Bill Miller's 15 Largest Stock Picks

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 |  Includes: AAPL, AMZN, BLK, CSCO, EBAY, EMC, GE, IBM, JPM, MSFT, PEP, PG, QCOM, UAL, WFC
by: Insider Monkey

Legg Mason Global Asset Management is one of the largest asset management firms in the world. Assets under management as of December 31, 2010, were $672 Billion, making it the 11th largest asset manager in the world, with 50% of these assets invested in fixed income securities and most of these (70%) in the Americas Division. Legg Mason Capital Management is one of the company's subsidiaries. It was founded in 1982, based in Baltimore. It specializes in long-term, valuation based equity management. Bill Miller is chairman and CIO of Legg Mason Capital Management. He graduated from Washington and Lee University with a degree in economics. Before joining Legg Mason in 1981, he served as treasurer of the J.E. Baker Company. Before the subprime crisis, he was one of the most famous and successful investment managers in the world. He was named by Money Magazine “The Greatest Money Manager of the 1990s.” Between 1990, and 2005, Miller had a phenomenal track record by beating S&P 500 (NYSEARCA:SPY) 15 straight years. However, between 2005, and 2010, he underperformed the SPY except 2009.

Bill Miller is a long-term value investor; he says:

We are value investors because we are persuaded of the logic of buying shares of businesses when others want to sell them, and we understand that lower prices today mean higher future rates of return, and high prices today mean lower future rates of return.

...One hundred percent of a company's information reflects its past while 100 percent of its value reflects its future.

Bill Miller had $9.7 Billion in his latest 13F portfolio. Here are his 15 largest stock picks:

Company

Ticker

Value (x1000)

Activity

Return Since June

MICROSOFT CORP

MSFT

240,828

-27%

-2%

EBAY INC

EBAY

237,903

-32%

-6%

E M C CORP MASS

EMC

236,860

-21%

-17%

APPLE INC

AAPL

225,043

0%

13%

PROCTER & GAMBLE CO

PG

211,194

142%

-2%

BLACKROCK INC

BLK

198,609

4%

-16%

AMAZON COM INC

AMZN

197,288

-30%

-3%

WELLS FARGO & CO NEW

WFC

190,125

-31%

-12%

UNITED CONTL HLDGS INC

UAL

189,371

-13%

-16%

CISCO SYS INC

CSCO

185,267

-30%

3%

QUALCOMM INC

QCOM

179,379

-40%

-10%

PEPSICO INC

PEP

179,144

-26%

-9%

INTL BUSINESS MACHS

IBM

174,361

-36%

0%

GENERAL ELECTRIC CO

GE

170,730

-30%

-14%

JPMORGAN CHASE & CO

JPM

169,278

-25%

-11%

Click to enlarge

Miller’s top stock picks lost 6.6% since the end of June, vs. SPY’s 9.4% loss. Miller’s four out of top five stock picks beat the market. Miller’s stock picks are mostly concentrated in mega-cap tech companies, which are relatively cheaper at the moment. Microsoft is Miller’s top position and the stock outperformed the market by 7 percentage points since June. David Einhorn talked extensively about Microsoft at the Ira Sohn Conference and said the stock is extremely cheap (read his entire speech here).

Miller’s best performing top stock pick is Apple. The stock gained 13% despite a 9% decline in the S&P 500 index since June. Apple is also one of the top three most popular stocks among hedge fund managers. Microsoft was also among the top three most popular stocks among hedge fund managers (see the top 10 list here).

Miller also had eBay, Cisco, Qualcomm, and IBM in his portfolio. All of these stocks except QCOM outperformed the market during the most recent market sell-off. eBay is Miller’s second largest position. There are several hedge fund managers who are also very bullish about eBay. Dan Loeb’s Third Point, John Griffin’s Blue Ridge, and former vice president Al Gore’s hedge fund Generation Investment Management had large stakes in EBAY (check out the largest holdings in Al Gore’s hedge fund).

Overall we think Miller’s portfolio has solid names and we believe investors can beat the market by imitating his top stock picks. We also see value in large-cap tech stocks and have Microsoft in our portfolio.

Disclosure: I am long MSFT.