Bill Miller shareholder letter: "I am often asked, how long do we have to wait before the fund starts to do better? The real answer here is the same as it is about most such forecasts: no one knows."
Our portfolio, in my opinion, is in excellent shape, despite, or more accurately because of, its performance. Prices have declined substantially more than business values. On the Monday Bear Stearns opened for trading after its sale to JPMorgan, the stock of the latter increased in value by the rough difference between the price agreed to (then $2 per share) and the mark-to- market book value of Bear Stearns, about $90 per share including the value of their building. While the price of Bear was around $2, the market understood the tangible value was about $90, all of which accrued to JPMorgan's shareholders. While the press focused on our ownership of Bear Stearns, our position in JPMorgan was nearly three times larger. Many of our top 10 holdings sell at less than half our assessment of their intrinsic business value (defined as the present value of their future free cash flows), an unusually wide discount.
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Our portfolio, in my opinion, is in excellent shape, despite, or more accurately because of, its performance. Prices have declined substantially more than business values. On the Monday Bear Stearns opened for trading after its sale to JPMorgan, the stock of the latter increased in value by the rough difference between the price agreed to (then $2 per share) and the mark-to- market book value of Bear Stearns, about $90 per share including the value of their building. While the price of Bear was around $2, the market understood the tangible value was about $90, all of which accrued to JPMorgan's shareholders. While the press focused on our ownership of Bear Stearns, our position in JPMorgan was nearly three times larger. Many of our top 10 holdings sell at less than half our assessment of their intrinsic business value (defined as the present value of their future free cash flows), an unusually wide discount.
Read the complete commentary
