Bill Miller, along with many famous value managers, slammed face first into the credit crisis. That said, his rep for picking up some of the biggest winners ever when no one wanted them (Amazon anyone?) is still intact and his record of beating the S&P 500 for 15 straight years (ended in ’05) still stands.
Based on an interview in Forbes, he is generally bullish on stocks (don’t stop the presses for that one) and specifically, he’s looking for lower quality recovery candidates selling below book value.
He is finding them in the regional bank sector:
“Regional banks, for example, were among the worst stocks in an otherwise good year in 2009, but have begun 2010 strongly,” said Miller. “Many of them have ample capital, will see loan and credit losses peak this year, yet trade below tangible book value and therefore with a negative deposit premium. This year should also see a merger boom, as corporate balance sheets are mostly flush with cash, and profits are again headed higher. Health care and tech are fertile hunting grounds, as well.”
I highlighted the activity in the regional banks the other day, they are some of the best performing stocks of the new year. I’m not surprised to see Miller playing in this sandbox, this group is the definition of unloved.