008, he also snapped up bullish call options on Amazon stock when it tanked that year.

Amazon shares, on a split-adjusted basis, have skyrocketed from less than $40 in November 2008 to $3,300 today. Miller told Green last year that the position made up 83% of his personal portfolio, and he was likely the largest individual shareholder of Amazon “whose last name isn’t Bezos” – excluding MacKenzie Scott, who divorced Amazon CEO Jeff Bezos and dropped his last name in 2019.

Miller’s bitcoin bet has now surpassed his Amazon stake in value, he told Green in the recent Barron’s interview. He started buying when it cost $200 to $300 a coin, and his average cost is about $500, he said. Bitcoin has surged by more than 600% since the start of last year to around $50,000, suggesting Miller has scored a roughly 10,000% gain on his investment.

Miller told Green that thanks to his Amazon and bitcoin wagers, he’s now a billionaire.

The Miller Value Partners chief remains bullish on both assets. He expects Amazon stock to double in the next three years as it expands its cloud-hosting, advertising, business-to-business, and private-label operations. He’s also confident that bitcoin will rise 10-fold in value as demand outstrips supply, and investors recognize it’s “far superior to gold,” he told Green.

While Miller managed to hold Amazon and bitcoin through their highs and lows in recent years, his fund virtually eliminated its GameStop stake in 2018. If his team hadn’t given up on the video-game retailer, their stake would have been worth $800 million at the height of the short squeeze in January, and more than $250 million today.

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Legendary investor Bill Miller sold GameStop stock before the short squeeze, missing out on a potential $800 million windfall

bill miller
Bill Miller.

  • Bill Miller’s fund sold almost all of its GameStop shares before their price rocketed in January.
  • Miller Value Partners’ 1.7 million shares would have been worth over $800 million.
  • The veteran investor’s team dumped 97% of its stake because it hadn’t paid off for years.
  • See more stories on Insider’s business page.

Legendary investor Bill Miller’s fund sold virtually all of its GameStop stock before the January short squeeze, missing out on a potential $800 million windfall.

Miller Value Partners invested in the video-games retailer in early 2014. It initially bought 1.2 million shares, then boosted its stake to almost 1.7 million shares by the end of 2015, SEC filings show. Its position was worth as much as $68 million earlier that year, when GameStop shares were trading around $43.

If Miller’s fund had held on to its shares, they would have been worth as much as $808 million on January 28, when GameStop’s stock price briefly skyrocketed to $483. Even if they declined to cash out then, their stake would be worth about $270 million at the current stock price of around $160.

However, Miller and his team slashed their position by 97% to roughly 32,000 shares in the first quarter of 2018. “We’ve owned this investment for a number of years and it has yet to work,” Samantha McLemore, Miller’s co-portfolio manager of the Opportunity Equity strategy, explained at the time. While GameStop remained “one of the cheapest companies on the market,” she and Miller ditched it to “avoid perpetual losers.”

Notably, the fund’s Income Strategy bought GameStop shares in May 2019. However, Miller and his son swiftly dumped them after the retailer scrapped its dividend and failed to lay out a clear turnaround plan.

“We cut bait so quickly that we didn’t even own the stock for a full quarter,” Bill Miller IV said in a letter to investors, describing the move as their “biggest mistake” in the period.

The third and final strategy, Deep Value, appears to be holding on. Daniel Lysik, the portfolio’s manager, described GameStop shares as “significantly mispriced” in the first quarter of 2019, and trumpeted their “significant upside potential” last October.

Read more: We asked 5 renowned growth-fund managers for their favorite stock picks. These are the 4 that multiple managers think will crush the market going forward.

Miller’s fund owned a total of 116,000 GameStop shares at the end of December, or about 7% of the amount it held back in 2015. Assuming it hasn’t already sold them, they would fetch around $20 million today.

Miller Value Partners declined a request for comment from Insider.

Here’s a chart tracking the size and value of Miller’s GameStop holdings over the past seven years:

Miller_GameStop

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