Bill Miller Wealthtrack Interview

Bill Miller recently appeared on Consuelo Mack's WealthTrack for an interview.  He's beat the S&P 500 for 15 consecutive years when he worked at Legg Mason.  Then he had a few years of underperformance and has come back with Miller Value Partners, an independent investment advisory firm. 

Here are some of the key takeaways:

-  Looks for stocks trading at a discount to intrinsic business value (present value of future free cashflow): looks for business that are naturally cash generative and buys them when free cashflow yield is 50% or more higher than the market.

-  Noted that typical value investors look for accounting value versus economic value.  Cites them missing Amazon (AMZN) as an example over the past 20 years.

-  Miller looks for "companies that can earn above their cost of capital through an economic cycle."

-  "Where you can really make significant amounts of money is when an industry changes from being one that doesn't generate economic value to one that does."  One example of this he cites is the airlines now.  Now they've had positive cashflow ever since 2009.  He owns Delta (DAL), United (UAL), American Airlines (AAL).  Consolidation has played a huge role.  As we've noted before, Warren Buffett is also now a large shareholder of airlines.

- Also owns Valeant Pharmaceuticals (VRX) equity in one fund and the bonds in another fund.  Notes that Bill Ackman has sold his VRX position.  Miller was buying around $30.  Thinks "perceived risk is way underpriced to real risk."  Thinks it could be a $50-60 stock in 3 or 4 years.

-  Miller thinks Apollo Group (APO) and Carlyle Group (CG) are cheap.  We've highlighted how Tiger Global has been buying APO as well.

-  Miller doesn't think the market is overvalued on a relative or absolute basis.  Especially compared to other asset classes it's cheap.

-  Likes Intrexon (XON), leading company in synthetic biology (think re-writing DNA). 

-  If he had to pick one stock to own for the long-term he'd pick Amazon (AMZN).  Compared it to Alphabet (GOOGL) and Facebook (FB) and their core business is the $500-600 billion ad market which is growing 5% a year.  Whereas AMZN's core business is retail.  US retail alone is $5 trillion so the total addressable market is huge.  Not to mention Amazon Web Services, etc.

Embedded below is the video of Bill Miller's Wealthtrack interview:



For more recent Wealthtrack interviews, we've also posted Consuelo Mack's interview with Joel Greenblatt.

Joel Greenblatt Interview With Consuelo Mack's Wealthtrack

Joel Greenblatt of Gotham Funds recently sat down with Consuelo Mack's Wealthtrack to talk about his hybrid approach to investing where he combines indexing with his active long/short strategy.

Greenblatt is known for generating insanely good returns (34% annualized) in his original Gotham Capital vehicle from 1985 to 1995. 

He took advantage of spin-offs, post-bankruptcy equities, and other plays.  He wrote about his strategy in a really good book that has a cheesy title:  You Can Be a Stock Market Genius.

But nowadays he's focused on some other strategies, and he dives into that in the interview.

Embedded below is the video of Wealthtrack's interview with Joel Greenblatt:

Wally Weitz's Wealthtrack Interview

A few months ago, value investor Wally Weitz of Weitz Investment Management sat down with Consuelo Mack in an episode of Wealthtrack.

In the interview, Weitz touches on the concept of valuable losses, or finding opportunities where others are seeing losses.


He says, "Selling begets more selling; people scare themselves and each other and almost always overshoot."

He has an 'on deck' list of stocks they've researched and are just waiting for the right price to buy.  That said, he says it's easier for him to buy stocks he's already involved with during downswings rather than jump on new names because he's more comfortable/familiar with management and how they will act during downturns, etc.

Weitz says that the fund he particularly runs is long/short but not designed to be market neutral or anything like that.  He noted he's typically 90% long and 30% short, running around 60% net long.  He mentioned they'd been short Sears (SHLD) in the past.

During the interview, Weitz talks about why he likes Liberty Global (LBTYA/K) and why he sold Valeant Pharmaceuticals (VRX).

Other investments Weitz mentions include Liberty Broadband (LBRDA), Charter Communications (CHTR), Berkshire Hathaway (BRK.A/B), Wells Fargo (WFC).

Embedded below is the video of Weitz's interview on Wealthtrack:

Tom Russo's Interview on Wealthtrack

Global value investor Tom Russo of Gardner Russo & Gardner recently appeared on Consuelo Mack's WealthTrack.  Russo mainly focuses on consumer products companies with a global presence and has a long-term holding period.

Embedded below is the video of Russo's interview:



For more from this show, head to Joel Greenblatt's interview as well as Bruce Berkowitz's chat.

Joel Greenblatt's Wealthtrack Interview

Gotham Capital's Joel Greenblatt recently sat down with Consuelo Mack on Wealthtrack where he talked about his change of strategy from a highly concentrated portfolio focused on special situations to a widely diversified one.

Greenblatt is also the author of numerous books on the various strategies he's run.  One of the best books on investing (don't let the silly title fool you) is his book on special situations: You Can Be a Stock Market Genius.

He has also authored The Little Book That Still Beats the Market, a book that details his formula-following approach to investing.

Embedded below is Joel Greenblatt's interview on Wealthtrack:

Bruce Berkowitz's Wealthtrack Interview: AIG, BAC, FNMA

Consuelo Mack's Wealthtrack recently sat down with Fairholme Capital's Bruce Berkowitz to talk about his investments.  These days, he manages around $8 billion and his largest holding continues to be AIG (AIG).

He says he's still focused on financials because that's what he knows and what's in his circle of competence.  The main thing he's drawn to is the huge stature of some of the companies he's invested in.  He likes systemically important institutions (such as AIG and Bank of America).


On AIG

Berkowitz notes that AIG's tangible book value is around $75 and he's waiting for the company to trade around book value.  He says he has to keep trimming the position slightly because as the price increases, it becomes an even larger part of his portfolio (and it's already almost 50% of his portfolio).


On Bank of America

He bought Bank of America (BAC) because he felt it would eventually become more like a bank like Wells Fargo after restructuring and settling litigation.  As it still sells below book or runoff value, he says he's getting the "future for free and a discount on the books."


Fannie/Freddie

He compares this situation to AIG in that it's a very important organization where the government is involved.


Curiously absent from the discussion was another of Berkowitz's holdings: Sears.  Shares have declined recently and Berkowitz has been interested in participating in the company's short-term loan.


Embedded below is the video of Berkowitz's interview with Wealthtrack:

Ken Heebner's Interview on Consuelo Mack's WealthTrack

Ken Heebner is the founder of Capital Growth Management and he manages the CGM Focus Fund, among other actively managed mutual funds.  He has put up big numbers some years, but he also was hit big during the financial crisis.  However, his long-term numbers beat the market (10 year and 15 year performance) and put him in the top 1% of his peers.

He sat down with Consuelo Mack on WealthTrack and talked about the themes he's seeing these days and how he's playing them:


Resurgence In Housing = Big Theme

Heebner's big theme in the US is housing.  He says, "I think it's the single most important factor causing economic activity and the stock market to surprise on the upside."

He notes that after a large drawdown in prices during the financial crisis, housing starts declined as homebuilders cut back.  As such, demand has grown while supply was largely stagnant.  As such, supply needs to catch up with demand and home prices can head higher until supply catches up.

As a result of this, Heebner also sees consumer confidence rising due to improved personal balance sheets which can obviously translate into increased consumer spending.

However, he doesn't necessarily think homebuilder stocks offer the best value as they're well off their lows and the general perception is more favorable for the industry nowadays.  The time to really load up on shares was when the majority of people were pessimistic.


His Outlook For Banks

Other themes he's tracking include industry consolidation and corporate profit margins.

He points out that 5 major banks have almost 50% of deposits and this consolidation hasn't been seen in quite some time.  Additionally, Heebner highlights the low P/E ratios many banks trade it.  He also feels that business opportunities for banks are presenting themselves and they should have some solid pricing power.

In particular, he highlights Morgan Stanley (MS) and Goldman Sachs (GS), noting that they can see P/E multiple expansion and that half of the earnings from MS come from wealth management.  He also points out the negative sentiment surrounding MS in particular.  We've highlighted Dan Loeb and Third Point's pitch on Morgan Stanley as well.

Of the industry, Heebner says, ""I look for situations where I think the fundamentals are a lot better than everyone else thinks they are.  I wish there were more of them.  I'd say the big investment banks are in that category today."


On Running a Concentrated Portfolio & Cutting Losses Quickly

Heebner likes to focus on companies where the risk/reward is very skewed in his favor.  While there's a lot of companies he looks at possibly owning, he says he wants to place the most capital on the companies he feels best about.  He asks, "Why hold the ones that aren't as good?  The side effect is volatility that exceeds everyone else's portfolio."

A lot has been made of Heebner's high turnover.  This, he says, is partly due to the fact that he likes to cut losses quickly.  Many great investors over time have highlighted the importance of managing losses.


Embedded below is the video of Ken Heebner's interview with Consuelo Mack on WealthTrack: